The proposed private equity investment deal between the South African Rugby Union (SA Rugby), and US-based Ackerley Sports Group (ASG), has been voted down by the SA Rugby provincial member unions.
Of the 13 member unions with voting rights, seven voted against the proposal in Cape Town on Friday, meaning it failed to come close to the necessary 75% approval mark (10 out of 13 votes) in order to pass. It is understood that three of the major South African rugby union franchises - the Lions, Bulls, and Sharks - all voted against the proposal.
Seattle-based ASG, it had been reported, would have been willing to invest $75 million in return for a 20% stake in SA Rugby’s commercial rights. The first injection would reportedly have been $35 million, and a new commercial venture would likely have been created.
The Seattle firm was confirmed by SA Rugby as its preferred bidder in terms of selecting an investment partner last December (the overall selection process has been running for the last few years), and indeed still has an exclusivity deal in place through the remainder of 2024 - meaning it could yet submit an improved offer in the coming weeks.
An approval vote amongst the 13 member unions had initially been scheduled for October but was then delayed until last week at the request of South African sports minister Gayton McKenzie.
Now, however, it has been reported that a group of four South African firms - AltVest Capital, EasyEquities, 27four Investment Managers, and RainFin - are looking to band together to invest as much as $372 million in return for a 40% slice of SA Rugby’s commercial rights.
Despite the fact the national men’s team, the Springboks, have won the last two Rugby World Cups, SA Rugby is not a wealthy organization, making a profit of just under $500,000 last year.
Media has cited a concern amongst the provincial unions around SA Rugby and ASG centrally organizing home international games - as opposed to the unions paying a set hosting fee and then keeping the profits - as being one of the reasons the vote did not pass.
Another reason, according to reports, was that if it had gone through, $7.5 million worth of commission would have been due to Eddie Jordan (the former team owner in motor racing’s Formula 1 for his role in the bid. This also concerned the various opposing member unions.
Mark Alexander, the president of the rugby union body, stated after the vote: “The input and perspectives shared by our members have been invaluable, and we respect those perspectives.
“Our goal remains to secure a sustainable and prosperous future for South African Rugby, ensuring that we continue to grow and succeed on both the national and international stages.
“We remain committed to working transparently and inclusively as we navigate this process. We thank our members for their engagement and feedback and look forward to presenting revised proposals that reflect our collective vision and goals in due course.”
The SA Rugby-ASG partnership had been proposed with the location of the 2031 Rugby World Cup in mind - with that event taking place in the US, both parties had said that "having an American strategic partner guiding the Springboks into this arena will provide the resources to continue their dominance both on the pitch and off.”
Major SA Rugby commercial partners currently include MTN, NIKE, FNB, Castle Lager, Betway, Gilbert, Dell, Toyota, Oppo, and Qatar Airways.
ASG, meanwhile, is an offshoot of the wider Ackerley Partners organization (established in 2002), which already has stakes in multiple professional sports franchises in Seattle - the Seattle SuperSonics, the Seattle Storm, the Seattle Seadogs, the Seattle Seawolves, and Seattle Kraken.
In early 2022, one of rugby union’s other Southern Hemisphere heavyweights, New Zealand, took a similar step, when New Zealand Rugby (NZR) created the NZR Commercial arm and sold off a minority stake to the Silver Lake investment group.
That firm now holds a 7.5% stake in NZR Commercial. NZR retains the remaining 92.5% equity in the entity.
