SA Rugby (Saru) is set to embrace the growing trend among national federations of rugby teams to raise funds from private equity as it prepares to collaborate with American company Ackerley Sports Group (ASG).
The private equity partnership would see the Seattle-based company acquire a 20% shareholding in the sport’s commercial activities, with SA Rugby expecting to double sponsorship revenue by the 2027 World Cup as a result of the deal.
The partnership is expected to provide SA Rugby with not just an immediate financial boost but also crucially supply the expertise, networks and resources necessary to enhance its commercial value, thereby giving it a brighter financial future.
However, naturally, there have been some raised eyebrows and speculation regarding what the purpose and practicalities of such an agreement would involve, with the biggest question being whether the Springboks have been put up for sale or not.
Sports business researcher, Nqobile Ndlovu, of Cash N Sport insists that it is difficult to tell at the moment if the partnership will be good for SA Rugby in the long term, despite the expected immediate financial benefit.
“In the deal, Saru and ASG will form a new commercial company where the former will be the majority shareholder and the latter will hold a 20% stake,” Ndlovu told Sunday World.
“ASG will profit from this increased revenue, while Saru’s share will fund the cost of running the amateur and women’s game in South Africa. This type of deal is not new, of course, in the rugby space. It is a deal that is very similar to the 2022 deal between New Zealand Rugby and Silver Lake, where the company paid $39-million for an 8.5% share in a new entity with New Zealand Rugby.
“Now, is this a good deal for Saru? There’s no way of telling at the moment because it is just too soon. But personally, I think it could be a good deal.
“My only concern with the deal is the percentage that ASG will be getting. I am not comfortable with a 20% stake, I think it is slightly on the high side and could prove problematic in the longer term if things don’t go as expected and the new entity is unable to make much money. I would have been more comfortable with anything below 10%.”
The R1.4-billion deal is said to be on track to close in May but still needs approval from 14 member unions of SA Rugby.
There have been concerns as well from the four major South African franchises – the Vodacom Bulls, Sharks, DHL Stormers and Lions – who have expressed concern over the hasty deal in a letter to SA Rugby.
