Gayton McKenzie says SA Rugby’s deal with US investor ‘does not give it 20% stake in the Springboks’

Gayton McKenzie clarified his stance on the ASG Springbok bid in a written response to parliament.
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Ackerley Sports Group will know in the first week of December if their bid for a piece of the Springbok pie has been successful.

The deadline to decide South African rugby’s commercial future is inching nearer.

The 14 unions making up the domestic landscape will on 6 December vote on whether to accept a R1.3 billion deal to sell a 20% stake in the South African Rugby Union (Saru).

Minister of Sports, Arts and Culture Gayton McKenzie met with stakeholders and unions this week, having earlier persuaded them to delay their vote in order to engage in further deliberations.

‘Not a 20% stake in the Springboks’

McKenzie had earlier said the deal was not a forgone conclusion, as 75% of the unions must agree on its signing.

Acting spokesperson for McKenzie’s office Chad Kramer confirmed to The Citizen on Friday that the minister had met with the unions on Monday, but was mum on the details.

“Commentary is reserved as the minister will release a press statement upon finalisation of the deal. Discussions are still ongoing and have not been concluded,” Kramer said.

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However, McKenzie responded to a parliamentary question earlier in November on the details of the deal presented by Ackerley Sports Group (ASG).

“The 20% referred to is not a stake in the Springboks, as such, but rather a stake in a company that is being proposed as an entity to hold the Springbok commercial rights that Saru currently holds in their entirety,” McKenzie’s written reply stated.

Commissions to third parties

The establishment of a new commercial entity would come with a 15% commission payable to third parties for the role in brokering the deal.

Acknowledging his own concerns about the large commission payment, McKenzie said that only if laws were broken would his department act.

“Unless there is something illegal or patently unethical about the way the deal has been structured, it would not be advisable to interfere,” McKenzie stated.

“[Saru] have also said that they have struggled to find the kind of funding that this deal promises to release for the support and growth of rugby and that this may well be the best deal on the table,” he added.

Saru financial position

Among ASG’s investment portfolio is Leeds United Football Club, a media and entertainment company co-founded by Tiger Woods and Rory McIlroy, as well as at least five sports franchises based in the US west coast.

As per their annual report released in June, Saru reported that it had a total asset value of R380 million for the group.

The Saru group is defined in their constitution as any commercial entity in which Saru has a shareholding or any other form of financial interest.

The Saru group recorded revenue of R1.4 billion, however, it had operating expenses of R1.8 billion.

“It would not be acceptable to say, ‘You cannot have this funding, but you also cannot have – or must accept there is no alternative source – of funding from elsewhere’,” McKenzie’s reply regarding the possible R1.3 billion injection stated.

No monopoly on SA rugby

A priority for government is that rugby remains affordable and accessible to all South Africans, while guarding against a hoarding of broadcasting rights monopolised by foreign companies.

“I agree that such questions are important; however, I am advised that the deal is primarily focused on expanding the reach and appeal of the Springbok brand,” McKenize stated.

“The basic principle that it will be better to have more money flowing into the sport is one that I wholeheartedly share.

“[However], if it emerges that this money is not going into rugby development, then I can promise that I shall explore all legal options to ensure that there are consequences,” the minister concluded.

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