The Business Of Rugby

The state of rugby in the country is dire. Spectator numbers are dwindling and sponsors are tightening their belts. But could a new ruling by SA Rugby mean a revival for one of the nation’s most loved sports?

 

- Lloyd Gedye

South African rugby is in the doldrums. Last year the Springboks looked like the whipping boys of international rugby. At a provincial union level, stadium ticket sales are down. Sponsorship money is drying up and television viewership is shrinking. Further, there is a player exodus for more lucrative foreign rugby fields and many of the provincial unions are struggling financially.

There is also increased pressure, both from government and from an impatient rugby viewing public, for the sport to transform.

At the moment it seems there is nowhere to hide for rugby administrators.

But the sport may soon undergo some drastic changes. In December SA Rugby announced that its general council had taken a number of decisions which its president, Mark Alexander, said would have far-reaching effects on rugby in the country.

The headline-grabbing decision was the one allowing 74% share holdings in commercial arms of rugby unions by private equity partners. Previously equity partners had been restricted to a 50% ownership. Could this mean that money is going to flood into the sport, with a host of new equity partners jumping on board?

THE SA RUGBY PRIVATE EQUITY LANDSCAPE

 As world rugby turned professional in the wake of the Springboks’ 1995 Rugby World Cup victory, new private equity investment flowed into the sport.

The Free State Cheetahs was the first South African rugby union to sign a deal with a private equity partner, says managing director Harold Verster. In the late 1990s SuperSport bought a 24.5% stake in the union. SuperSport has also invested in the Sharks, with an initial stake of 24.9%, which was upped to 50% in 2016.

In 1998 SAIL, a subsidiary of Remgro, purchased a 24% stake in the Border, Valke, Eagles, Griffons and Eastern Province rugby unions. In 2006 it would go on to sell its shares in Border and the Eagles to SA Rugby.