More heat on SA Rugby as rejected equity bid ends up costing millions

“I suppose these things cost money,” said a provincial president about the R14m SA Rugby have to pay after their proposed equity deal with the Ackerley Sports Group (ASG) fell through.

The SA Rugby Union last week informed their provincial heads that the amount was payable after the agreement reached between the commercial agent and Saru was terminated.

ASG offered to pay R1.4bn for a 20% stake in SA Rugby’s commercial rights but the bid was rejected with only six of the 13 voting unions in favour of it. For the deal to be rubber-stamped it had to meet a 75% threshold.

“We will just have to wait to see how these things pan out,” said the provincial president, who preferred to remain anonymous.

He said the governance review by an independent audit firm to look into the processes that were followed in the structuring of the deal between SA Rugby and ASG should shed some light on the path forward.

A 15% commission was payable at the completion of the deal, but provincial affiliates are demanding answers on how that figure was arrived at and how it was going to be disbursed.

“I think we will have to wait and see if anything comes from that. We need to know who stood to benefit or if there was any wrongdoing in that process. Until then we have to be patient,” said the provincial president.

He said he expected that process to be completed quickly but did not provide a time frame. The governance review was commissioned by SA Rugby to assure stakeholders that governance requirements were adhered to.

In a letter to its affiliates last week Saru sought to explain the 15% commission had the deal with ASG gone through. The commission fee proved a considerable sticking point for members.

“The commission payable to [a] commercial agent for successfully concluding an equity transaction was set at 15% of the transaction value,” Saru said.

“This commission was a gross percentage, against which the equity transaction professional and transactional costs would be paid by the commercial agent on behalf of Saru, which professional fees were estimated to be 5% of the 15%.”