Springboks R1.3 billion deal collapse threatens SA Rugby

A controversial private equity deal over the commercial rights to the world’s highest-ranked national rugby team, South Africa’s Springboks, has been rejected, dealing a blow to a sports authority vexed by financial instability.   

SA Rugby, which oversees the national team, planned to sell a 20% stake in a newly created commercial-rights company for $75 million (R1.3 billion) to Seattle-based Ackerley Sports Group.

The proposal failed to reach the 75% majority required for such a transaction to be approved after seven of the 13 member unions with voting rights opposed it, the body said in a statement on Friday. 

Ackerley, which was identified by the members as the preferred bidder in December 2023, has an exclusivity period until the end of 2024 to make a revised offer, should it wish, SA Rugby said.

The rejection comes days after SA Rugby executives told lawmakers it faces the risk of collapse if it fails to bolster revenue and bucks a growing trend among national federations of successful rugby teams, most notably, New Zealand’s All Blacks, to raise funds from private equity.

SA Rugby, which supports all levels of the sport nationwide, has barely turned a profit for over a decade and hoped the deal would help to stabilize its finances, create a reserve fund and capitalize on the success of a team whose commercial income lags its biggest rivals.  

The deal caused a storm of controversy and a string of front-page headlines, with the prospect of loosening local control over a team whose success and multiracial makeup has made the one-time icon of White supremacy under apartheid into a symbol of transformation.

The country’s sports minister and the unions that run some of its biggest rugby teams, which are linked to a number of the country’s richest men, queried the benefits of the deal and the lack of South African participation. 

SA Rugby has tried to clinch a private equity deal since 2018. Its executives told lawmakers this week it generates about 90% of its revenue from the Springboks brand and franchise competitions.

Almost half of the national team’s matches are played overseas and South Africa’s weak currency puts it a disadvantage when competing against rivals and makes it difficult to retain top players that are lured by lucrative contracts abroad, they said.  

Rugby unions that run clubs linked to South Africa’s richest man, Johann Rupert, Patrice Motsepe, the country’s only Black billionaire, and pharmaceutical tycoon Stephen Saad were among SA Rugby’s member associations that signed a letter in October opposing the deal amid concerns over its fee structure, governance, and ethics. 

A group comprising AltVest Capital, EasyEquities, 27four and RainFin has formally submitted an expression of interest to buy as much as a 40% stake in the commercial rights, according to a statement on AltVest’s website. This rival bid is for R6.7 billion, Business Day reported on Friday.