Kings-style bailout for SA franchises?
OPINION: Two media dispatches that reached us late last week had different tones, but carried the same basic message - a desperate need to find solutions.
SA Rugby and the Lions Rugby Company sent out media releases within 24 hours of each other - both that spoke of the repercussions of COVID-19 (or coronavirus) on the management, staff and players in the game.
South Africa, like many other countries, are in the midst of a lockdown and all rugby activities are suspended.
It is a time of uncertainty and doubt.
The SA Rugby statement had a more eupeptic undertone, where as that of the Lions was more saturnine.
The former spoke of how the South African rugby 'industry' has "come together" in the face of the threat of the coronavirus pandemic.
The latter made it clear we currently face "uncharted waters" in South African sport and spoke of the possible need for "cost-cutting".
Lions Chief Executive Officer Rudolf Straeuli also divulged a very important fact: a teleconference between SA Rugby and the franchises this coming Friday.
This may well be one of the most important meetings in recent times.
I return to the SA Rugby statement, which spoke of a "unique situation which has called for a unique response".
It is understandable that they are unwilling - or unable - to reveal details of the possible processes they are considering.
However, SA Rugby - having set a precedent by bailing out the Southern Kings with close to ZAR100-million during their second Super Rugby stint in 2016 and 2017 - may be asked to do the same to the four current Super Rugby franchises.
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Given the dire financial status of the Stormers, Lions, Bulls and Sharks, the absence of games to assist with their income streams may move some closer to the brink of insolvency.
SA Rugby may have to 'take an advance', so to speak, on next year's British and Irish Lions tour to ensure the financial stability of their four 'professional' teams.
The longer the lockdown and suspension of competitions drag out, the worse it will get for the franchises.
The Stormers, for example, have been cash-strapped for a couple of years now - having remained in a deep mire of financial problems since liquidation in 2016. Their planned development of the Newlands Stadium (to get a ZAR100-million cash injection) is moving ahead at a snail's pace.
The Blue Bulls Company sold a large chunk of their shares to Patrice Motsepe's African Rainbow Capital company – which saw existing shareholders, Remgro and the Blue Bulls Rugby Union, reduce their previously equal percentage of shareholding from 50 percent each to 37 percent and 26 percent respectively.
The Lions Rugby Company are still heavily reliant on the generosity of Altmann Allers, through his company Foxbell Investments. He has a 74.9 percent equity shareholding in the Lions Rugby Company (Golden Lions Rugby Union) and has pumped millions of his own money into the franchise.
The Sharks are equally reliant of Pay-TV station SuperSport, who previously had 25 percent equity shares, and bailed them out a few years ago and obtained more shares – taking it to 49.9 percent.
That brings us back to the need for SA Rugby - who, by all accounts, has 'underfunded' the franchises from the broadcasting revenue - to come to the party.
To paraphrase one insider that spoke to @rugby365com this past weekend, the B&I Lions tour next year will not be the 'cash cow' they are hoping for if the South African rugby economy is to collapse before then.
Even before the COVID-19 suspensions and the lockdown, the creaking franchises were struggling to slow down the talent drain.
The proverbial dam wall will break if the franchises are not given a helping hand.
The alternative is too ghastly to contemplate and now, more than ever, the game needs intervention, direction and leadership from SA Rugby.
As stated, SA Rugby's hands may be tied in terms of the information they can put out in the public domain, but whispers of disquiet are growing into a loud chorus.
It is not just in South Africa where teams (franchises and clubs) are feeling the pinch.
In the United Kingdom, where Exeter Chiefs is apparently the only profit-making outfit in the Premiership, clubs are going bankrupt at an alarming rate.
New Zealand and Australia this past week went public with salary cuts for players, coaches and staff.
Exeter Director of Rugby Rob Baxter this past week made a call to "put the domestic game first".
Maybe there is a method to his madness and - as selfish as it seems - he just wants to ensure the national team has a sound base from which to operate.
As discussed, the South African financial model is not without its challenges - even before the arrival of this virus.
In the absence of gate revenue, the possible absence of some broadcasting revenue, along with the possibility of season ticket and sponsorship refunds, the enormity of the cash crisis will soon dawn on all teams.
Salary cuts simply won't solve the problem on its own.
And the franchises simply don't have the reserves to carry the cost of COVID-19.
Decisive action is needed, otherwise it would be akin to SA Rugby listening to the band as the proverbial titanic sinks.
As stated earlier, SA Rugby has the precedent of bailing out the Kings and while they have not made any profits in recent years, helping the franchises stay afloat now by 'taking an advance', it will ensure they have a much better product to sell to the world next year.
It is common knowledge that players are looking for job security and while the current uncertainty won't see an immediate rush of players heading abroad, an implosion of the financial model in South Africa will have dire effects down the line.
One final thought.
Given the enormous PR value Siyamthanda Kolisi and his Springboks have for the country, maybe now is the time for SA Rugby to go to the government for some 'payback'.
A winning Springbok team and successful franchises will certainly lift the mood of a country that is dealing with so much more than just a virus.
Kolisi has shown himself to be a master of uplifting the downhearted - not just by bringing the Webb Ellis Cup to the Republic, but being a true ambassador for the game and his country.
The charismatic Bok skipper needs an appealing product to sell!
@king365ed
@rugby365com