Will an inept SA Rugby result in catastrophe?

While many local rugby fans, players, supporters and administrators are preoccupied with the poor SA Super 14 form; are going through the motions of the Vodacom Cup; thinking about the British & Irish Lions tour starting the end of May and preparing a team for the Currie Cup in July, a more sinister and monumental dilemma lurks for SA Rugby.

This is the expansion of Super Rugby for the benefit of all South African rugby players and particularly whether the current SA Rugby administration is leading South African rugby down a mine shaft.

It defies logic that two individuals at SA Rugby should be so prescriptive on the expansion of the Super 14 without adequately caucusing all the affected rugby unions and stakeholders (SuperSport, SABC, government, stadium owners, tourism and trade), tabling a variety of future planning scenarios and outlining the advantages and disadvantages to growing the game. In a short 12 months, these two SA Rugby representatives at Sanzar today, will be no more and all of SA Rugby will be burdened, for the following 6 years, with the malaise of a short-sighted vision espoused just last week Thursday.

Remember SA Rugby have had 4 years to develop and craft a future competition and tournament model and instead are furtively introducing a model — in so clandestine and secretive a fashion — without any real consideration for the catastrophic consequences it will have on the existing 5 franchises and in particular the Lions, Cheetahs and Stormers.

Where is the transparency and where is the open-door policy and canvassing of opinions in structuring the Sanzar R3.5 billion broadcasting deal? There is none and because of this it smacks of reckless, negligent behaviour in which the directors of SA Rugby and Sanzar have failed in their fiduciary duty to their shareholders. A most serious indictment on corporate governance and flouting of company law in South Africa.

What most people forget is that section 424 of the Companies Act in South Africa is not limited to directors of the company but applies to “any person”, including an ordinary employee such as a financial manager even if he is neither a shareholder nor a director or officer of the company. The liability can also attach to a juristic person such as a company as in SA Rugby, provided it can be demonstrated that the so-called “controlling mind” of the company, its board of directors, as in SA Rugby’s board meeting last week, was aware of the activities. I submit that it will not be too difficult to demonstrate this and have this challenged by any one, or a couple, of the aggrieved rugby unions, which feel that SA Rugby and its directors have acted in a reckless and negligent manner to the detriment of its shareholders.

These same 3 franchises of the Lions, Stormers and Cheetahs, were on the ropes and in a financial quandary in February/March 2006 and it was their will and motivation to elect individuals who would sandbag and eliminate any future competition to their franchise. In short, the inclusion of a sixth South African franchise. The fear factor then was that any one of these three Super Rugby franchises would be relegated in either 2007, 2008 or 2009 and they could sit out the Super 14 for a year or maybe two and this would have catastrophic consequences for them, hence the Southern Spears were iced at a cost of R27.1 million to SA Rugby, with no thought of any future planning.

Along the way, since then, the R30 million provided by SuperSport was earmarked by SA Rugby for a high-performance academy and centre in Alicedale in the Eastern Cape. Plans were drawn up and still lie in wait for implementation. Then in 2007 SA Rugby were facing a R20 million loss, so the R30 million allocated for the academy and high-performance centre was dropped into the SA Rugby bottom line to declare a R10 million profit, and poof, gone, in a snap, was the funding for the academy, confirmed with the epitaph of a press release issued by SA Rugby that there is no funding available for the academy.

Now fast forward to Thursday last week when certain individuals at SA Rugby finalised their preferred option for Vodacom Super Rugby expansion at a meeting of the board of directors on Thursday. An SA Rugby press release declared:

“The board accepted a recommendation from Andy Marinos, the acting managing director of SA Rugby, on South Africa’s approach to the season structure of a planned new Super 15 competition to be introduced in 2011.

“This has been a long process with all partners having to compromise in some directions,” said Dr Jan Marais, the chairman of the board. “We are prepared to extend the Super Rugby competition into July for instance but the integrity of the Absa Currie Cup competition is not something that we can throw away.

“Major matches in the Currie Cup attract audiences that are larger than the equivalent Super Rugby matches and the tournament is the lifeblood of our 14 provinces. It is also very important to South African rugby that we secure a Super Rugby franchise for the Eastern Cape and we will be tendering for a sixth team if we reach agreement on future structures.”

The details of South Africa’s position will now be communicated to Australia and New Zealand as part of an ongoing series of discussions and workshops in the search for an agreed position.

The board also received an explanation on the Legacy project for the Port Elizabeth region as an outcome of the Castle South Africa 2009 Lions Series. A total of R2 million has been earmarked for the region to uplift rugby at grassroots level, although the specific project has not yet been finalised.

“SA Rugby is putting R1 million of the profits from the tour into the project and other money is being invested into other legacy projects around the country,” said Dr Marais. “Another R1 million is being invested by the British & Irish Lions into the Port Elizabeth project as part of an agreement we reached with government.

“This was all done amicably and as part of a negotiation around SA Rugby being granted special dispensation to be allowed to play the match between the Coastal XV and the Lions on Youth Day, June 16.”

Firstly, it is inconceivable to equate the magnitude of a R3.5 billion 5-year (2011-2015) Super Rugby agreement, with a single, paltry R2 million one-off grant to the Eastern Cape for development on Youth Day.

Secondly, the Coastal XV is NOT playing, but June 16 — Youth Day — is the date set down as the launch and roll out of the new 6th South African Super Rugby franchise, the Southern Kings. Has SA Rugby forgotten their pledge and agreement with government and the Eastern Cape unions? Either this is selective memory or the accuracy of SA Rugby’s media releases need to be checked, double-checked and triple-checked but more of that in the sequel.

Over the next 60 days SA Rugby together with their Sanzar partners, the NZRU and ARU need to resolve a Southern Hemisphere Super Rugby expansion plan conundrum that has eluded the three Southern Hemisphere administrators, who are on the eve of signing before June 31, another multi-year (5-year) broadcast agreement for Super Rugby.

Sanzar’s broadcasting deal, currently worth $323 million over five years, or R2.9 billion over 5 years, as in R581 million a year, expires at the end of next year, but needs to be renegotiated before June 31.

A broadcasting deal as lucrative as this, could be in jeopardy as the Sanzar officials are at odds as to how to attract spectators to the Super Rugby series following years of declining spectator audiences and TV ratings and each have their own ideas as to how to do this and by all accounts appear to be a country mile apart from each other in terms of resolving this.

The ARU under O’Neil wants to shed South Africa and invite Japan to participate in some Pacific Rim tournament, but his motives are about as transparent as mud in wanting to pursue the commercial sponsors in Japan. O’Neil quite simply wants the fifth franchise for Melbourne and has lobbied hard for this. The NZRU under Steve Tew have been conspicuous by their absence in tabling a workable solution, yet have inserted a NZRU project manager to oversee options, which is more than crafty, as they will have a hand in the authorship of the expansion plans.

Then there is SA Rugby, who this year and the next are the acting secretariat of Sanzar, have had four years to put together a solution or series of options, especially when the Eastern Cape have had no franchise in the history of Super Rugby. It is quite perplexing then and more than a concern that they are leaving it a little late in the day in terms of coming up with simple, conflict-free solution, especially given the siren call to deliver a Super Rugby franchise to the Eastern Cape and to expand Super Rugby with a broadcast product that will attract spectators to games and viewers to the telecasting of the Super Rugby matches.

Why then launch a Super Rugby franchise, the Southern Kings, on June 16 to play the British & Irish Lions, for one game only, with much fanfare and hoopla and not have a single fixture thereafter? Are we so delusional that one spends R15 million (R11.5 million gate receipts plus R3.5 million team assembly and staging) for the day, blow out of town and say, “See ya!”

Let’s assume then, hypothetically, that we were the secretariat of Sanzar and had from now till June 31 to present an expanded Super Rugby series to the broadcast sponsors, that also needed to include the Tri-Nations to 4-Nations, to include Argentinia, what rugby product or products could be considered for presentation in offering a new revitalised rugby inventory for broadcast television and sponsors and which will add value and grow spectatorship and viewing audiences:

1. We all agree that Super Rugby requires expansion and revitalisation due to declining spectatorship and viewership.
2. We agree that Sanzar Super Rugby must be played in 3 conferences of South Africa, New Zealand and Australia as the local derbies attract spectators.
3. We agree that a variety of options could be considered for expansion or non-expansion of Super Rugby. These are:

3.1 Super 14 remains as is, from 2010 to 2015, with 14 teams (5+5+4) with a promotion relegation system, for an extra franchise in each of the Sanzar countries to play the last-placed team of that country in a Tri-Game series. The three extra franchise-in-waiting teams play in a sub tournament 6 months prior to the S14. One could add anyone or Argentinia, the Pacific Islands, Japan, Africa or US to this.

3.2 S14 goes to Super 15 in 2010 to 2015 with 5 teams from each of the Sanzar countries with a promotion relegation system, for the extra franchise in each of the Sanzar countries to pay the last-placed team of that country in a Tri-Game series.

3.3 S14 goes to Super 18 in 2010 to 2015 with 6 teams from each of the Sanzar countries. No promotion relegation and all teams are included and none are threatened with relegation.

This then is what is so perplexing about SA Rugby backing a sterile Super 15 model, that goes nowhere, to roll out in 2011:

1. Everyone at the SA Rugby president’s council is obligated in terms of a June 8 2005 pesident’s council resolution, which, to date, has never been rescinded, to see that the Eastern Cape gets a Super Rugby franchise. This is a legal and binding agreement that has been tested in the Cape High Court. Exclusion of the Eastern Cape Super Rugby franchise will have dire consequences for SA Rugby.
2. SA Rugby has spent R27.1 million to keep the Eastern Cape at arms length of Super Rugby.
3. SA Rugby have vowed to government to include the Eastern Cape in Super Rugby in 2010. Note: They have to, lest they face the withdrawal of government’s support for their 2015 and 2019 Rugby World Cup bid, plus a massive claim and another publicly embarrassing legal lambasting.
4. With a relegation and promotion series, the Lions, Cheetahs & Stormers are in line to face relegation not only in 2010, but in 2011, 2012, 2013 and 2014, which will have catastrophic financial results if any of these franchises sit out for but one year.
5. There is general consensus at Sanzar that there should be 3 conferences, South Africa, Australia and New Zealand given that local derbies boost gate attendances.

Oy Vey!