Sport

Rugby

Southern Kings payment issues latest black mark in a sad litany of poor management

Southern Kings payment issues latest black mark in a sad litany of poor management
The Chris Burger/Petro Jackson Players’ Fund has helped over 500 injured players over the years. (Photo by Michael Sheehan/Gallo Images)

Earlier this week Southern Kings rugby players and staff were paid their April salaries 10 days late. It sent unsettling ripples through an organisation that has been a case study of how not to run a rugby club.

Controversy and rugby in Eastern Cape are natural bedfellows. A region with a rich rugby heritage and many leading rugby schools has failed to harness those gifts and produce a competitive professional team.

Poor leadership and petty squabbling have been at the heart of the union’s issues and failures and it’s no different in 2020. Since the game went professional in 1996, there has been a steady stream of administrators who have run EP Rugby like a fiefdom — To the detriment of progress, sustainability and performance.

From the incompetent to the potentially fraudulent, the union has suffered destitute leadership, which has resulted in poor on-field performances.

Last week, Kings staff were paid salaries 10 days late, a warning shot that it could be a repeat of 2015. Five years ago, the EP Rugby Union (EPRU) couldn’t pay wages and 36 Southern Kings players attempted to have the union placed in liquidation.

At the time, accumulated debts were calculated at R58-million and it was only the intervention of SA Rugby, with some assistance from the Nelson Mandela Bay municipality, which saved the union from bankruptcy.

After three years of administration by SA Rugby, which included a stint when 2019 World Cup-winning coach Rassie Erasmus and current Bok coach Jacques Nienaber took over coaching of the team, the Southern Kings were sold.

The Greatest Rugby Company in the Whole Wide World (GRC), a consortium of locally based investors Loyiso Dotwana‚ Gary Markson‚ Rory Stear‚ Kenny Govender and Vuyo Zitumane, took on the R45-million debt by buying a 74.9% stake in the Southern Kings. The EPRU holds the other 24.1%.

Dotwana, head of the consortium, said at the time: “We have followed a rigorous process to take control of the franchise but we have been single-minded throughout: that bringing ownership of the Southern Kings into local hands will be good for the team and good for the region.

“We are rugby people who understand the Eastern Cape, the passion of the people for rugby and just how much a successful Southern Kings team would mean to this region. We are focused and determined to deliver that success.”

That success looks a long way off as the team has failed to secure any marquee players to bolster its performances in PRO14, the European-based tournament it plays in.

With the Kings involved in the PRO14, the GRC saw potential revenue opportunities, but these have failed to materialise. The Kings get R24-million a year from SA Rugby disbursements from PRO14 broadcast rights. They also received a R6-million loan from the NMB municipality and have a three-year, R10-million sponsorship in place with Isuzu. It sounds like a healthy budget but, offset against the massive debt it had accumulated, much of the income is used to service those repayments.

The latest issue stems from tension between the EPRU and GRC, the joint shareholders of the Southern Kings club, over salary payments before debt repayments.

SA Rugby pays disbursements to its members – in this case the EPRU. The EPRU should immediately pass on that money to the Kings to service its costs. It is alleged that the money was not released, but the EPRU denies this claim.

“The Eastern Province Rugby Union would like to place on record that the union is very concerned about the current state of affairs taking place at the Southern Kings,” EPRU president Andre Rademan said in a statement.

“The failure to meet their salary obligation is not only unacceptable but also regrettable in these times that we are facing. Furthermore, the union has in no circumstances tried to block or encourage the non-payment to the Southern Kings from the municipality.”

It wasn’t an unreasonable expectation for the GRC, as the holding company, to put some of its own money into the club. But Dotwana admitted in an interview with Rugby365 this week that the company had not put any of its own capital into the Kings. It had rather tried to leverage its debt through third parties.

“The idea was for us to secure funding from a number of sources,” Dotwana told Rugby365. “However, with the relationship we have with the EPRU, it is difficult to secure the funding we require.

“When we took over the team, there was a loan of just over R40-million in favour of SA Rugby. That loan was to be paid back over an extended period.

“However, as a result of the problems we had with Eastern Province Rugby Union, we are struggling to secure funding.

“The players will be paid next month, the money is already in the bank. The salary reductions that have been agreed [as a result of the coronavirus] will help us in making payments.”

Given the already fragile nature of the sport due to a global suspension of all competitions and the fact that SA Rugby has budgeted for a R1-billion loss if no rugby is played in 2020, the Kings cannot expect another bailout. If the GRC and EPRU fail to find a way to keep the Kings sustainable, there are few places it can go for funding.

The team was already on shaky ground with PRO14 after a string of poor results. When the GRC bought their share of the Kings, the team had won only three of 44 PRO14 matches. Under GRC ownership, it won once in 13 games before the current season was suspended due to the coronavirus pandemic.

When the GRC bought their stake in the franchise, Dotwana told this reporter that PRO14 had issued the club with a thinly veiled threat: “Perform better or risk being ejected from the competition.”

“Obviously we are looking for a few big names to bolster the side, but the plan is steady growth and improvement,” Dotwana said shortly after buying the Kings. “The PRO14 organisation has raised concerns about the Southern Kings’ performances and value to the tournament.

“We are on a tightrope with PRO14 and we will respond to those challenges in a positive way. So, we will recruit some good players in the short term to improve our quality.”

Quality and stability have not been achieved and the signs aren’t good that they will in the current climate. DM

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