On Tuesday morning, Southern Kings players and staff officially received the news they had been dreading. There will be no more rugby in 2020 for the ailing club because there is not enough money to fund the cost of playing in a domestic competition.

The Kings have been limping along under the weight of years of poor management and debt, which culminated in SA Rugby putting the club into administration in June this year – for a second time in five years.

From the unchecked spending and financial mismanagement under former Eastern Province Rugby Union (EPRU) president Cheeky Watson, to the equally disastrous nine-month ‘ownership’ by a private equity consortium, the Kings are a case study in how not to run a business.

“This may not be a popular decision, but in the current circumstances it is the right decision.”

“Following several weeks of interrogation of the Kings’ financial state of affairs, we were left with a straightforward choice,” said Southern Kings board chairman and current EPRU president Andre Rademan.

“We could opt to field the Kings in the domestic competitions mooted by SA Rugby for the sport’s post-lockdown resumption if we so wished.

“If we did so, it would require additional loans to the Kings, or extra investment from the shareholders to the tune of R6.5 million, which would add to the organisation’s existing substantial debt.

“However, as there was no contractual requirement for the Kings to resume short-term participation in the PRO14 competition, and because of air travel restrictions – and as the Kings had no other commercial commitments to honour – the most prudent decision was to withdraw.

“This may not be a popular decision, but in the current circumstances it is the right decision.”

Death of a King

The reality, though, is that the Kings will never come back from this. The professional team is dead in the water and, while the decision to withdraw it from a proposed post-lockdown eight-team Currie Cup will enable salaries to be paid until the end of the year, the hard truth is that there is no future.

Senior professional rugby in the Eastern Cape is in all likelihood on its last legs as Covid-19 has forced the entire rugby industry into severe cost-cutting measures to stay afloat. Costly projects such as rugby teams that cannot conduct their own affairs profitably will be cut from the system. That is the new reality.

“We have been told that we will be paid until the end of the year, which is why they (the board) have made this decision,” a Kings squad insider, who didn’t want to be named, told Daily Maverick.  

“The biggest issue we face is, the question of ‘what next’? The board cannot give us answers at all. They won’t tell us if we’re in PRO14 and, if not, what is the next competition we’re in? There is so much uncertainty.

“Inevitably it is going to lead to a lot of players trying to find career paths elsewhere, because what are the options? Rugby players just want to play rugby and we don’t know when and where that will be.”

The short answer is, never and nowhere. The Kings are dead. “That’s the permanent end of them,” a well-placed source confirmed to Daily Maverick.

In June SA Rugby took back a 74% stake in the Kings, acquired by the Greatest Rugby Company in the Whole Wide World (GRC) in March 2019. The GRC failed to meet its financial commitments relating to the acquisition of the shareholding. 

GRC, a consortium of locally based investors chaired by Loyiso Dotwana, took on the Kings’ debt. They fell foul of rugby’s tough trading environment, a situation worsened by the Covid-19 pandemic and their own management and operational shortcomings. 

The deal was structured in such a way that GRC would service the Kings’ debt of R45-million in annual R5-million installments. Sponsorships and disbursements from SA Rugby’s broadcast rights (approximately R34-million) would service the annual running costs of the team. 

But GRC missed its first payment last September and was given an extension by SA Rugby until February 2020 to honour its commitments. They missed it again. At the end of April, players and staff at the Kings were paid salaries 10 days late because the GRC required an emergency loan from the Port Elizabeth municipality to cover those costs. The growing picture of financial instability was enough to force Saru’s hand. 

“As a board, we had been considering further short-term contracts to see the squad through to the end of the year”

Tuesday’s decision was supported by the executive committee of the EPRU and SA Rugby – the two shareholders in the Kings’ company.

“This is obviously very disappointing news for the players and management who, like all rugby professionals, were desperate to resume playing,” said Rademan. “But the board believed further investment in 2020, with zero commercial return, would be reckless in the extreme.”

Rademan said that with ongoing uncertainty about competition formats and travel restrictions into 2021, the board would now take time to reconsider its options and the on-going financial challenges.

“As a board, we had been considering further short-term contracts to see the squad through to the end of the year,” he said. “But it became apparent that we would, for want of a better phrase, be throwing good money after bad in the current global environment.

“We now have time to consider what is the best way forward for rugby in the Eastern Province in this fluid and financially challenging environment.”

Southern Kings timeline of struggle

• November 2010: SA Rugby announces intention to field the Southern Kings in Super Rugby in 2013.
• February 2013: Kings compete in the Super Rugby competition as one of five South African teams.
• August 2013: Kings lose place in Super Rugby in a two-legged play off against the Lions.
• November 2015: SA Rugby takes control of the franchise when EPRU, to whom the operation of the franchise had been granted, ran into financial trouble.
• February 2016: Kings return to Super Rugby when the competition expands to 18 teams.
• April 2017: SANZAAR announces that Super Rugby will contract from 18 teams to 15 teams in 2018.
• September 2017: The Kings (and Cheetahs) are included as South Africa’s groundbreaking representatives in the PRO14 competition.
• January 2019: GRC acquires 74% shareholding in the franchise; EPRU retain a 26% shareholding.
• June 2020: SA Rugby resumes control of the Southern Kings following the failure of GRC to meet contractual commitments.
• August 2020: Southern Kings withdrawn from potential domestic competition resumption because of ongoing financial challenges. DM