Total Zeltdown: WP Rugby placed under administration by Saru following leadership collapse
The Western Province Rugby Football Union has been placed under administration by Saru after years of governance failures and a leadership vacuum.
The collapse of the Western Province Rugby Football Union (WPRFU) unfolded like a slow-motion car crash but, eventually, the union hit the wall. On Tuesday the WPRFU was placed under administration by the sport’s governing body SA Rugby (Saru).
It was a drastic and inevitable step, but Saru was left with no alternative as the union under president Zelt Marais faced hundreds of millions of rands in lawsuits and had cash flow problems.
Former Saru chief executive Rian Oberholzer, who is managing director of a successful sports marketing, consultancy and events business these days, has been appointed as administrator.
For a union as rich and powerful as the WPRFU once was, to be placed in what is effectively business rescue, underlines how poorly it has been managed for several years. It is the rugby equivalent of Manchester United or Liverpool facing collapse.
President — well, ex-president — Marais, has in recent months, tried to centralise his power as the union collapsed around him, mostly through his many poor decisions.
He unconstitutionally appointed a “war room” of hand-picked people to solve the union’s massive challenges. The irony was that most of the problems were created on his watch.
Under Marais, the union has gone from one crisis to another and is now at the point where it faces financial ruin because of a damages lawsuit of more than R500-million from property investment partners Dreamworld Pty Ltd.
Title sponsor DHL was unhappy with the ongoing issues at the union and threatened to withdraw its R60-million backing of the team per year.
Watching on as Marais and his enablers bungled deal after deal, Saru eventually reached a point where they could not in good conscience hand over an annual broadcast rights disbursement of close to R35-million any longer.
All official structures at the WPRFU (those that remained) will be removed under clause 29 of the Saru constitution, and every decision will be taken by the administrator. Oberholzer’s sole mandate is to ensure that the WPRFU stabilises and has steady leadership before it can be freed from administration.
Clause 29.1 of Saru’s constitution gives the mother body the right to take over the running of a union if it fails to meet several criteria.
The verbose legalese of the clause states: “All unions have to conduct their business affairs in such a way that, at all times, they are in a sound financial position, comply with the laws of the Republic and adhere to the requirements of good governance inter alia as expounded in the King Report on Governance for South Africa, 2009 (‘the King Report’) and the King Code of Governance for South Africa, 2009 (‘the King Code’) which came into effect on 1 March 2010, and to ensure that their commercial companies, if any, similarly conduct their business affairs in such a way that, at all times, they are in a sound financial position, comply with the laws of the Republic and be guided by the requirements of good governance.”
On every count in that clause, the WPRFU and, by extension, its professional arm, Western Province Professional Rugby (WPPR), failed.
Saru president, Mark Alexander, said the decision had been taken with extreme reluctance. Saru’s executive committee (exco) finally gave approval for the takeover after weeks of gathering exhaustive and expensive legal opinions and advice.
“We had engaged with the WPRFU over a number of months on the challenges the organisation faced and tried to assist them in finding solutions,” said Alexander.
“We attempted to partner in a joint oversight committee but were frustrated in our attempts to receive accurate information and engage constructively.
“However, the Union has regressed in its attempts to extricate itself from those challenges and we could no longer stand by. This is very much the last resort, but it had become apparent that the union’s leadership was incapable of putting in place the actions to regularise its position.
“Several of the union’s stakeholders have contacted our offices to express their dismay and we are aware of the public alarm.
“Clause 29 of the Saru constitution charges that all unions have to ‘conduct their business affairs in such a way that, at all times, they are in a sound financial position, comply with the laws of the Republic and adhere to the requirements of good governance’.
“It is Exco’s view that WPRFU has failed that test and we could no longer distribute SA Rugby income in that knowledge. On that basis, we have taken this decision with a heavy heart.”
The WPRFU was unable to make a statement because it no longer operates as a separate entity. Marais, and what remained of the WPRFU board and exco have been removed. Oberholzer, as administrator, has complete control.
“Clause 29 gives us the authority to remain in administration until the union’s affairs are stabilised,” said Alexander. “It is not possible right now to put a timeline to that — although it is our intention and desire to make this process as short-lived as possible.”
Traditional power hollowed out
The WPRFU has traditionally been at the centre of South African rugby, producing the most Springbok players and having the largest fan base.
It will now have no voting rights at Saru, joining fellow miscreant union Border under administration. It’s a spectacular fall from grace for a once-great union, which still has an uncertain future because of the legal problems it faces.
Marais has been accused by many people, from former board members to potential investors, of being incompetent, “secretive” and “dictatorial” and only concerned with his own narrow self-interest.
Marais scuppered a deal with New York-based MVM Holdings to buy a majority equity stake in WP Professional Rugby (WPPR), which runs the professional arm of the game. Despite a $6-million (R100-million) offer, Marais kept moving the goalposts. MVM eventually moved on and bought a 51% stake in the Sharks.
Michael Yorkmark, a member of the consortium and president of talent management company Roc Nation, which has subsequently bought a stake in the newly formed United Rugby Championship (URC), was scathing after his dealings with Marais.
“MVM is a very deep-pocketed investment group that has a South African lead investor,” Yormark told Daily Maverick in November 2020.
“We are not only willing to make the purchase, but also to invest significantly more resources in bringing the best talent in the world to run and operate the franchise.
“MVM also wants to develop an infrastructure that can support the players and which can provide an incredible fan experience in Cape Town and around South Africa. But Zelt won’t listen. He simply won’t listen.
“The consistent fabrication of the deal structure which has been presented by Marais in the media is frankly just insulting.
“We agreed to all the terms — he (Marais) keeps changing them. He keeps removing the clause about a controlling stake, which is non-negotiable for us. Every time we sent back the heads of terms, they (he) changed the term sheet.”
Last Friday, 8 October, four independent WP board members resigned, resulting in the last official management structure at the union folding.
That decision by Janine Myburgh, Melene Rossouw, Solly Moeng, Sabelo Mzanywa was the final straw for Saru, which closely followed Marais’ ousting of another four board members earlier that week.
Their parting shot, in a collective resignation letter, was telling:
“No one who has been closely following the developments within Western Province Rugby over the past year can deny that the deteriorated environment within the management of Western Province Rugby has been caused by your (Marais’) secretive, dictatorial, and relentlessly conspiratorial management style and conduct over time,” the letter stated.
“Your recent actions to completely disregard existing management structures at WPRFU and to centralise all decision-making authority in your hands have come after a long series of actions by you to undermine the good work we have tried to do to help Western Province Rugby stand on its feet again, even despite the impact of Covid-19 lockdowns.
“Furthermore, many decisions you have single-handedly taken over time without consultation — or when you chose to undermine even collective decisions taken in your presence — have placed the material conditions of the Union (WPRFU) into jeopardy.
“Such decisions, utterances and actions have also, by extension — because the two organisations are linked — further impacted directly on the viability of the Company (WPPR) to stand on its feet again.”
Ebrahim Rasool, who was chairperson of the WPPR board until the Saru intervention, supported the decision.
“This decision is regrettable because there was sufficient opportunity to resolve the financial issues at the core of WP Rugby, but instead the situation was worsened through brinkmanship,” Rasool said.
“It is now clear that there was no alternative left for Saru but to act decisively, and I am relieved that they did. The majority of the board directors of WPPR were painfully aware that our fiduciary responsibility was leading us to exercise the option of business rescue, which we would have had to decide on Friday, 15 October 2021.
“But even there the brinkmanship of suspending five exco members meant that the board’s quorum was dealt a fatal blow, such that four independent directors chose to resign rather than having their integrities compromised.
“Saru’s intervention comes as a vindication for those directors as well as the exco members who chose to speak up and not condone the wrong they saw.
“WPRFU has failed the test of good governance and financial prudence and we will cooperate with Saru completely to revive a proud union and a rugby lovers’ region and restore respectability and integrity.”
Marais is now gone. That’s the first step. But saving the union is a long way from assured. DM
This article has been updated with comment from Ebrahim Rasool.
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