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Return of crowds vital to save rugby from bankruptcy in...

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SPORT IN ICU

SA Rugby: Return of crowds vital to save the sport from bankruptcy in 2022

Leolin Zas of the DHL Stormers making a linebreak during the United Rugby Championship match between DHL Stormers and Zebre Parma at Danie Craven Stadium on March 13, 2022 in Stellenbosch, South Africa. (Photo by EJ Langner/Gallo Images)
By Craig Ray
15 Mar 2022 0

SA Rugby will take the opportunity in front of a governmental sports portfolio committee to lobby for the return of crowds on Wednesday.

SA Rugby has done a remarkable job in keeping the sport afloat over two Covid-racked years, but it won’t be able to survive another year like the previous two.

That is the dire warning from the governing body, which it will take to Parliament when it does a regular update to the portfolio committee on sport.

“SA Rugby has been in ICU for the past two years due to the cancellation or prescribing of revenue-generating events,” SA Rugby’s presentation warns.

“Income in 2020 was 39% down on 2019. 2021 saw some recovery led by broadcast revenues but we are still 21% down on 2019 income levels.

“It’s now two years and two days since a South African rugby team was last able to sell unrestricted tickets. The professional game – and by extension all rugby – is in extreme crisis. Essential restrictions must be lifted to stop the haemorrhaging.”

In 2019, SA Rugby’s combined broadcast (R752-million) and sponsorship revenue (R347-million) was R1.1-billion. In 2020, because of the suspension of tournaments, tours and competitions due to the global pandemic, income plummeted to R668-million (R411-million broadcast and R257-million sponsorship).

In 2021, there was a slight recovery due to the British & Irish Lions tour and the resumption of Springbok Tests, despite the fact that they were played without fans.

Revenue recovered to R867-million from broadcast (R649-million) and sponsorship (R218-million) income in 2021, which remains R233-million off 2019 earnings.

“The Series against the British & Irish Lions in 2021 was completed, but without any spectators,” the report reads. “It was supposed to generate cash reserves to weather storms such as Covid-19.

“It helped, in that we will break even for 2021, but our reserves remain at zero. Repeating the ‘no-crowd’ policy of 2021 will lead to the sport bankrupting in 2022.”

In 2020, SA Rugby shaved R1.2-billion off its budget through cancelling competitions, cutting or mothballing development programmes, slashing salaries and shelving strategic campaigns. While it was an effective short-term measure, it’s an unsustainable operational approach.

Currently there is still a restriction of 2,000 fans in stadiums for games. Despite repeated lobbying by rugby and other sporting organisations to the government, the sports ministry appears unwilling, or incapable, of revising this policy.

SA Rugby, in a move that exposed its growing frustration with the limited-fan policy remaining unmoved for months, has started selling tickets for the Sevens World Cup in Cape Town later this year, and Springboks Tests, as if stadiums will be back to capacity then.

“The time has come now for the government to open the stadiums,” SA Rugby president Mark Alexander told Sport24 this week.

“We need to save livelihoods now. Considering all the financial pressure we are all under from all parts of the country; we understand that government can’t fund (sports) organisations to the levels required to remain relevant.

“But around the world, all the stadiums have opened up and there are no restrictions about doing PCR tests and all that stuff. And why are there double standards?

“In December, more than 100,000 people went through the doors at the Waterfront – without showing vaccination certificates – but you build all these regulations around sport.”

While rugby will plead for the return of fans, the South African rugby industry has collectively been reviewing the contracting model for players in the country. At this stage the current salary cap, which limits franchise teams to a maximum annual wage bill of R60-million, is under discussion.

Each of the 14 provinces has been submitting proposals over salary caps and contracting systems. 

Clearly some franchises would like to see the cap limit raised, some would like it to stay the same and others would like the cap scrapped altogether. But all these discussions cannot happen in isolation of the situation in the country, and the fact that stadiums remain largely empty.

URC finally resembling the tournament it was meant to be

On the field, there have been positive developments in terms of the resumption of competitions. The Currie Cup and the United Rugby Championship (URC) are running concurrently and with success.

The URC is the flagship of the provincial game and a vital potential earner for SA Rugby while the mother body is also close to finalising the sale of an equity stake to CVC Capital Partners.

CVC bought a 14.3% stake in Six Nations for a reported £365-million last April. It guaranteed a cash injection of £95-million for the Rugby Football Union (England’s governing body) over the next five years and about half that for the Welsh, Irish, Italian and Scottish rugby unions. France will also receive £95-million.

The Six Nations purchase was CVC Capital Partners’ third acquisition in European rugby along with portions in URC and the English Premiership, in which it holds stakes of 28% and 27% respectively.

With shares in three high-profile rugby properties totalling more than £700-million, CVC’s cash will strengthen those leagues immeasurably. SA Rugby will benefit in terms of cash flow with CVC.

The URC is finally starting to feel like the tournament organisers envisaged after two years of Covid-related setbacks.

Last weekend, South Africa’s four leading franchises hosted four overseas teams in the URC for the first time. The Bulls, Lions, Sharks and Stormers all won their matches, which was a good outcome.

The touring teams – Munster, Cardiff, Zebre and Scarlets – were under strength with many players on Six Nations duty, but at least the cross-hemisphere fixtures are happening.

It was the first local glimpse of the potential of the URC and the possibilities it holds as a tournament with mass appeal and exciting new contests.

But the vast empty seats were also a reminder that the players and administrators can do their bit, but without the backing of the national government and some sensible decisions over fans in stadiums, the sport still faces the prospect of collapse. DM

On Tuesday, the Government extended the national State of Disaster for another month  – effective till April 15, 2022.

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