Defend Truth

AMABHUNGANE

‘Technically insolvent’: Banyana Banyana exposes Safa’s house of cards

‘Technically insolvent’: Banyana Banyana exposes Safa’s house of cards
Illustrative image sources: Thembi Kgatlana of Banyana Banyana in the Fifa Women’s World Cup match against Italy at Wellington Regional Stadium, New Zealand, on 2 August 2023. (Photo: Lars Baron / Getty Images) | Safa House in Johannesburg. (Photo: Facebook) | iStock

The bonus impasse with the women’s national soccer team exposed an open secret: the South African Football Association is in a hole, financially and organisationally. Among the concerns are the R65-million purchase of a water park in 2015 that the association planned to turn into a football Centre of Excellence. Eight years later, Fun Valley has one astroturf pitch. It will cost R600-million to complete as envisioned.

Two weeks before the Fifa Women’s World Cup, Banyana Banyana players found themselves embroiled in a fight with the South African Football Association (Safa) over tournament bonuses – a dispute that highlighted the association’s financial woes.

The spark that lit this fiery impasse came from Fifa’s decision to revise its funding model.

Fifa is not only rewarding the association for their national team’s success, but also earmarked funds for the guaranteed direct benefit of the players.

The world football governing body set aside $30,000 (R564,000) for each player of the national teams that were knocked out of the group stage, with the money rising to $270,000 (just over R5-million) for the champions.

The associations themselves will be paid between $1.5-million (R28.2-million) and $4.2-million (R78.9-million). 

Banyana Banyana players were incensed by the fact that their contracts with Safa did not guarantee that the minimum $30,000 from Fifa would be paid to them.

Given that the women’s team consists mainly of amateur players, the World Cup is a rare and significant payday given the minimal training and match fees that Safa pays.

The World Cup-bound players also wanted Safa to pay bonuses in addition to guaranteeing the Fifa payments. These demands ranged from R400,000 if they got eliminated in the group stage, to R3.5-million for each of the 23-member squad if they won the tournament.

The bonus impasse lifted the veil on Safa’s financial struggles after Safa’s vice-president, Bennet Bailey, admitted that “Safa doesn’t have money” to meet the players’ demands – and it showed how past decisions, many laid at the door of Safa president, Danny Jordaan, are beginning to hurt SA football.

Bailey’s admission contradicted the association’s assurances in January this year by Safa’s chief financial officer Gronie Hluyo and former chief executive officer Tebogo Motlanthe, who told the media that Safa was not broke. 

Hluyo proudly declared that the association’s finances are “well and very much in order”, and boasted about the good corporate structures Safa had in place, arguing that those structures had ensured that the association was on a sound financial footing.

But behind closed doors, Hluyo has been raising the alarm for years.

In 2018, Hluyo warned Safa’s national executive committee (NEC) that its reserves sat at R12-million, far below the R100-million he believed it would need to be in a comfortable position.

Since then, Safa’s slim reserves have been eroded further so that Safa is now nearly R2-million in the red, according to its 2022 financial report, which noted that, as of 30 June 2022, “the Group’s total liabilities exceeded its total assets by R1,940,141 which may indicate an inherent concern on the Group’s going concern [status]”.

Following Banyana Banyana’s boycott of the send-off match against Botswana, Safa and sports minister Zizi Kodwa went cap in hand to the Motsepe Foundation to ask for financial assistance. 

The foundation donated R6-million to the association, allowing it to pay each player R230,000 in bonuses. National lottery operator, Ithuba, also pledged R2-million to the team.

While this was enough to get Banyana Banyana on the plane, the promising national side will return to an association plagued by financial and leadership fragility, highlighted by a series of questionable decisions.

Perhaps the most glaring example is the 2015 purchase of the Fun Valley Pleasure Resort, a budget water park south of Johannesburg. 

Not so Fun Valley

Fun Valley was envisaged to become a high-performance centre where national teams could prepare for events like the World Cup.

But eight years later, there is little sign of the world-class training facility, hotel and conference centre that was promised.

Although Safa says what is now dubbed the National Technical Centre hosts a number of Safa events, the association is still incurring the costs of hiring hotels for the senior national teams’ camps as well as for NEC meetings – even though the acquisition of the resort was sold as an investment that would limit these expenses.

From early on, there were concerns that Safa overpaid for what now feels like a sad hybrid of a faded pleasure resort and stunted sports centre.

When amaBhungane visited last week, the empty pool and the leaves covering the property made it look like a post-apocalyptic wasteland – far from a thriving football technical centre.

Safa agreed to pay R65-million in 2015, which former chief executive Dennis Mumble (who has since fallen out with Jordaan and the association) now suggests was hugely overpriced.

Safa has countered that it obtained a valuation at the time from [consulting firm] LDM for R63.7-million – but a year after Safa bought the resort, and after making minor improvements, Mumble commissioned a valuation of the property which put its worth at R44.5-million. 

“Based on our extensive research, this purchase price” – of R65-million – “appears to include a notable premium as it is significantly above current market levels,” Valuetec Property Valuations wrote in their assessment.

The Fun Valley purchase is the subject of an investigation by the Hawks.

Jordaan is named in a criminal complaint registered in May 2020 by former NEC member Malesela Mooka, with supporting affidavits submitted by Mumble and Lucas Nhlapo, former vice president and chair of the audit and risk committee.

Read more in Daily Maverick: Safa president Danny Jordaan submits warning statement to the Hawks after financial misdemeanour claims

Safa’s own ethics committee, chaired by retired judge Sisi Khampepe, is investigating the matter following numerous media reports alleging there were irregularities in the transaction. 

Fun Valley has been a millstone for Jordaan, who has been dogged by questions about his role in the acquisition, including having to deliver a warning statement to the Hawks in May this year.

How the deal came about

In December 2014, Jordaan told a gathered Safa NEC that the 2010 Fifa World Cup Legacy Trust had approved R82.7-million “for the purchasing of a property to start a national technical centre”. 

“Some of you saw the place already,” Jordaan told the NEC. “If you have not seen it, you can go and see it… As soon as the legal people and the technical people have finalised [the purchase] you will be invited to the opening of your technical centre.”

Mumble and Nhlapo claim that the NEC never properly discussed the purchase of this property, which would be partly funded by a series of grants from Fifa and partly funded by the World Cup Legacy Trust, where Jordaan was a trustee. 

“It was never a decision of the NEC to say that we are going to apply for money to buy [it],” said Nhlapo. “[Jordaan] just came to us and said, ‘The board of the Legacy Trust has approved this thing. Jerome [Valcke] has agreed. Let’s go and see.’ And then we saw that thing.”

Valcke was the then Fifa general secretary with whom Jordaan developed a close working relationship

Mumble, who signed off on the purchase while CEO, set out his version of events in 2020 in an explosive 71-page report titled Governance Challenges at Safa.

He wrote that no due diligence was conducted before a decision was taken to develop Fun Valley into a national technical centre. Mumble said that before he left Safa, he had “recommended that the Association reconsider its investment in this site because of the volatility of the area” – the site is close to an informal settlement – and the fact that it lacked basic services.

“For example, sewage is still manually pumped and transported off-site at a cost in excess of R120,000 per month due to a lack of sewage runoff systems linked to the city’s sewage system,” Mumble wrote.

“The area is not serviced by the major telecommunications companies, making it difficult to maintain basic communication connections on site. Cellular phone coverage is therefore hugely problematic… and led to national teams being reluctant to stay there as many players were assigned homework that required internet access.”

Mumble said he signed the agreement to purchase the land only after the NEC ratified the decision.

He also claimed he raised the issue of R65-million being more than the property’s value, but the seller told him he had negotiated the figure with Jordaan and he would not take anything less.

Nhlapo, in an affidavit seen by amaBhungane, also raised concern about an unexplained amount of R2.25-million in a report on Fun Valley provided to the NEC, which he speculated might have been an undisclosed commission payment. 

“No item was provided for that and no explanation was provided on the same report,” the affidavit reads.

Vehement denials

Jordaan has repeatedly and vehemently denied wrongdoing and suggested the allegations are “utter rubbish” and part of a campaign against him by bitter and disgruntled individuals who lost out in Safa elections, or whose employment at Safa was terminated.

In an 11 July statement, Safa said the media was being used to recycle “the same old false information that has been peddled in the past”.

It noted, “The Fun Valley/Safa National Technical Centre matter was previously dealt with in detail and exhausted. The funding was approved by the 2010 Fifa World Cup Board of Trustees. The valuation of the property was also commissioned by the same Board of Trustees and the valuation report was submitted directly to the Trustees before the property was purchased. 

“The purchase of the property complied totally with the governance requirements of the Fifa/Safa Legacy Trust. A subcommittee of the Trust considered the matter and a letter was written to Fifa to first raise the matter of funding.”

It said the contracts were signed after the Safa NEC approved the purchase following  an inspection: “We have all the documents in our possession… and we are happy to share all these in the courts.”

The wisdom of the purchase remains in question, however. 

To date, Safa has been able to add three pitches, including an astroturf. Change rooms have been designed but there is seemingly no money for construction.

In January, Safa announced that it would need an astonishing R600-million to complete the national technical centre at Fun Valley, including a hotel. But it is unclear where the money will come from as the Legacy Trust funds Safa has been tapping for years have finally run dry.

The faded legacy of 2010 

It was always Fifa’s wish that the 2010 World Cup would leave a lasting legacy for football in Africa.

To make that a reality, Fifa helped set up the 2010 Fifa World Cup Legacy Trust with a grant of R450-million to benefit the beautiful game.

The biggest beneficiary would be Safa itself: between 2012 and 2022, the Legacy Trust has cushioned the association’s finances, injecting more than R320-million into its ailing balance sheet.

But what was intended to be a long-term, self-sustaining fund has now run out of money and ceased operations in February 2022, with potentially serious consequences for Safa’s sustainability.

Read more in Daily Maverick: Secrecy cloaks 2010 Fifa World Cup Legacy Trust after Danny Jordaan may have been caught in a lie

Safa’s 2022 financial report hints that the future could be bleak for the association if it does not attract more sponsors soon: 

“The 2010 Fifa World Cup Legacy Trust ceased its operations and this will have a negative impact on the grants revenue,” Hluyo, Safa’s CFO, wrote in the association’s 2022 financial report. 

“The grants from the Trust were instrumental in ensuring that our development programmes proceed without any financial hindrance and thus ensuring their success. The success of the junior national teams and the huge strides achieved in the development of women’s football are prime examples of the Legacy Trust funding’s impact. However, concerted efforts are being made to ensure that this funding gap is closed in the shortest possible time.”

The association recently took a $1.5-million (R27-million) loan from Fifa, to be repaid with future grants Safa receives from the Fifa Forward Programme, which is meant for football development. 

This decision was ratified at an NEC meeting in November 2021: “It is our money,” Mxolisi Sibam, Safa NEC member and chairman of the finance and procurement committee, was recorded as saying.

“The Fifa loan is more like requesting that belongs (sic) to you in future, we must make the repayment by June 2026.”

Safa’s precarious financial state is underlined by the fact that without the Covid relief loan of R24-million and the last of the Legacy Trust grants worth R22-million, Safa would have been nearly R50-million in the red.  

The 2022 financial report notes, “For the first time in the recent history of the Association, the Association cash flows from operating activities were negative. The strong cash position from 2021 cushioned this negative, this was supported by the front loading of the grants from Fifa which made it possible for the Association to close the financial year with a positive cash balance.”

In an analysis written for Mumble’s football website, former Safa acting CEO Gay Mokoena pointed out that expenses are rising faster than income.

“The [$1.5-million] loan from Fifa” – which will be repaid with funds earmarked for football development – “was used to pay creditors.

“[D]espite settling some creditors, the creditors have started to increase again… Safa is sitting without cash again. A rough estimate shows that about R15-million was used to settle creditors and about R10-million for congresses and litigation. The loan money was used up in no time.”

“Safa has built up a cash-flow deficit for many years,” Mumble said in an interview with amaBhungane.

“And that house of cards is going to come tumbling down because, habitually, Safa’s income doesn’t equal its liability. It owes more than it has in cash. What Safa does is that it relies on future payments, on future revenue, to cover and get to a balanced sheet. There’s always a practical deficit, you might be running a cash-flow surplus for a particular year but you are going to have an accumulated deficit because your liabilities don’t match your assets. 

“This makes Safa technically insolvent.”

Safa has put a brave face on the situation. In a lawyer’s letter to amaBhungane in January, the association argued that its financial performance was cyclical, moving in and out of profit and loss depending on the Fifa and African competition calendar and the revenue such competitions brought in.

In notes to the financial statements, it remained upbeat: “The Association has long-term sponsorship contracts with most of its sponsors and this assures it of future revenue inflows… The Association is also guaranteed grant funding from Fifa and CAF.” 

It added, “Engagements with existing sponsors and potential sponsors, with a view of securing additional revenues, have commenced. The Association believes that it will achieve some phenomenal success within a short period of time.”

In the tent and out

But the cost of keeping the fractious football community together is also rising, especially given Jordaan’s allegedly imperious management style, captured in former Banyana technical director Fran Hilton-Smith’s tart observation that, “his style of ‘leadership’ consisted of shouting a lot and trying to intimidate people”.

The 2022 financial report revealed a growing list of legal disputes.

It noted, “Ms Ria Ledwaba is disputing the outcome of the 25 June 2022 Safa elections and has filed court papers in this regard. She wants the election results to be nullified and the elections to be re-run. The Association is defending this matter. 

“The Association is a defendant in various labour cases relating to alleged unfair dismissals by its former employees. These cases have not been finalised.

“Mr Gay Mokoena, a former Vice President of Safa, is suing the Association for allegedly being unlawfully removed from his former position. He wants to be reinstated as a Safa Vice President and a member of the NEC…

“Mr William Mooka, a former member of the Association’s NEC, is suing the Association for allegedly being unlawfully removed from his former position. He wants to be reinstated as a member of the NEC.” 

More recently, in May this year, CEO Tebogo Motlanthe resigned with immediate effect, with various media reports saying he quit because he felt he was nothing but a “glorified clerk” and his “constitutional right to privacy was tampered with”.

Later, in a stilted media briefing presided over by Jordaan, Motlanthe denied there was any such discord, before leaving without taking any questions.

But perhaps the most significant indication of the cost of keeping people in the tent is the bloated NEC.

Ballooning NEC size and costs 

To understand how Safa finds itself in this position, we have to go back to 2009 when the association elected Kirsten Nematandani as its president on the eve of the 2010 Fifa World Cup.

Those elections marked the rise to power of a group that called itself the Football Transformation Forum (FTF), headed by Jordaan, who was elected Safa president in 2013. 

FTF’s manifesto promised to reduce the size of the NEC, which sat at 39 members at the time. 

A decade later, Safa’s NEC has risen to 47 members while the association’s staff complement has drastically shrunk from around 200 in 2013 to 59 in 2023. 

The NEC is effectively the association’s board and its highest decision-making body. 

Between 2012 and 2022, the Safa NEC cost the association more than R120-million. This included hosting NEC meetings, accommodation and transport for members from outside the hosting province, as well as covering honorariums paid to each NEC member. 

These funds could have been slashed if Safa followed Fifa’s instruction in 2012 to reduce their 39-member NEC. Initially, Safa looked like they would heed Fifa’s call and, at an extraordinary congress in 2015, resolved to reduce the size of its NEC to 20. 

But this decision was never implemented. 

Jordaan and the current leadership, who swept into office with promises to downsize, now characterise Fifa’s directive as an attempt to prescribe to or destabilise the association.

Former NEC members who spoke to amaBhungane alleged the structure had been allowed to grow because that is where Jordaan consolidated his power. 

Eighteen of the 47 current NEC members are also presidents of their regions. The regions vote every four years to elect the association’s head, and for the past 10 years, the regions have elected Jordaan.

Former vice-president Nhlapo alleges some NEC members are “not clean”. 

“Some have criminal cases and others don’t qualify to be there in terms of the initial criteria we put up for what it takes to sit in the NEC,” he told amaBhungane.

The Safa NEC members who sit on the national list did not respond to wide-ranging questions sent to them by amaBhungane in December.  

Only Gerald Don responded, but not to the questions, instead writing, “Dear Faceless. I don’t know you. I don’t know how you got my personal information… without my consent. I’m not the spokesperson for Safa. Please do not engage me again.” 

Former Safa chief executive Mumble claims a situation has been created where serving in the NEC is seen as a lucrative personal benefit, complete with honorariums and car loans. 

Fight for survival

Despite the swirl of allegations and media scrutiny, Jordaan has maintained a strong grip on the association, winning the 2022 election by a landslide. 

His tactic has been to issue affronted denials and move on, backed by an aggressive legal strategy.

On 7 July, Safa announced it had taken legal action against forensic investigator Bart Henderson, who started a petition calling for the suspension of Jordaan and Hlunyo pending the outcome of the Hawks’ investigation. 

Henderson has called for a forensic investigation into Safa and the 2010 Fifa World Cup Legacy Trust. In particular, he flagged the purchase of Fun Valley, calling for its full review. 

Safa will rely on Banyana’s good showing at the World Cup to keep difficult questions at bay.

It may work – until the next crisis. 

Banyana Banyana beat Italy 3-2 to advance to the knockout stage of the competition. They face the Netherlands on Sunday. DM

Gallery

Comments - Please in order to comment.

  • Sydney Kaye says:

    It’s hardly a recent exposé of SAFA any more than the famous TV interview was a recent ecposê of Eskom. DM has been writing about the crooks running these organisations for years.

  • Jane Crankshaw says:

    And so the steal continues until there is nothing left to steal!

  • Grumpy Old Man says:

    I am not sure if anyone remembers Fikile Mbalula (when he was head of the ANC election campaign) wanted to ‘deploy’ Danny Jordaan as the Mayor of the Nelson Mandela Bay Municipality?
    I don’t want to get into conspiracy theories but honestly believe one of the reasons for Jordaan’s survival is political protection
    So many sporting bodies in this country have come under political scrutiny & criticism – but not SAFA!
    If ever there was an organisation that used its income for the sole benefit of its own executive this has to be it. The management & beneficiaries of their finances are exactly the same as we see in so many of our municipalities.
    Jordaan should be in gaol. If it were left to me I would hang him for treason for the damage he has done to South African football

  • Ernest Esterhuizen says:

    Jordaan is a mini anc. They hold onto power because of their corruption. Growing the nec to 47 means that he has ensured that he does not get unseated – very much like the anc intimidate their cadres to vote even if it is wrong or unethical. They behave above the law. What’s ever happened to the rape charges against Jordaan?

  • William Kelly says:

    What does Jordaan’s personal balance sheet look like? The guy has been dodgey since, like, forever.

  • Johan Buys says:

    the ladies should open a theft charge against Jordaan if they do not get the money that FIFA says is direct for the players

  • Gregory Scott says:

    SAFA’s woes are a clear indication that they cannot run a spaza shop let alone make an investment decision and also refrain from putting their hands in the till.
    And how they can tell lies with such a straight face

  • David Amato says:

    Cry the beloved game. Fun Valley is a disgrace, it still open to the public, you can’t have it both ways. Either it is technical center or on water park, pick one.

  • Epsilon Indi says:

    And why are they in financial trouble ? For the same reason so many corrupt South African organisations are in financial trouble, control has been turned over ( more likely forced over ) to certain groups of South Africans who have neither the ability to the honesty to run organisations such as SAFA ( note the capitalised acronym as required by the rules of the English language ).

  • jcdville stormers says:

    What say Danny Jordaan?Stealing is a national sport

  • David Farrell says:

    What has jordaan contributed to football in South Africa, he is simply there to line his pockets, he runs it like his own little back yard business, but the cronies keep installing their emperor

Please peer review 3 community comments before your comment can be posted

X

This article is free to read.

Sign up for free or sign in to continue reading.

Unlike our competitors, we don’t force you to pay to read the news but we do need your email address to make your experience better.


Nearly there! Create a password to finish signing up with us:

Please enter your password or get a sign in link if you’ve forgotten

Open Sesame! Thanks for signing up.

We would like our readers to start paying for Daily Maverick...

…but we are not going to force you to. Over 10 million users come to us each month for the news. We have not put it behind a paywall because the truth should not be a luxury.

Instead we ask our readers who can afford to contribute, even a small amount each month, to do so.

If you appreciate it and want to see us keep going then please consider contributing whatever you can.

Support Daily Maverick→
Payment options

Daily Maverick Elections Toolbox

Feeling powerless in politics?

Equip yourself with the tools you need for an informed decision this election. Get the Elections Toolbox with shareable party manifesto guide.