At Tuesday’s Annual General Meeting in Cape Town, member unions were informed that the South African Rugby Union reported record broadcasting and sponsorship revenues for 2022 but had also reported a minor deficit due to its significant investment to enter northern hemisphere competitions.

The Group’s pre-tax deficit of R2.62 million included expenditures of R330 million attributable to participation in the Vodacom United Rugby Championship and European Professional Club Rugby (EPCR) competitions. The Group’s revenues significantly increased to R1.54 billion (2021 – R1.28 billion) primarily due to increases in broadcasting (R828 million from R654 million) and sponsorship (R396 million from R222 million) income. The higher value placed on the 2022 Springbok calendar, which includes a home series against Wales as well as a full Castle Lager Rugby Championship schedule, contributed to the increase in broadcasting revenues

CEO Rian Oberholzer cautioned that without a visiting Test team from the northern hemisphere and with a condensed Rugby Championship schedule in 2023, broadcast revenue would be significantly reduced. Revenues from the broadcasting were subtracted from the participation fees that SA Rugby had to pay to play in European rugby.

Oberholzer stated: “As a founding member of SANZAAR, we received nett income from Vodacom Super Rugby. Currently, as a result of our participation costs, we are a nett contributor to European club rugby, with the goal of returning to receiving nett income in the near future. “In the past, SA Rugby might have received about R160 million from SANZAAR. However, the situation we are in now requires us to pay our way into a business that is already established. These participation costs, along with the obligation to cover all international travel and lodging expenses for the SA teams, totaled R330 million in 2022.

The SA Rugby president, Mr. Mark Alexander, stated: “Even though the financial aspect of this pathway is hurting us in the short term, the continued investment in the Vodacom URC and EPCR competitions is essential as we carve our way to full membership and shareholding.” Oberholzer forewarned SA Rugby that until the successful conversion to shareholder status at the end of the 2024-2025 season, it would have to maintain austerity measures in its other activities.

In addition to the return to full rugby activity in 2022, there was also a return to pre-COVID levels of investment in the Springboks and other national teams (R347 million from R280 million), with additional camps and Rugby World Cup warm-up matches for XVs and sevens women’s teams, Junior Springbok men’s overseas participation, Under 18 series participation, among other investments within the department.

The Vodacom URC and EPCR are included in the operational and commercial delivery costs for tournament commitments, which also increased from R292m to R429m. The cost of player insurance and image rights also increased significantly, from R73 million to R104 million.

Springboks player Eben Etzebeth in action during Round 6 of the Rugby Championship 1. EPA-EFE/DAVE HUNT

According to Mr. Alexander, “each of the past three years has brought with it brand-new, unprecedented challenges that called for creative efforts to resolve.” “The very future of the game was at stake, and as we have seen before during difficult times in rugby, it brought out the best in many at the front lines of the game.” The way we handled the challenges would determine how the game developed in the future. Even though the pandemic itself may seem to be under control, its effects will be felt for years to come. Rugby was not insulated from the devastating financial challenges that resulted from the pandemic and many of those challenges remain. “Loans to member unions of R84.7m in the accounts, highlights the need to continually address the financial health of the member unions is highlighted by loans to them totaling R84.7 million in the accounts.

SA Rugby president Mark Alexander Photo: Sydney Seshibedi/Gallo Images

Mr Alexander said that the role of private equity investors in the sport at national and provincial level was extremely important and necessary. “Private equity investment contributes in a significant way to our rugby ecosystem nationally,” he said. “We must ensure that everyone benefits on an equitable basis from our growth as an organisation – and that we don’t kill the golden goose within our franchises in the process. “It stands to reason that the more we succeed in international competitions, the more marketable we become, and the more all rugby will benefit. We need to address ways to include the private equity structures in our decision-making processes, to ensure that everyone has a seat at the table, and always be mindful of how membership is constituted. I am sure we can find the model that will be to the benefit of the greater good of the game.

“Managing the sport’s finances is a daily challenge but our basic asset – the Springboks and rugby in South Africa – remains a blue-chip resource in the market.”

Mark Alexander Rugby SARU URC