SA Rugby Union (SARU) 2020/21 Annual Report & 2023 Rugby World Cup

Sports, Arts and Culture

16 March 2022
Chairperson: Ms B Dulane (ANC)
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Meeting Summary

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The South African Rugby Union (SARU) discussed its 2020/21 Annual Report, how it is doing financially with the impact of COVID-19 restrictions, and its transformation goals. SARU also delved into its preparations for the 2023 Rugby World Cup. On the matter of the SARU CEO, the SARU President said SARU could not suspend the CEO based on financial misconduct he committed at his previous employer. SA Rugby has received five legal opinions that advised against his suspension. On “burning issues in the media”, SARU would return to give a full briefing at a separate meeting.

The Department of Sports, Arts and Culture spoke about the R4.5 million given to SARU to fund transformation programmes.

Among the Members' delights was SARU's win as the National Federation of the Year. Members agreed that the return of spectators to stadiums needed to happen. Most Members were satisfied with the SARU transformation efforts. Several complaints were made about visibility and support for Women's Rugby.

Meeting report

SARU President, Mr Mark Alexander, apologised for the SARU executive unable to attend who were travelling due to a meeting taking place in Cape Town.  Mr Johan "Rassie" Erasmus, was not able to attend due to a family emergency.

It was agreed by the Committee that full names and not pseudonyms should be used by attendees on the Zoom platform.

Mr D Joseph (DA) accepted the agenda but wished for the SARU President to acknowledge that there are “burning issues in rugby” and he hoped that he would touch on these after the presentation.

The Chairperson acknowledged the proposal saying that a full briefing on “burning issues in the media” is needed. SARU must prepare to give a briefing on “burning issues” for the Committee not to be "brainwashed". A separate meeting on the "burning issues" would be ideal.

Apologies from the Ministry were noted. The Minister had a joint meeting of all Cabinet Committees and the Deputy Minister was attending a GBV outreach programme in the Eastern Cape.

Department of Sports, Arts and Culture (DSAC) overview on SARU
Mr Vusumuzi Mkhize, DSAC Director-General, spoke about the support that has been offered to SARU. SARU received  R4.5 million in 2021/22. The financial aid was for the transformation agenda in:
- Support of school rugby
- Support for women’s rugby
- 'Get into Rugby' Programme
- Capacity development programmes.

He gave an analysis of the Eminent Persons Group (EPG) findings on transformation in South African rugby. While many sectors of SARU were seeing a significant transformation, the medical and scientific support base sector – particularly Sport Psychology has not yet aligned with the country’s demographics.

Rugby at school remains a challenge as schools primarily participating in rugby are privileged schools. DSAC has noted the constraining factors leading to this lack of participation by underprivileged schools. However, there has been significant transformation in the National Female Senior and Underage Teams, and Coach and Referee structures. The numbers were presented. Club memberships have declined due to the financial challenges of maintaining a club due to a decline in memberships. Overall, 84% of the EPG targets were met.

Mr Mkhize concluded by discussing the return of spectators. DSAC intended to return spectators "safely" to the stadium. Guidelines for the return of spectators have been developed. Rugby has been hosting a maximum of 2000 spectators and the costs were incurred because of that.

SARU Annual Report and 2023 Rugby World Cup update
SARU President, Mr Mark Alexander, outlined the topics of the briefing:
 - Impact of COVID-19
- Industry Saving Plans
- British & Irish Lions tour and attendance restrictions
- Prioritising Women’s Rugby
- Preparations for Rugby World Cup / Team Performance
- Transformation Update.

Mr Abubakar Saban, SARU CFO, spoke about the impact of Covid-19 on the financial standing of SARU. There had been a decline since 2020. For two years, SARU has been in ICU due to the cancellation or restriction of revenue-generating events. While there was some recovery led by broadcast revenue, the income level compared to 2019 – is down by 21%. This in conjunction with professional games being in extreme crisis. Mr Saban said restrictions lifting was essential to allow “haemorrhaging” to cease.

SARU has implemented industry saving plans which include cancelling competitions, cutting or mothballing development programmes, cutting salaries across the board and shelving strategic campaign plans.

[A brief interruption took place after the SARU President discovered Western Province Rugby Union President Mr Zelt Marais was present in the meeting despite his SARU suspension. The Chairperson asked the Committee Secretary to remove him from the virtual meeting and questioned who had given him the meeting link.] 

Mr Saban continued that the series against the British & Irish Lions in 2021 was completed without any spectators. It was meant to generate cash reserves to weather COVID-19. However, the reserves remained at zero.

Mr Alexander added that there was R6 billion economic loss because of the restrictions. Not having spectators has a great impact on informal traders who have no other place to turn to for compensation.

Mr Saban spoke about how SARU earns sponsor income and the figures were provided. Broadcast income was 78% attributable to Springbok and franchise media rights (with 49% directly due to the six Springbok Tests). Purely domestic competition media rights made up 22% of total broadcast income.

Mr Saban said 55% of the income was spent on rugby (teams and competitions); 19% redistributed to member unions; 9% on governance and operations; 6% on image rights and player insurances; 3% on the Cape Town Sevens; and 8% on other departmental necessities.

Mr Charles Wessels, SARU General Manager & Team Manager, outlined the pre-games which were designed as “tests” or preparation before the World Cup. A spreadsheet of these games was provided.

The Springboks did “fairly well” in 2021 retaining the Number 1 spot in world rankings. In the South African Sports Awards held on 13 March 2022 – SARU walked away with the following awards:
Team of The Year - Springboks
National Federation of The Year - South African Rugby Union
Sportsman of The Year - Makazola Mampimpi & Siya Kolisi
Coach of The Year - Johan Erasmus
People’s Choice Sports Star of the Year - Siya Kolisi

Other world cups scheduled for 2022 included Rugby World Cup Sevens South Africa 2022, Rugby World Cup New Zealand rescheduled from 2021 due to COVID-19 and lastly, Rugby World Cup France 2023.

Ms Lynne Cantwell, SARU Women’s High Performance Manager, spoke about Women’s Rugby rankings: Springbok Women ranked 13th and Springbok Women's Seven 12th. 

Women’s Rugby in South Africa is very transformed with 'generic black' leading demographically. The National Competition for Primary / Secondary Schools is something SARU wishes to implement as well as increase visibility via commercial partnerships to increase revenue into the games.

Ms Bulelwa Tau, SARU Chair of Transformative Committee, acknowledged the progress made since 2016. This includes MOAs and provincial performance agreements concluded for staged targets to 2030. It was performance audited annually and had met targets successfully in its MOU with DSAC. The Independent Transformation Advisory Panel was established in 2021.

Ms Tau noted the structures to deal with transformation. One of these is MyPlayers, an association of  South African rugby players, which includes a dedicated senior player representative and a 24/7 helpline for professional players. This support structure is also responsible to identify matters impacting on players including transformation, discrimination and equality. It also consists of Sports Employees Unite (SEU) a trade union representing industry employees to protect staff interests. SAREO is the South African Rugby Employers’ Organisation that elected its first black chairperson in 2021, Thando Manana. SAREO facilitates the orderly settlement of disputes and assists on matters affecting the relationship with employees. SAREO also promotes, supports, or opposes any proposed measures that may affect the interests of members.

Mr Wessels spoke about another initiative titled Black Coaches launched as a fast-tracking programme for black coaches. It creates opportunities for talented elite coaches to be exposed to coaching at higher levels, thus establishing a pool of elite coaches to be used at a provincial, national, and international level. The initiative is to ensure employability and opportunities for these elite black coaches.

Another notable aspect was the 54% females on the SARU payroll.

Discussion
The Chairperson appreciated the well-presented and well-planned presentation and acknowledged that SARU is one entity.

Mr T Mhlongo (DA) welcomed the presentation and noted that everyone participated. His compliments were aimed at the President and everyone from his team. In contrast, he did not support the record of transformation. Specifically, he asked for details about Zelt Marais and why he was suspended. “Rugby has won as best federation in South Africa but has a questionable CEO”. Rewarding corruption is becoming a sad trend in sports in South Africa. South African Rugby is aware that the matter is critical, as per the statement issued to the media. He requested the Chairperson remove the SARU CEO as he wished to ask questions about his fraud case.

The Chairperson condemned this and stated that she did not give anyone a platform to remove the CEO. All members need to ask questions so there can be a debate and we need to be updated.

Mr Mhlongo thanked the Chairperson for her input and apologised for his actions. He explained that he wanted the CEO removed because of the media statement issued by SARU. Why was Mr Jurie Roux hired as CEO with a cloud hanging over him? Who is paying for his court case legal fees? What is SARU doing about the fraud allegations against the CEO? It is strange that the CEO did not participate in the presentation. Why has SARU not taken any actions against the CEO? He said he would move away from this topic as it was emotional for him.

Mr Mhlongo asked about the 54% females on the SARU payroll. He asked about the demographics of the 54%. He referred back to the CEO and asked that SARU implement a fair policy – as some get suspended while others do not. He compared the situation with that of coaches who are often fired after losing games. However, SARU hires the CEO with a fraud case.

Mr Mhlongo asked for a breakdown of the R4.5 million allocated to SARU. There was no clear guidance on how the money would be used. How much of it will be given to Women’s Rugby? He asked why the Minister was not present as the meeting was of utmost importance. He stated that clearly the EPG is not working. The measurements used are not working. He has a different view – for transformation to take place, rugby as a sport must take place in different locations of South Africa including in townships and rural areas.

Ms V van Dyk (DA) thanked Mr Mhlongo for his comments and congratulated SARU on its achievements. She expressed her curiosity about the background to the CEO's court case and the impact it has on SARU - why has it been quiet about this?

She acknowledged the attempts at transformation by SARU but wondered what transformation alludes to at SARU. Is it about the representation of black businesses? What about training and facilities? Ms van Dyk wanted to know about transformation and what are the challenges that SARU has been facing. She also wanted to know who handles identifying and nurturing the talent of those who are at junior levels? Veronica also asked if there are adequate facilities and if proper training is supplied for young men/women in sports? 

Ms van Dyk asked where do victims file complaints at SAREO. Given the recent spate of suicide attempts in sports, it is vital that safeguarding is prioritised within all sports federations. 

To prevent derailing the agenda, the Chairperson reminded attendees not to deviate from the agenda. This was to prevent the meeting from going past the stipulated end time. SARU must come back to present a full report since the public cannot rely on the media to update them on these questions posed by Members.

Ms R Adams (ANC) asked about the current closure of the stadiums to spectators and its effect on SARU finances. How many of the secondary schools that offer rugby in South Africa are in townships? She asked about the seriousness of the charges against the CEO and the next step SARU will take. On the transformation report, what were the challenges for not reaching the target?

Mr C Sibisi (NFP) thanked SARU for fighting for the development of school sports. It has done an excellent job in implementing sports at different schools. He asked about the plans for developing rural schools as well.

Mr M Zondi (ANC) welcomed the report. His questions were about the allocation of funds for transformation. SARU has been underspending on its programmes since 2018. The financial status shows that there has been a decline in funds allocated by SARU to its programmes. The liquidation of Southern Kings has left a gap in development, especially in the Eastern Cape. What led to the liquidation? Despite praising SARU's demographics, he questioned if women were getting enough exposure. Does SARU take measures to reduce the gender gap in rugby at a national level? Is SARU doing anything about the high level of steroid use by high school rugby players?

Mr D Joseph (DA) thanked SARU for its efforts to keep rugby on the map worldwide. The media reports of fraud allegations against Mr Roux are unavoidable. He requested that SARU returns to give a briefing and take accountability at its earliest convenience. He alleged that there was favouritism. Some get suspended while others do not get suspended.

Mr Joseph noted that SARU said club structures have declined. The CEO matter contributes to that decline. The Board does not act fairly. Employees are treated differently. He asked if women contract players receive equal pay. He asked for the timeline and target for transformation. Having been a democracy for more than 20 years, there are still transformation challenges within rugby. He emphasised the importance of promoting rugby in schools, as rugby was seen as a "religion" in South Africa back in the days.

He asked what kind of disputes is SAREO dealing with. Senior management had a 50-50 split in demographics. What is the agreement as that is where most decisions are made? 

Before speaking, Mr Mamabolo's dress code was criticised by the Chairperson which was not proper for a formal meeting but only for a stadium. Her remarks about dress code applied to all Members of Parliament. 

Mr B Mamabolo (ANC) asked about the tripartite relationship SARU has with the Departments of Sports and Basic Education. He wanted to know more about the relationship as there is little visibility of rugby in townships and rural areas. He was happy about women's rugby and the Black Coach structure.

He wanted to know the plans SARU has for junior level players who are graduating soon. This is to prevent having to get a new team for the World Cup. He was happy about the transformation measures being taken.

The Chairperson thanked SARU for the "impressive" way of presenting and improvement in involving everyone from the team. She remarked how pleased she was about SARU reaching 84% of its transformation targets and congratulated SARU on their awards.

She would establish an appropriate date very soon to invite SARU for another meeting due to questions that could not be covered in the meeting. She is however concerned that SARU has not been taking proper care of women in rugby.

SARU response
The SARU President discussed the  CEO as the CEO had left for another meeting. The CEO was appointed in 2010 and at that time there were no pending cases against him. The CEO has done wonderful work for SARU. It would have been premature to suspend the CEO in 2014 when the allegations started. This was according to the legal advice they had received. They were advised legally to wait until the case unfolded. When the allegation resurfaced in 2016, they consulted a lawyer for further guidance. The CEO contract was extended for a further four years in 2019. The attorneys of both parties are in talks and that is why SARU has not elaborated more when speaking about the CEO.

The Chairperson interjected and asked about the allegation for the suspension of Mr Marais and the allegation of unfair treatment of staff members.

Mr Alexander replied that when the CEO was appointed, he had no allegations against him. He was hired before the allegations. SARU does not pay for the CEO's legal fees. Mr Marais was suspended as he was causing financial difficulties for SARU.

The Chairperson thanked Mr Alexander for his clarification.

Mr Alexander replied about school rugby saying they do not have any standing when it comes to implementing rugby as a sport in schools. That is the responsibility of the Department of Basic Education. However, they have a programme called Get into Rugby. He reiterated that when it comes to sports the Department of Basic Education has much more control. Another barrier was created when the decision to discontinue the Ikusasa project was made which has led to a lack of rugby visibility in underprivileged schools.

SARU promotes drug-free tournaments. SARU also tests kids for drugs before taking part in any competitions. This is done with permission from the parents.

SARU is running at a loss without spectators. To date, there has been a loss of about R240 million. Mr Alexander questioned the double standards of COVID regulations and restrictions. For example, shopping malls are filled with people who have not been vaccinated. There will be more retrenchments because of “no spectators” in the stadiums.

The demographics making up the 54% females on the SARU payroll – “42% are so-called African Blacks, 24.9% coloured, 3% Indian, 28% white”. Mr Alexander said discussing race made him feel uncomfortable as they are a union for multiracialism. He asked the CFO to speak on how the R4.5 million will be allocated.

Mr Saban explained that 80% of sponsorship and broadcast revenue comes from commercial sources. Women's rugby sponsorship must be funded by other organisations since SARU does not generate much revenue. Due to sponsorship being received in November, it is difficult for SARU to spend it all that year, so it is usually rolled over to the following year. Due to COVID-19, there are technical reasons SARU cannot allocate the money to schools. As a result of cross-subsidies, R21 million was spent on women's rugby last year.

SARU is audited financially. As an industry, it must be financially stable. Therefore SARU decided to liquidate Southern Kings due to a lack of funding for Southern Kings.

Mr Alexander noted that transformation will be covered in the next meeting – he wants to do further consultations before giving his response on this.

On exposure to women’s rugby, SARU has consulted with various channels to ensure that women’s rugby gets enough exposure.

Mr Alexander spoke about the safeguarding policy. The safeguarding policy is available on the SARU website. On rugby development in townships and rural schools, he gave a breakdown of 4501 schools in both primary and secondary schools. Rugby facilities are a challenge as there is a shortage of infrastructure in schools. The existing stadiums should be used but the onus is on government.

DSAC response
Mr Simphiwe Mncube, DSAC Chief Director: Federation Support, wanted to emphasise how the money is spent to clear the accusations about underspending. The portions are divided into various programmes, and this is how the money is allocated. This includes Vuka Development Rugby, Get into Rugby, and Rugby in Wheelchairs.

Ms Sumayya Khan, DSAC Deputy Director-General: Recreation and Sports Development, spoke about the importance of rugby and it is prioritised as one of the sports in schools.

Director-General Mkhize dismissed the notion that EPG is not effective. EPG serves as a measure of progress toward transformation. It must be viewed as a tool to measure progress and enforce transformation and it is a tool that needs to be embraced. This tool will continue to be used. The infrastructure and facilities challenge is a national issue according to him. Government needs to intervene to ensure the available facilities are accessible. Another concern is the budget which is severely constrained.

He acknowledged the challenges of the tripartite in developing school rugby. He spoke about the pilot initiative in conjunction with Tshwane University of Technology which seeks to find those who have retired from sports and hire them as coaches for schools. The budget constraints are proving to be a challenge as they plan to work with 25 000 schools. This is going to be a challenge to implement.

Further discussion
Mr Joseph urged that SARU applies its constitution fairly and does not destroy rugby in the Western Cape. He requested the costs for legal advice about the CEO case. He expressed satisfaction with the responses he had received so far.

Mr Mhlongo vehemently stated that the EPG is not working. How can a federation receive a mandate to set its own targets? He noted the figures received from the SARU President. He agreed with the SARU President about opening the stadiums. 

His second point was about multiracialism. He questioned how SARU says they are promoting multiracialism, yet they have a structure that focuses on black coaches. Diversity is broad – he asked how many people with physical challenges are hired by SARU. If nothing is done to correct corruption, effective governance will never be realised. With those words, he proposed that the CEO be fired. How much money has SARU spent on seeking legal advice? Why was there no reference to the CEO during the presentation? He suspected that there were secrets being kept by SARU. He questioned how the federation cannot fulfil its mandate in relation to the Western Cape issue.

The SARU President disclosed the name of the legal firm and said that they have followed due process in dealing with the matter.

Mr Mhlongo asked why the SARU President was not disclosing the amount used on legal fees and which money has been used. Was it the sponsorship money or the money meant for development? He questioned SARU's leadership from an ethical standpoint.

The Chairperson intervened to ask that SARU be given time to prepare. This is to prevent receiving information filled with discrepancies.

On the return of spectators to the stadium, the Director-General explained that government is following procedures to prevent the spread of COVID-19. There were plans in place for how spectators would return to the stadiums before the discovery of Omicron. The chances of bringing back spectators sooner could be enhanced by getting more people vaccinated. Initially, government agreed to have spectators back in stadiums after 70% of people had been vaccinated. According to the proposal by his department, stadiums might operate at 50% capacity when spectators return to them. He assured the attendees that government wants to open up, but it cannot do so recklessly.

The Chairperson thanked everyone and acknowledged that some of the questions were based on what was seen in the media. Therefore, she requested SARU to contact her office when it has updates which will be circulated to inform the Committee members.

The SARU President apologised for not providing all the answers to the questions posed and assured the Committee they would be answered in the next meeting. The focus was on the agenda and the preparation for the meeting was based on it.

Director-General Mkhize said the Department would await SARU communication on developments.

The meeting was adjourned.

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