DSAC & SARU update on the equity sale (with Deputy Minister)

Meeting report

Introductory Remarks

The Chairperson said that before he proceeded with a formal welcoming, he would like to address the introduction, the apologies, and the adoption of the agenda. He stated that the members had the agenda in front of them. He outlined that they would deal with an overview by the Department of Sports, Arts, and Culture on South African rugby, followed by a briefing by the South African Rugby Union (SARU) on the details of the equity sale. He added that they would also consider various reports that had been outstanding for quite some time.

He noted that Mr L Jacobs (DA) moved to adopt the agenda, and Adv S Salie (Al Jama-ah) seconded it.

Apologies were noted, and he then gave everyone physically present in the meeting an opportunity to introduce themselves briefly.

Following the introductions, he made his introductory remarks. He stated that he would make a ruling, noting that the issue of SARU was very important. He ruled that members who had perused the department's presentation and sought clarity on it should submit their questions in writing. However, he clarified that this would not prevent the department or the Deputy Minister from making opening remarks. He added that he would still deliver his own opening remarks and would also give the Deputy Minister an opportunity to speak. He would then allow and hand over to SARU, specifically to the President of Rugby, to deliver opening remarks and proceed with the presentation.

He reminded the Honourable Members that the Springboks were a national asset, adored and cherished by all South Africans. He noted that the SARU President, Mr Mark Alexander, and he had worked hard to secure this meeting, which was taking place two days before a very important vote. He mentioned that he had done so under tremendous pressure from the committee, which had a strong appetite for intensifying its scrutiny of SARU’s operations. However, he emphasised that neither the committee nor the nation could be caught by surprise regarding this deal. He highlighted that the Portfolio Committee and South Africans were important stakeholders, as they were elected representatives of the people, and the Springboks were a national asset.

He reminded the House that the National Sport and Recreation Act 110 of 1998 required sporting federations in South Africa to adhere to key practices during material financial transactions to ensure informed decision-making. He acknowledged that the deal was a commercial transaction to be decided upon by the negotiating parties and stressed that the National Assembly was not part of these negotiations. He clarified that Parliament sought a thorough briefing and update, including the process of the deal. He acknowledged the widespread media attention and the mix of support and criticism surrounding the deal, particularly regarding the introduction fees and allegations of a lack of transparency.

He assured the Honourable Members that the session was intended to be a constructive information session to enhance understanding of the matter. To this end, he requested Parliament’s Senior Legal Advisor, Mr Frank Jenkins, to assist the Portfolio Committee and SARU. He emphasised that this should not be seen as an attempt to stifle meaningful debate. He expressed gratitude to SARU for making themselves available to provide updates to Parliament and the public.

He hoped the engagements would be fruitful and provide more clarity, reiterating that South Africans had a vested interest in rugby as stakeholders. He then invited the Deputy Minister to deliver her introductory remarks, if she had any, followed by the introductory remarks of the President of SARU, who could then proceed with the presentation.

The Deputy Minister said that she was grateful for the opportunity to speak. She acknowledged that the proposed equity sale had clearly sparked much debate and controversy within the South African rugby community and among South Africans in general. She agreed with the statement that rugby was a national asset. She mentioned that she would not go into detail because she wanted to allow SARU the opportunity to present the news to the portfolio committee. However, she noted that the main concerns raised came from provincial unions, specifically mentioning the Lions, the Blue Bulls, the Sharks, and the Western Province. She added that a strong group of South African rugby power brokers were reported to have compiled a counteroffer to a company that was said to have shown interest in purchasing the equity.

[The YouTube livestream went down, and the monitor was unable to capture the remaining introductory remarks by the Deputy Minister, as well as those made by the President of SARU]

SARU Presentation

Mr Mark Alexander, SARU President, and his colleagues led the committee through the presentation.

SARU presented its proposed equity partnership to the Parliamentary Portfolio Committee, focusing on addressing financial challenges and ensuring the long-term sustainability of South African rugby. SARU emphasised that despite on-field success and a strong player development pathway, the organisation faces persistent financial instability exacerbated by over-reliance on sponsorships and broadcast rights and the economic strain caused by the COVID-19 pandemic. The proposed partnership involves selling a 20% minority stake in a newly formed commercial rights company (CRC). In comparison, SARU retains 80% ownership and full control of rugby operations, including team management and intellectual property.

The partnership aims to inject $75 million into SARU to establish financial reserves, diversify revenue streams, and support global brand growth for the Springboks. The CRC will focus on commercial growth, leveraging Win-By-1’s global sports and entertainment market expertise. Governance safeguards, such as shared decision-making and an eight-year minimum holding period for the equity partner, ensure SARU maintains operational control. Financial priorities include covering rugby-related costs before the equity partner receives distributions and securing stability for grassroots and professional rugby initiatives.

SARU highlighted the broader benefits of the partnership, including reduced reliance on domestic sponsorship and media revenues, enhanced commercialisation strategies, and increased investment in grassroots rugby. The deal addresses SARU’s lack of in-house commercial expertise and limited global brand strategy while unlocking new revenue streams to support infrastructure and youth development. SARU also detailed a 16-month engagement process with unions and stakeholders, underlining the strategic and collaborative nature of the partnership.

The presentation concluded with SARU reiterating its commitment to protecting the Springbok emblem and green-and-gold colours. It emphasised that the partnership is not a sale of the Springboks but a strategic collaboration to ensure the long-term sustainability and global competitiveness of South African rugby. SARU invited further dialogue and collaboration to refine and implement the partnership effectively.

(See Presentation)

Discussion

The Chairperson said they had reached a key point in the discussion and addressed the President of South African Rugby. As the Chairperson of the portfolio, he admitted that it was the first time they had received a presentation of this nature. He noted that they dealt with 28 entities and over 70 federations and acknowledged that the South African Rugby Union (SARU) was proactive. He expressed his appreciation for their efforts and the insightful presentation, adding that he valued what SARU was doing for the country.

He mentioned that similar to Cricket South Africa's approach, the President of SARU had invited the portfolio committee to visit their premises, including high-performance centres, to better understand their operations. He emphasised the importance of keeping rugby alive and noted that rugby was thriving. Recalling a visit to Mahikeng in 1994, he remarked that rugby had acted as a catalyst for South Africa, uniting the nation during pivotal moments, including its recent successes.

He clarified that the committee was not opposed to any federation’s actions or equity deals. Referring to one of the presenters’ points about revenue growth and its benefits for South Africa, he stated his support for initiatives that contributed to such growth. However, given recent developments, he stressed that the process surrounding the equity deal was of utmost importance, describing it as challenging to navigate. He noted that even a domestic stakeholder had approached SARU to engage, demonstrating the deal's complexity.

He appreciated the President of SARU's honesty in acknowledging that the upcoming vote could go either way, with supporters and detractors. He commended this transparent and adaptive approach, saying it was the kind of leadership they wanted to see from a federation of SARU’s stature. He reflected on his own experience in 1994, recalling his refusal to wear a rugby jersey manufactured in China, emphasising the need to focus on supporting local production. He recounted a similar experience with Cricket South Africa, where he had been given a tracksuit made in China, and stressed the importance of addressing such issues domestically.

Finally, he informed the members that, due to the gravity of the case, he would allow them to ask two questions each, with SARU responding after each question. He instructed members to avoid giving speeches, instead asking concise questions with short introductions followed by responses. He also sought clarity on something he had noticed in the "Win by One" presentation and asked for a brief explanation of the committee's benefit. He then concluded by opening the floor to questions.

Mr Alexander explained that the proposed equity partner chose "Win by One" after observing South Africa's performance in the World Cup, where they had won three consecutive games by one point. He then addressed the question about the media outburst, stating that they had deliberately chosen not to respond because they communicate directly with their members, not through the media.

He elaborated that their approach involved engaging with their members via a dedicated forum and prioritising direct communication. He noted that the media was not receptive to what had been communicated and reiterated that they do not operate through the media. He shared that he had advised their staff not to "feed the dragon" by engaging with the media, emphasising their focus remained on direct dialogue with their members.

Discussion

Adv Salie said she often had many questions but would go straight to the point. She assured them not to feel as though it was a grilling session, emphasising that these were questions from the nation that needed to be addressed. She asked about the equity deal and the repercussions of not meeting the service debt applications. She also requested the terms and conditions of the equity deal, the identities of the beneficiaries, and their involvement in rugby. She concluded by stating these as her first three questions.

Mr Abubakar Saban, SARU CFO, addressed the question about service debt, stating that there seemed to be a misconception about the construct of the deal. He explained that the deal involved a commercial legal entity where a third party purchases a minority shareholding. He emphasised that rugby operations would remain under SARU, while the commercial entity would need to generate significant revenue to fund itself.

He clarified that the equity partner purchasing the minority shareholding could not extract any value until the rugby costs were fully covered. This was a critical point, as speculation about loans, debt, and the deal's complexity often missed this protective mechanism. He explained that before the shareholder could extract any value, the cost base of rugby must first be safeguarded. A shareholder could receive their entitled value share only after ensuring that rugby's costs were covered. He noted that this was protected within their agreements through a distribution policy that defined how value would be extracted.

Regarding the beneficiaries, he stated that the shareholders within the commercial entity would be the beneficiaries. However, through a licensing agreement, 80% of the value generated would revert to SARU. As an association of members, SARU would receive 80% of the value created within the commercial entity. He added that once rugby's debt had been paid, the ordinary shareholders would be entitled to their share of profits within the entity. He concluded by expressing hope that his response answered the question.

Ms Chantal du Pisani, Head: Legal and Compliance SARU, responded to the question about the terms and conditions, noting that it was a wide-ranging topic. She explained that the umbrella agreement was 73 pages long and that they had not yet delved into the rest of the agreements. However, she emphasised the importance of the reserved matters outlined in the agreement.

She explained that the agreement clearly defined the commercial property that would be vested within the new company, along with the rights, statutory obligations, and operational structure. Additionally, reserved matters were introduced to deal specifically with SA Rugby. She stated that if any aspect of the agreement was unclear, the two CEOs involved would discuss the issue. It will be deemed an SA Rugby matter if no conclusion can be reached. This mechanism, she said, was central to protecting SA Rugby's structure and ensuring its obligations were upheld.

She also mentioned that the agreement included conditions such as rights of first offer and SARU’s option to buy back shares later. She reiterated that the agreement was comprehensive and designed to safeguard SA Rugby’s reserved matters.

Adv Salie asked as a follow-up whether the agreement could be provided to the portfolio committee for perusal.

Ms du Pisani responded that the agreement was subject to very strict confidentiality clauses and non-disclosure agreements, and therefore, it could not be provided.

Ms M Mmolotsane (ANC) began by noting that she had several questions, acknowledging that she might exceed the strict rule of three to four questions. She appreciated the SARU presentation but remarked on the challenge of addressing overlapping issues. She pointed out that SARU presented to politicians, who typically conducted their own research before attending meetings to ensure they were well-informed.

She noted that the Chairperson had mentioned the Department of Sports overseeing many entities and highlighted her concern that some entities often provided unsatisfactory or "sanitised" reports. She then moved on to her questions, starting with her observation that as the portfolio of sports, arts, and culture, they were a key stakeholder in all South African sports entities. She expressed disappointment that SARU had come to the portfolio committee to present the equity deal only after several attempts to gain their attention. She questioned whether SARU viewed it as important to present this equity deal to the portfolio committee, suggesting that if they did, the committee should have been informed first rather than learning about issues through the media.

Her second question was about the current CEO of SARU. She specifically asked when the CEO had been appointed and whether they held the position in an acting or permanent capacity. She indicated she needed an answer to this question before proceeding with her additional queries.

Mr Alexander, president of SARU, affirmed that SARU viewed the portfolio committee as a key stakeholder and highlighted their long-standing good working relationship. He acknowledged that there had been a lapse, both on SARU's side and the portfolio committee’s, in facilitating the meeting. He noted that with the previous chairperson, communication lines had always remained open, allowing them to address issues as they arose, including those highlighted in the media. He emphasised that SARU valued the portfolio committee as a key partner in their operations.

Regarding the second question, he confirmed that the CEO position was permanent and that SARU employed the CEO.

Ms Mmolotsane explained the context of her questions, stating that while researching the equity deal, she discovered that the previous CEO, Mr Jurie Roux, stepped down in December 2022 after being found guilty by the Western Cape High Court regarding the transfer of funds during his tenure at Stellenbosch University. She noted that the equity deal discussions did not begin recently but originated during Mr Roux's time as CEO.

She raised concerns about whether individuals involved in facilitating or signing such deals were entitled to commissions and asked for clarification on this point. She also worried about rugby's historical controversies, referencing the cases of Dr Louis Luyt and former President Nelson Mandela. She suggested that unresolved issues from Mr Roux’s tenure might still be impacting SARU, noting that some topics, while not directly related to the day’s discussion, were interconnected and required further exploration.

She expressed disappointment that the equity deal was only being presented to the portfolio committee now, despite having been in discussion for some time. She acknowledged the President’s statement about a good working relationship with the portfolio committee but highlighted that certain questions from members were met with confidentiality claims, limiting the information provided. She suggested that more transparency and direct engagement should be expected if SARU had a strong working relationship with the portfolio. For example, instead of simply declining to share information due to confidentiality, SARU could provide opportunities for private briefings.

She concluded by indicating that she would raise additional questions in the second round of discussion.

The Chairperson addressed the concerns raised, suggesting that the President of SARU explain the role of the individual mentioned in the question. He acknowledged the confidentiality clauses in the equity deal negotiations and reiterated that, as stated in his introduction, the portfolio committee was not part of those negotiations. He emphasised that detailed discussions on those specifics would follow later.

He also raised the issue of domestic equity partners and the involvement of other service providers, particularly regarding invitations and the openness of the process, given rugby's status as a national asset. He invited the President to respond to the question but allowed that it would be understandable if confidentiality constraints prevented a full response. Lastly, he encouraged the President to address the specific individual mentioned if he was willing to do so.

Mr Alexander began by clarifying the timeline of the process, stating that discussions regarding equity deals began in 2019, as previously shown. He explained that Mr Roux’s termination as CEO in 2022 was due to arbitration findings that found him guilty of misusing funds to support the Stellenbosch University rugby club. He emphasised that this was the sole reason Mr Roux was no longer CEO of SARU.

Regarding the issue of commissions, he noted that while conversations with CVC began during Mr Roux’s tenure, the current equity deal under discussion involved the ASG group, which was entirely separate. He firmly denied any involvement of Mr Roux in benefiting from the deal, stating that no commission was paid to anyone. He mentioned that the only entity potentially benefiting was the organisation led by the "Formula One guy" who introduced the deal. However, he reiterated that Mr Roux was not entitled to anything.

He further explained that SARU has a robust social and ethics committee composed of independent professionals who rigorously review contracts and business operations to ensure compliance and integrity. He reiterated that no commission payment was involved in any part of the deal.

Regarding confidentiality, he explained that SARU was bound by non-disclosure agreements (NDAs). He highlighted that the current discussion was broadcast live, making it impossible to share certain details without risking legal repercussions. He stressed that SARU was not attempting to hide anything and would allow the honourable member to review the agreement in SARU's offices alongside their legal team under appropriate conditions. He affirmed that SARU had nothing to hide and acted in full transparency within the constraints of the confidentiality agreements.

Mr Jacobs began by referencing the desire of South Africans for transparency and clarity, likening it to their love of light and the recent cessation of loadshedding. He emphasised the importance of shedding light on matters and posed his first question, which focused on the task team responsible for the equity deal. He inquired specifically about who comprised the task team and the identities of the individuals tasked with handling the deal.

Mr Alexander responded that the task team consisted of personnel from SARU's own office, including members from their legal compliance team, the Financial Director (FD), and the Chief Financial Officer (CFO). Additionally, he noted that SARU engaged external organisations to assist with the transaction. These included the international legal firm Sullivan Cromwell, BDO, AWC, and ENS for various aspects of the deal. He emphasised that the task team was not just a small group of individuals but a combination of internal staff and external organisations brought together to oversee and evaluate the transaction.

Mr Jacobs posed his second question, pointing out the presence of cameras and emphasising the significance of the live broadcast. He noted that many South Africans were watching due to the high level of interest in the meeting. He asked for a clear and public confirmation directed to South Africans, stating unequivocally that no SARU's executive council members would benefit directly or monetarily from the equity deal in the form of a commission or similar payment.

Mr Alexander responded by affirming that SARU had already made a public statement confirming this point. He reiterated that no member of SARU, whether independent or elected, would receive any benefit or revenue if the transaction went through. He emphasised that not everyone within SARU would benefit financially from the deal.

Mr Jacobs began by reflecting on the deal, noting uncertainties about what was included in the 20% equity share. He emphasised that while it might seem straightforward, the specifics, such as the roles and responsibilities tied to the governance and oversight structures, could have significant impacts. He remarked on the composition of the board overseeing the commercial arm, which he described as a 3-3 structure with an independent chairperson appointed by the group securing the deal. He questioned how a chairperson appointed by a particular group could truly be independent, suggesting this might affect the strength and validity of the board. However, he clarified this was a thought and not his question.

He then compared the South African Rugby Union’s deal to the New Zealand Rugby Union’s deal with Silver Lake, pointing out certain similarities in the commercial arm structures. He highlighted the value of the New Zealand deal—$200 million for 5% to 8% of the commercial arm, equivalent to R3.7 billion. In contrast, SARU’s deal was valued at R1.39 billion ($75 million), spread over a period rather than being a one-off payment.

He raised concerns about the disparity in the deal values, particularly given the differences in the two countries' economies. He noted that South Africa's economy is 1.5 times larger than New Zealand’s, and its population is 12 times larger. He asked how SARU justified the valuation of their deal in light of these disparities, particularly considering factors like purchasing power and broader economic discussions. That was his third question.

Mr Alexander began by comparing the All Blacks’ deal to SARU’s deal, explaining that the primary difference lay in revenue. He noted that the presentation had addressed this point, emphasising that the New Zealand Rugby Union's revenue was almost three times that of SARU. This significant difference in revenue streams directly impacted the organisation's valuation, making SARU's value weaker than that of the All Blacks.

He acknowledged that there were additional technical details related to the valuation and the deal. He offered to defer to the FD and legal representatives for further explanation to ensure accuracy, noting that they were better equipped to address those specifics.

Ms du Pisani addressed the process behind the transaction, emphasising its importance. She explained that SARU had engaged independent experts and advisors to assist with the deal, including the BDO London desk conducting an independent fair value assessment. Using various multiples and comparisons to other transactions, BDO concluded that the deal's value exceeded what they believed to be SARU's fair value. From a process and independence standpoint, she highlighted this independent assessment as a key indicator of the deal's legitimacy and value.

She then moved on to the 20% shareholding and the independent chairperson, noting that the CFO had explained the deal's financial construct. She reiterated that SARU's budget was secure and would be the first payment in the transaction, ensuring SARU's financial stability in perpetuity until a certain point in time. She explained the "plus one" principle, where shareholders could only extract the value after SARU's consolidated and CRC budgets were fully covered. She said this was a fundamental part of the legal construct underpinning the deal.

Regarding the board composition, she confirmed it would consist of three members from SARU, three from the equity partner, and an independent chairperson. She explained that the contract outlined a process for appointing the independent chairperson, and both external and internal legal reviews ensured this process was robust and appropriately governed. She expressed confidence that the legal construct adequately addressed the appointment process and protected SARU's interests.

Mr Saban began by comparing SARU’s equity deal with the New Zealand Rugby Union’s deal, noting that the question was "loaded" as it attempted a like-for-like comparison. He emphasised significant structural differences between the two deals. Specifically, he pointed out that a substantial portion of the New Zealand deal involved loans, whereas SARU's deal was purely an equity transaction with no loan components.

He explained that SARU had taken steps to protect the interests of South African rugby, particularly regarding its cost base. Drawing lessons from the challenges faced by New Zealand Rugby, he highlighted issues in New Zealand related to ballooning costs, rights conflicts, and company structure, which SARU aimed to avoid. He emphasised that SARU's deal was constructed with safeguards, including agreed baseline budgets between the parties, preventing unchecked cost escalation.

He further explained the payment structure of SARU's deal, stating that the $75 million was guaranteed for the equity stake, equating to a shareholding within the commercial entity. He clarified that earlier proposals included performance indicators or Key Performance Indicators (KPIs) tied to the deal, but these had since been removed. As a result, SARU was not required to meet performance targets to secure the funds.

He also noted that the $75 million payment would be disbursed in four tranches over two 18-month cycles. From a transactional perspective, SARU would align specific costs with the payment plan to ensure smooth execution. He affirmed that the deal provided sufficient protections and a clear repayment structure while ensuring the equity partner's investment contributed to SARU’s growth.

Mr Jacobs asked for clarification on the duration of the baseline budget guarantee for rugby, emphasising the importance of securing financial stability for the sport.

Mr Saban responded by explaining that the current baseline budget guarantee for rugby is set for three years. He emphasised that SARU develops these baseline budgets based on the organisation's business and rugby needs assessment. This process ensures the budgets align with SARU's priorities and requirements, including those discussed during the meeting.

He highlighted that the equity partner's value proposition is directly tied to what they can potentially extract but reiterated a key safeguard: no shareholder will be able to extract any value until the baseline budget, as determined by SARU, is fully covered. This baseline budget accounts for the broader costs of rugby, not just the Springboks, although they are key revenue generators.

He clarified that rugby's cost base is guaranteed under the baseline budget for three years, after which the budget is reset. To address governance concerns, he noted that in cases where the parties cannot agree on a reset budget, the original three-year budget will serve as the default. This governance mechanism ensures continuity and protection of rugby's financial needs.

He also pointed out that SARU has clear processes separating rugby, commercial, and sporting matters. These processes ensure that budgetary decisions maintain independence and focus on rugby's core requirements. These processes provide assurance that South African rugby will continue to meet its costs and deliver its teams effectively.

Lastly, he mentioned that he would refrain from commenting on tax implications, explaining that it would be irresponsible without all the facts and final contracts in place. This caution underscores SARU’s commitment to ensuring accurate and informed communication.

Mr Jacobs raised his fourth question, seeking more clarity on the repayments associated with the equity deal. He acknowledged that financial jargon could be complex and murky for many South Africans watching the discussion.

He specifically asked for an explanation of how the repayment structure differentiates this investment from a loan, noting that the terminology and structure might give the impression that the money was being paid back, which seemed unusual in the context of an equity transaction. He sought to understand how this aspect aligned with the nature of the deal and its classification as an investment rather than a loan.

Mr Saban acknowledged the complexities of the repayment structure and the question itself. He highlighted that SARU had engaged highly experienced advisors to guide them through the deal's constructs. He explained that the principle of underwriting a budget within this equity deal was not a typical feature of such arrangements.

He clarified that the equity deal involves one party (the investor) buying a minority stake in a commercial entity, sharing the risks and rewards of being a shareholder. However, SARU has coupled this arrangement with the necessity of funding rugby activities. The goal is that, over time, the commercial entity's value proposition will generate enough revenue to cover rugby's cost base and provide additional financial stability.

SARU is not even a break-even business, struggling to deliver on its mandate. The rising costs, particularly in the Northern Hemisphere due to inflationary pressures like transport, have made it difficult for SARU to sustain its cost structure. This financial strain underscores the need for the equity deal.

He explained that the investor's role includes underwriting rugby's costs, a critical component locked into the agreement and governed by a distribution policy. This mechanism ensures rugby's baseline budget is prioritised and fully funded before the investor can extract any value from their stake.

He acknowledged that, at first glance, the deal could appear loan-like. However, he stressed that it differs from a loan because the investor assumes substantial risk. If the commercial entity fails to realise its value proposition, the investor could go 10 to 15 years without seeing any returns, while still ensuring rugby's cost base is funded. This risk-sharing element, where the investor has no guaranteed returns, fundamentally sets the deal apart from a loan.

The Chairperson began by expressing his belief that the President of SARU had negotiated with the interests of South Africans in mind, particularly for the benefit of rugby. He suggested that, from a layman's perspective, there may have been a significant focus in negotiations on what individual unions would gain from the deal. However, he questioned whether there had been adequate consideration of broader issues, such as the lack of rugby development in schools, which is critical for the sport's future.

He asked for an explanation of the benefits unions would receive from the deal. He also inquired whether SARU had attempted to negotiate a better introduction fee as part of the equity deal. He noted that the President need not respond to the latter question if he felt it was inappropriate to address it.

Mr Saban began by addressing the question, explaining that the equity deal is designed to ensure financial benefits for SARU's members. The organisation's ecosystem is critically dependent on its unions and franchises. He emphasised that without these unions, South African rugby would not exist, as they form the essential pipeline for developing players, including Springboks.

He outlined the "funding model" that governs the financial relationship between SARU and its members. This model is essential for participation and delivery within the ecosystem of South African rugby. He clarified that this funding model is not determined by SARU's board but by the General Council, which ensures that it is based on sound principles.

The funding model has two critical components:

1. Sustainability of Federations: 

   He emphasised the importance of investing in the amateur side of the sport, which includes governance, youth development, grassroots programs, administration, and provincial rugby. The funding model ensures these areas receive adequate financial support to maintain the sport's long-term viability.

2. Participation-Based Funding: 

The model accounts for the varying costs of participation. For example, franchises participating in the Northern Hemisphere incur higher costs due to travel, team sizes, and other logistical expenses. Therefore, these franchises receive slightly more funding to accommodate their higher cost base. However, the funding model remains equitable and aims to balance participation costs with the needs of all members.

He explained that the equity deal would not alter the principles of this funding model but would enable SARU to generate more revenue through increased commercial opportunities. This additional revenue would be reinvested into rugby to enhance the sustainability and performance of its members. However, he stressed that additional funds would be earmarked specifically for rugby development and enhancement rather than being diverted into non-rugby activities.

In conclusion, he emphasised that the equity deal's goal is to strengthen the financial stability of SARU’s members and ensure the continued growth and sustainability of South African rugby as a whole.

Mr Alexander emphasised that SARU is fundamentally its members and that the organisation primarily coordinates activities. He stated that whatever SARU does is for the benefit of the collective membership and not just for the small group of individuals responsible for coordinating activities. This reinforces SARU’s commitment to acting in the best interests of its broader ecosystem rather than focusing on individual or organisational gains.

Mr Rian Oberholzer, SARU Interim CEO, responded to the question regarding efforts to negotiate a better introduction fee, confirming that SARU had entered into renegotiations and successfully reduced the fee by nearly half. He explained that the fee covered the introduction and all professional costs associated with the transaction, including success fees and other transaction-related expenses.

He emphasised that the renegotiated fee was deemed fair and equitable compared to similar transactions, and SARU was comfortable with the outcome of these negotiations.

The Chairperson acknowledged his satisfaction with the response but wanted to interrogate further. He raised a question about the deduction and the declaration of conflict of interest, asking whether any member within SARU had signed such a document. Additionally, he inquired whether anyone within SARU was known to the individual or entity that introduced the deal, though he refrained from mentioning the introducer by name.

Mr Oberholzer reiterated that no one involved in South African rugby would benefit from this deal, which had been emphasised multiple times. He explained that SARU had made this clear not only to its members but also through public media statements. He further highlighted that SARU had established various committees to oversee such matters and implemented policies within the organisation to prevent anyone from benefiting in any manner or form from the deal. This framework ensures transparency and accountability when handling transactions.

The Chairperson stated that his comments were made for the benefit of SARU. He referred to the Sport and Recreation Act 110 of 1998, which outlines the requirements for detailed financial disclosures when federations enter into deals of this nature. He also highlighted the importance of addressing potential conflicts of interest in such transactions. He urged SARU to take note of these legal provisions to ensure compliance and transparency.

Adv Salie raised a detailed and multifaceted question, emphasising that it was in the interest of both the nation and SARU. She acknowledged the presentation of graphs and explanations but expressed a desire for more comprehensive financial disclosures to better understand the organisation's current and projected financial position, both with and without the equity deal.

She outlined her request for:                                                     

1. Detailed Financial Statements: 

   - Income statement for the nine months ending 30 September 2024.

   - Balance sheet as of 30 September 2024. 

   - Forecasted income statements for the year ending 31 December 2024, excluding and including the equity deal. 

   - Forecasted balance sheets as of 31 December 2024, excluding and including the equity deal. 

2. Long-Term Financial Projections: 

   - Detailed forecasted income statements and balance sheets for the years ending 31 December 2025 to 2029, excluding and including the equity deal. 

   - Cash flow statements from 31 December 2024 to 2029, excluding and including the equity deal. 

She pointed out the importance of understanding the financial implications of the equity deal over time, including the organisation's ability to generate revenue and maintain sustainability with or without the deal.

She also inquired about two additional points: 

- The current financial reserves ("coffers") of SARU. 

- Whether SARU had considered involving independent advisors to scrutinise the equity deal for further assurance and transparency.

Mr Saban acknowledged the length of the question. He explained that SARU has comprehensive financial modelling, including income statements, balance sheets, and cash flow forecasts for equity and no-equity scenarios. These financial models are presented regularly to the Executive Committee (EXCO), including in a session scheduled for the following day, where long-term budgets will be discussed.

He highlighted the challenges SARU faces as a self-funded organisation, noting that the federation operates without a balance sheet or financial reserves and relies heavily on match-generated revenue. This dependency creates vulnerability, as cancelled matches lead to lost revenue while the cost base remains fixed. Despite these challenges, SARU strives to sustain and transform rugby across all levels, including youth and women’s teams, while maintaining world-class performance.

He further elaborated on SARU's current deficit, emphasising the importance of the equity deal to create financial reserves and establish long-term solvency. He clarified that the value of the equity deal lies not just in the upfront funding but also in the potential to stabilise SARU’s financial position over time.

He explained that SARU’s financial models are heavily assumptions-based due to uncertainties such as broadcasting contracts, which are typically signed in cycles of three to five years and are yet to be finalised for the next global cycle starting in 2025. The equity deal provides a pathway to fund SARU's cost base sustainably, while the no-equity scenario would require alternatives, such as revenue generation or cost-cutting measures.

He also addressed the current financial situation, stating that SARU has no reserve funds. He referenced the financial strain during COVID-19 when SARU’s revenue dropped significantly, requiring industry-wide salary cuts and operational reductions. Despite these hardships, SARU managed to survive and even achieve significant successes, such as maintaining the Springboks’ position as the number one team in the world.

Lastly, he reiterated SARU’s resilience and adaptability, noting that if the equity deal is not approved, SARU would need to explore alternatives to meet its financial obligations and continue competing at the highest level. These alternatives would involve difficult decisions, such as cost-cutting measures, which reflect the harsh realities of operating in a high-performance sports environment without external funding or reserves.

Ms Nkosi (ANC) began by greeting everyone in the meeting and acknowledging that she was unwell but wished to contribute. She joined her colleagues in welcoming SARU's presentation and stated that she had several questions, particularly about stakeholder engagement regarding the proposed equity deal.

1. Stakeholder Consultation: 

   - She asked whether SARU had met and consulted all its stakeholders about the proposed equity deal. 

   - She inquired specifically about which stakeholders were consulted during this process. 

2. Concerns from Unions:

   - She asked SARU to clarify the concerns the majority of its unions raised, particularly those that appeared to oppose the proposed deal. 

   - She wanted to know the key outcomes or resolutions from SARU’s discussions with the unions.

3. SuperSport Consultation:

   - Referring to a letter dated 16 October 2024, she pointed out that SuperSport, a long-standing and vital partner of South African rugby, had expressed significant concern about the lack of consultation regarding the deal. 

   - She questioned why SARU had not consulted SuperSport, despite their importance, and sought an explanation for why no meeting had been arranged with them to discuss the equity deal. 

4. Strategic Importance of the Deal: 

   - She referred to three risks outlined in the presentation if the equity deal does not go through: 

      1. SARU would remain financially constrained, risking its ability to support unions and franchises. 

      2. SARU would fail to fulfill its obligations to invest in grassroots initiatives and further develop rugby in South Africa.

      3. Professional and amateur rugby pathways would become unsustainable, potentially forcing a restructure. 

   - She asked SARU to clarify what plans or interventions they had put in place to address these risks, noting that the presentation had not provided clear solutions or strategies for mitigating these challenges.

She concluded by requesting a thorough response to all her concerns to better understand SARU's approach and intentions regarding the equity deal and its broader implications for South African rugby.

Mr Alexander began by addressing the consultation process for the equity deal, stating that SARU had briefed three ministers of sport—Mr Nathi Mthethwa, Mr Zizi Kodwa, and the current minister—on the deal. SARU also conducted a roadshow with its sponsors and engaged with its members, emphasising that the claim of not briefing stakeholders was incorrect.

Regarding SuperSport, he expressed surprise at their dissatisfaction, highlighting that SARU had presented the deal, line by line, at SuperSport’s offices with their staff present. He found it disingenuous for SuperSport to later claim a lack of consultation and stated that this was taken up directly with them.

He explained the sustainability goals behind the equity deal, emphasising that rugby in South Africa is primarily funded by revenue from Springboks and four franchises, with little financial input from other sources. SARU cross-subsidizes activities like school rugby, relying heavily on broadcast rights and sponsorships. He pointed out that the South African market has been maximised and can no longer sustain rugby's financial demands.

The equity deal aims to unlock new revenue streams, such as OTT platforms and enhanced sponsorship opportunities. He noted that sponsors now demand more than logo placement; they require sophisticated platforms for engagement, data mining, and fan experiences, whereas SARU seeks partnerships with experts instead of building internal capacity. He referenced the New Zealand Rugby Union’s experience, where attempts to build internal capabilities led to financial challenges and dependence on external funding.

He criticised individuals who took concerns to the media instead of addressing them through SARU’s forums, noting that SARU had not engaged in public disputes to avoid damaging rugby’s reputation. He reiterated SARU's commitment to broad consultation and adaptability, stating that if the deal failed, SARU would explore other initiatives but face financial constraints requiring cuts to the organisation.

He explained SARU’s efforts to sustain the sport, including exploring mechanisms like accessing the 3% allocated to women’s development under the CSI codes or DTI regulations and advocating for tax incentives for sports sponsorships. However, he admitted that options were dwindling, emphasising the urgency of finding sustainable solutions to prevent rugby in South Africa from declining.

He concluded by reaffirming that the equity deal is about ensuring the sustainability of rugby in South Africa, emphasizing that if the vote on the deal fails, SARU will need to find alternative strategies to keep the sport alive.

Ms Nkosi reiterated her concern about the equity partner and the specific interventions SARU planned to address the three risks outlined in the presentation. She pointed out that without the strategic minority equity partner, SARU highlighted the following threats: 

1. Financial constraints preventing SARU from supporting unions and franchises effectively.

2. Inability to invest in grassroots initiatives and further develop rugby in South Africa.

3. The unsustainability of professional and amateur rugby pathways in the long term, potentially forcing a restructure.

She emphasized the need for SARU to provide clear plans or interventions to mitigate these threats, even if the equity deal did not proceed. She expressed that this lack of contingency planning was a significant concern and asked for a detailed response outlining how SARU intended to address these challenges.

Mr Alexander acknowledged the critical need for a contingency plan if the equity deal fails. He admitted that SARU would have to return to the drawing board and reevaluate its options. While SARU has already extensively tapped into the South African market to fund its programmes, he noted that additional efforts would be needed to develop new initiatives to ensure sustainability.

He emphasised the importance of keeping rugby alive in South Africa, particularly for the younger generation. He expressed SARU's commitment to doing whatever it takes to maintain access to the sport and its development. However, he admitted that, at this point, he could not provide specifics about those new initiatives, as they would need to be explored and developed after reevaluating the situation.

Ms Mmolotsane raised a direct question regarding Mr Jurie Roux, asking the President to clarify whether Mr Roux has any relationship with SARU and is providing any services to the organisation.

Mr Alexander clarified the circumstances surrounding Mr Jurie Roux's role and SARU's current leadership structure. He explained that when Mr Roux's contract as CEO was terminated due to losing an arbitration case that made it untenable to keep him in a position of trust, SARU brought in a new CEO to manage the organisation's day-to-day activities.

However, he noted that SARU retained Mr Roux as a consultant on a short-term contract. He emphasized that this decision was based on Mr Roux's intellectual property (IP) and expertise, which SARU deemed valuable for specific projects. He also mentioned that SARU is managing two significant processes: the equity transaction and the launch of the "Greatest Rivalry" initiative with the All Blacks in 2026, with Mr Roux contributing in a consulting capacity.

Ms Mmolotsane raised several critical questions:

1. Jurie Roux's Current Role: 

   She questioned the appropriateness of Mr Jurie Roux continuing to work as a consultant for SARU despite being found guilty of improperly transferring funds while at Stellenbosch University. She noted that while he did not steal the money, the act of moving funds illegally had consequences. She expressed concern about SARU rewarding him with consultancy work after his exit as CEO and asked if this implied approval of his prior actions.

   - Additionally, she inquired whether Mr Roux had a pre-exit contract in place when he left SARU, stating that while she expected the answer to be no, her research suggested otherwise.

2. Feasibility Study:

   She asked about the feasibility study conducted before initiating the equity deal, referencing her research that indicated it was performed by a UK-based company. 

   - She questioned why SARU did not utilise South African companies or universities for the study, emphasising the availability of local expertise. 

   - She expressed concern about SARU’s reliance on foreign entities, asking why a local company or organization was not engaged for this work.

3. Comparison to New Zealand: 

   She reiterated her unease with the comparison between South Africa and New Zealand in the equity deal discussion. She pointed out the stark differences in population size, with New Zealand having a population of only 5 million, making such comparisons problematic.

4. Approach by Local Investors: 

   She asked whether it was true that Dr Patrice Motsepe and Mr Johann Rupert had approached SARU with a similar equity deal offer. She clarified that this was a rumour and sought confirmation on whether there was any truth to this claim.

She concluded by requesting clarity and transparency on these points.

Mr Alexander addressed the questions as follows:

He expressed surprise at the mention of a UK company conducting a feasibility study, categorically stating that a UK-based firm did no such study. Instead, SARU handled the study internally. However, he clarified that BDO, including their UK office, was engaged in evaluating the deal's value because similar deals had been conducted in the UK, particularly involving soccer clubs. SARU chose not to use local companies for this evaluation because no comparable deals had occurred in South Africa.

He explained that the investment process was open and noted that while South African businesses initially expressed interest, these entities did not follow through. He acknowledged that other companies had later indicated interest but reiterated that SARU had been upfront about its requirement for an equity deal rather than a simple cash injection or loan, which would not contribute to long-term growth.

He expressed concern about potential resistance to foreign direct investment (FDI) in South Africa, noting that FDI aligns with the South African president’s calls for attracting foreign investment. He apologised if the reliance on FDI for the equity deal had caused concern but defended the approach as necessary for SARU’s growth.

He deferred to the experts to address comparisons between South Africa and New Zealand, indicating that this required a more technical response.

He reaffirmed SARU’s intentions to create long-term sustainability for rugby in South Africa and expressed openness to further clarification if needed.

Mr Saban responded by stating that he had already addressed the differences between New Zealand and South Africa regarding the valuation of their respective deals. He emphasised that the comparison involved distinguishing between a loan-based deal, like New Zealand’s, and an equity-based deal, like SARU’s. He noted that he had spent considerable time explaining these distinctions earlier and seemed to suggest that his previous explanation should suffice.

Mr Alexander addressed the question about Dr Motsepe and Mr Rupert by confirming that South African companies had been interested, including in the current deal. However, he declined to disclose specific names or details, stating that discussing these parties was outside his scope. He suggested that those parties should provide information directly if they wished to do so.

The Chairperson addressed the first question by stating that the legal advisor had informed him it is legally possible to employ someone depending on the outcome of an arbitration process. He wanted to ensure this point was clear to the members present.

Mr Jacobs thoughtfully observed the unique nature of the Springboks as a brand, noting that it is both distinct from and representative of the nation. He compared this with football, where national teams lack a singular brand identity. He highlighted similarities between South Africa’s franchises (e.g., the Stormers, Bulls, Lions, and Sharks) and the branding strategies of American National Football League teams.

Using this as context, he asked about potential safeguards against undue influence or manipulation from the "big four" franchises. Recognising their significant contribution to SARU’s revenue, he asked whether SARU had measures in place to ensure that these franchises’ influence does not disproportionately affect decisions, particularly given their prominence in major competitions.

Mr Alexander began by explaining that SARU's members are the unions, and these unions often have equity partners with whom they have direct relationships. However, these equity partners do not currently have a direct relationship with SARU, which he identified as a structural gap in the governance of the sport. He compared this to soccer, where FIFA’s members represent the amateur aspects of the sport, while the professional arm is often excluded from decision-making processes. He suggested it might be time to consider giving the professional arm a seat at the table, as they are frequently the subject of discussions and decisions.

Regarding the potential for influence from the big franchises, he acknowledged that equity partners might exert influence through their relationships with unions. However, he clarified that decisions ultimately depend on the union, the voting member within SARU’s governance structure. This ensures that influence is possible and mediated through the unions.

Mr Oberholzer added that SARU had engaged with equity investors as stakeholders during the process. He mentioned that they held sessions with these investors, including as recently as the previous week, where the Sports Group had a session to answer questions about the deal's construct and workings. While these equity investors are not members, SARU ensured they were included in the process to provide transparency and gather their input.

Ms du Pisani addressed the appointment issue by referring back to the presentation. She explained that SARU has a Social Ethics Committee, which is independently chaired and reviews the strategic consultant's appointment on behalf of SARU. This committee operates within a framework and has implemented guardrails for the appointment, including a clear structure outlining the specific work required and deliverables expected. She emphasised the importance of this structured approach in ensuring accountability and transparency.

She also noted that Parliament's legal advisor had highlighted a nuance in the situation. Specifically, there is an ongoing appeal process regarding the legal matter associated with the appointment in question. She concluded by stating that the principle of law would apply in this case, reflecting the commitment to adhering to legal standards and due process.

Mr Saban added to the discussion, addressing the nuance around the transfer of funds associated with Mr Jurie Roux. While refraining from delving into details due to the ongoing nature of the matter, he clarified that Mr Roux serves only as a consultant to the CEO of SARU and has no delegation of authority within the organisation.

He emphasised that Mr Roux has no power or ability to transfer funds or conclude contracts on behalf of SARU. This arrangement ensures that Mr Roux's role is strictly advisory and does not involve any decision-making authority or financial control within the organisation.

Mr Jacobs shifted focus to the players, seeking a deeper understanding of how the equity deal would benefit them across all levels of rugby. While acknowledging that the presentation touched on this, he requested more specific details, particularly its impact on grassroots development.

He highlighted the importance of tournaments such as Grant Khomo Week, Craven Week, and Wildeklawer, emphasizing their significance for player development and economic contributors, especially in local communities. He asked how the deal would support these events and ensure the continued development of players from grassroots to elite levels.

He noted the importance of sessions like this for public understanding, as they provide clarity and counteract potential misrepresentations or misunderstandings in the media. His focus remained on how the deal would directly impact the rugby ecosystem and the players who are its foundation.

Mr Oberholzer explained that SARU’s ability to fund its programs, including grassroots development, is directly tied to the financial resources available. The equity deal would bring additional funds into the system, allowing for increased investment in community rugby and development programs. This, in turn, would strengthen the pipeline that develops players from the grassroots to the professional level.

He emphasised that SARU does not contract players directly; they are contracted through the unions. Therefore, increased revenue for the unions from this deal would ultimately benefit players as well, as unions could allocate more resources to player salaries, development, and support.

He noted that SARU had discussed the deal with the players' union. While the players' union does not have direct influence over the deal, they have been informed about its structure and implications.

He reiterated the critical need for funding community rugby to maintain the “conveyor belt” that produces top-level players. Without adequate investment, this development pipeline risks drying up, leading to more young players leaving South Africa to play overseas. This exodus would weaken domestic rugby and impact the performance of national teams. He stressed that this deal is essential to sustaining the pipeline and keeping talented players within the South African rugby system.

Mr Saban expanded on the CEO’s points by emphasising rugby federations' global financial challenges, noting that many are experiencing significant losses due to increasing financial pressures. SARU has identified this equity deal as a critical revenue opportunity to address these challenges and ensure long-term sustainability.

He candidly acknowledged that SARU currently operates on a "flat balance sheet" principle, meaning they can only fund competitions, including grassroots initiatives if sufficient funding is available. Without financial commitments, SARU often faces situations where it cannot support participation in certain competitions due to a lack of resources.

He stressed that unlocking the commercial opportunities provided by the equity deal would enable SARU to generate the necessary revenues to adequately support grassroots participation. This funding would allow SARU to ensure that more players at the community level have opportunities to develop, participate in tournaments, and contribute to the sport's growth in South Africa. He underlined the importance of this investment in securing the future of rugby at all levels, particularly in areas currently underfunded.

Adv Salie highlighted a statement made during the discussion that SARU operates without reserves and that as revenue increases, expenditures also rise. While acknowledging that the equity deal would provide an immediate financial boost, she raised concerns that it might be a short-term solution that could lead to long-term challenges.

She expressed confidence that SARU must have conducted a thorough study to identify potential risks associated with the deal. She requested that SARU place on record the risks identified during the evaluation process and explain the mechanisms put in place to mitigate those risks, ensuring the deal’s sustainability and protecting both SARU and the nation from potential negative outcomes.

Mr Saban said that the discussion ties back to the deal's construction, particularly the equity aspect. He explained that a baseline budget was drafted within SARU's structures based on an understanding of the organisation's cost base and current investments in national teams and competition participation. He expressed confidence in the baseline budget, noting that an equity partner cannot derive value until the baseline budget is covered. This, he stated, serves as a risk mitigation mechanism.

He added that guardrails are in place, such as processes involving a new board within a commercial entity. For example, when decisions about sponsorship deals arise, they must consider whether they are driven by commercial interests or rugby high performance. Mechanisms exist to address such issues, and the budget is reset when needed.

From a financial perspective, he emphasised the importance of understanding growth and investment in rugby. To avoid future financial difficulties, he highlighted two key supporting elements. First, the proceeds will fund a reserve fund underpinned by a reserve policy. This policy has already gone through internal structures and roadshows, ensuring members understand its purpose. Access to the reserve fund will also be controlled, preventing cost creep and ensuring expenses do not escalate alongside revenue growth.

He stated that if SARU manages its cost base as forecasted until beyond 2030, the critical aspect is realising the commercial upside. He noted the globalisation of the rugby product as an example of a commercial strategy already showing results, with increased value and new sponsorship pipelines. He also highlighted sustainable revenue products, such as the "Greatest Rugby Rivalry," a significant profit event similar to the British and Irish Lions series, which will occur every four years.

Regarding funding models, he mentioned that SARU focuses on affordable models for its members, ensuring that funding requests align with activities and participation needs. The models avoid unsustainable practices, such as distributing excessive revenues without considering industry requirements or local salary caps. He stressed that South Africa must accept its competitive limitations if it cannot afford specific salary caps.

Finally, he explained that the equity deal provides upfront reserves and is tied to SARU's value proposition, commercial strategy, and affordable cost base. He acknowledged that affordability is a global challenge, with escalating costs not being managed effectively in many regions. However, he believed SARU had managed these risks effectively within the South African context.

The Chairperson, speaking from a layman's perspective, said that comparing similar deals was of great concern to him. After doing some research, he mentioned that while the deal in question was 74 pages, other deals often run up to 200 pages. He remarked lightly that he would be satisfied if there was assurance that everyone involved was content with the 74-page deal.

Mr Oberholzer said that he referred to the current 74-page document as a short-form agreement and clarified that a more extensive agreement would follow. He assured the committee that the final document would contain more than 74 pages and guaranteed this was part of the process. If the deal were accepted on Friday, they would proceed to the long-form agreement phase. He added that their legal counsel could explain that this was a standard part of the process they had to undertake.

Mr Jacobs said he wanted to ask about the deal, describing it as controversial because it provokes discussion and gets people talking. He noted that South Africans deeply value their country, its emblems, and what they represent, as they strongly hold onto these things.

He recalled an incident during the Euros when the English National Football Team had their shirt redesigned. While the shirt retained its white and blue colours, the designers altered the flag on the back, changing it from white and red to navy blue, purple, and red. This change was not well received by English fans, who boycotted the new shirt and instead wore shirts from previous decades.

Drawing from this example, he asked for confirmation that the Springbok emblem would not be changed without public consultation. He emphasised the importance of maintaining the green and gold colours indefinitely.

Mr Alexander confirmed that the Springbok emblem and the green and gold colours would remain unchanged. He emphasised that there would be no alterations, stating that these elements were part of the unity agreement established in 1992 and agreed upon with the colours board. He reassured me that these symbols would never change. Additionally, he apologised for the light green outfit worn last year, explaining that it was part of a Sixty-60 promotion.

Mr Jacobs acknowledged that the earlier joke was well-received but noted that it was beside the point. In his closing remarks, he emphasised that whatever decision is made regarding the matter should always prioritise the interests of all South Africans—those who play the game, those who aspire to play, and those who find joy and pride in watching the Springboks. He highlighted the importance of decisions that preserve and strengthen the values of optimism, excitement, and unity associated with the team while ensuring the process is robust, fair, transparent, and protective of the future of rugby in the country.

He spoke passionately about representing voices from impoverished communities in the Northern Cape, Gauteng, and the Eastern Cape, where children attend schools they otherwise might not have been able to and play rugby with dedication. He shared how these children gain life and rugby skills, attend tournaments, and receive opportunities they would not have had without the sport.

He also spoke on behalf of university players, including his friends from institutions like the University of Pretoria, which has been back-to-back Varsity Cup champions, and players from Stellenbosch, Northwest University, and other places across the country. He expressed hope for these players who aspire to wear the national colours one day.

Finally, he spoke from the perspective of parents who dream of seeing their children live out their rugby aspirations in a dignified way that proudly represents South Africa. He concluded with a heartfelt appreciation for the Springboks, expressing deep love for the team, calling them among his top two favorite things and humorously adding that they are "definitely not number two." He wished everyone involved the best and praised the fantastic work being done.

Mr Alexander began apologising, clarifying that his earlier comment about the Sixty-60 promotion was tongue-in-cheek. He then assured me that one thing that would always be protected was the emblem and the colours of the springboks. He emphasised the rich history of the sport's struggle that led to where they are today, with people uniting around a symbol and the national colours. He firmly stated that the South African colours and what they represent in terms of playing for the country are non-negotiable and guaranteed they would never be compromised.

Adv Salie began by stating that she would be brutally honest, emphasising that she could not simply accept things at face value as an advocate. She strongly disapproved of Mr Jurie Roux's involvement with SARU, citing his mismanagement of funds and the dismissal of his appeal. She stated that it was irresponsible for him to be associated with SARU in any capacity.

Moving to the equity deal, she explained her commitment to transformation, particularly in schools and in improving infrastructure and sports development in townships, rural areas, and other struggling areas. Despite understanding the need for the deal due to empty coffers and the challenges of supporting rugby players who are leaving the country, she expressed concerns about the financial risks involved. She noted that while she understood the rationale behind the deal, the current documentation and information provided were insufficient for her to confidently support it.

She acknowledged that disclosures and confidentiality requirements might limit how much could be shared, but she felt that the presentation lacked transparency regarding the risks and downsides of the deal. Without adequate information to ensure its safety for the nation, she could not support the deal at this stage.

However, she reiterated her support for the Springbok team, the green and gold colours, and the transformation efforts within South African rugby. She mentioned her involvement in advising Cricket South Africa to ensure transformation within their organisation as well. She expressed gratitude for the player's hard work and everyone behind the scenes and wished the team the best in their endeavours.

She concluded by reaffirming her inability to support the equity deal at this time, given the concerns and limited information available, but emphasised her ongoing support for the Springboks and their progress in transformation.

The Chairperson clarified that the members' role was not to support or oppose the deal but simply to listen.

Ms Mmolotsane began by referring to slide 30, titled "Aligning with Global Trends," and highlighted a statement made during the presentation that an equity partner would bring capital expertise and best practices from other successful sports organisations. She questioned what specific expertise the equity partner would provide that South Africa does not already have. She emphasised her patriotism, asserting that it cannot be acceptable to assume that expertise must come from outside the country. She asked for clarification on the kind of expertise referred to and reiterated her earlier concern about involving external entities instead of local resources.

She then addressed the CFO directly, requesting a simpler explanation of the distinction between an investment and a loan. She was confused, stating that the deal sounded like a loan, especially given the notion of paying back the partner. She questioned why, if it were an investment, the partner could not simply receive dividends instead of requiring repayment. She suggested that there would be less resistance or confusion if the deal were openly labelled as a loan.

She acknowledged the caution against expressing outright support or opposition as a member of parliament but shared her concern that many questions raised during the meeting were not receiving clear answers. This lack of transparency, she said, raised suspicions that hidden issues were not being disclosed. However, she emphasised her hope that the Springbok emblem and colours would remain intact, as that was critical to her and many South Africans.

She then shifted to a regional concern, highlighting the unfairness she perceived toward the Free State province. She pointed out that the Free State boasts a state-of-the-art rugby stadium rarely utilised for Springbok games, often held in Johannesburg, Mpumalanga, or Cape Town. She argued that this neglect leaves the stadium as a "white elephant," creating unnecessary expenses for the municipality to maintain an underused facility. She urged SARU to consider hosting more games in the Free State, given its central location between Gauteng and Cape Town.

In closing, she expressed her unease about the equity deal, noting that her research into the matter uncovered troubling issues for her as a community member. She suggested that another meeting address these broader administrative concerns, emphasising the need for transparency and open discussion. She concluded by stating that the current meeting should not be the last on these issues, as significant problems requiring attention could not be adequately addressed at that moment.

The Chairperson began by expressing his agreement and acknowledging that she had been one of the most vocal members of the committee in addressing SARU around the equity deal. He admitted that her efforts and others were instrumental in ensuring SARU's presence at the meeting. Reflecting on the confidentiality clauses mentioned in the media, he shared that he had previously requested the portfolio committee to involve senior legal counsel. This, he explained, was an effort to protect both SARU and the committee itself.

He appreciated the SARU President's presence at the meeting, emphasizing that the discussion was taking place before the 6th of December 2024, as the committee had wanted. He mentioned the seriousness with which the committee had approached the matter following conversations and comments in the media. He also acknowledged that both SARU and the portfolio committee had worked to create this opportunity for dialogue, noting that the SARU President had reached out proactively and expressed willingness to meet before the critical deadline.

He noted that the discussions in the meeting had the potential to foster a more informed and content country and possibly inform unions who might not have previously been privy to the details discussed. He clarified that he was not suggesting this was the case but acknowledged the importance of the meeting in shedding light on critical issues.

In closing, he stated that he would allow SARU to address the points raised about expertise and the perceived loan issue.

A SARU representative explained that the question of expertise required revisiting the events of December last year when two options, ASG (Akali Sports Group) and CVC, were presented to SARU members during the annual meeting on 8th December. Members were tasked with deciding their preferred candidate to negotiate a potential deal. One key distinction between the two was the expertise offered by ASG, which originates from the United States.

He elaborated that the Akali Sports Group brought relationships, contacts, and access to service providers specialising in the sportainment ment business in the United States—expertise not currently available locally. He highlighted that some of the world's best sports fan engagement programs have emerged from the United States. For instance, in 2020, Major League Baseball invested $1.8 million per team into a new fan engagement platform, now recognised as one of the best globally.

He also referenced an earlier comment about New Zealand’s advancements, noting that their content creation and fan engagement success was achieved through external investments and expertise. He candidly admitted that South African Rugby lacks the financial resources and expertise to achieve such outcomes for its supporters, both locally and internationally.

He emphasised that this deal was not merely a financial proposal but a two-part strategy: first, to address immediate financial challenges and establish reserves, and second, to leverage international expertise to elevate the Springbok brand globally. This, he argued, was essential for the growth and future of South African Rugby.

Ms Nkosi began by acknowledging that her colleague had already covered many points. She supported the suggestion for another meeting with SARU, emphasising the importance of continuing the discussion. She supported the Springbok players, commending them for their excellent performance.

Turning to the presentation, she pointed out that under the slide discussing the staff complement, she observed that female representation stood at 45%. She urged SARU to work on increasing the number of women in their organisation, highlighting that women are often underrepresented in such entities. She requested SARU to address this issue, hoping to see more women in leadership roles. She emphasised that women are the leaders of tomorrow and vital to progress, and she was sincere in her request for SARU to prioritise this matter.

She thanked SARU for attending the meeting, acknowledging the Chairperson’s earlier remarks that SARU had initially proposed a virtual meeting, which was not agreed upon, but expressed gratitude that they made time to attend in person. She reiterated her point about increasing female representation within SARU, clarifying that her comment was serious and not made in jest.

Mr Alexander thanked the members for their comments and assured them that SARU had listened to their concerns and feedback. He acknowledged that not all questions may have been answered to their satisfaction but emphasised SARU's openness to future discussions. He mentioned that SARU is typically called annually to account for its activities, and he hoped that this practice would continue, providing opportunities to address any outstanding questions.

He explained that SARU sees itself as a coordinator of rugby activities and is accountable to both the players and the members present. He hoped they had provided informed responses to the concerns raised. He invited the advocate or any interested parties to visit SARU's offices and meet with their CFO to gain a deeper understanding of the extensive work that had gone into the process.

He clarified that discussions about private equity had not arisen suddenly. Still, he was part of a long-term strategy that began in 2018 when it was first mentioned in SARU's annual report. Members granted formal approval to explore private equity in 2019 as part of efforts to find new avenues for growth and income generation amidst challenging times for rugby and other federations.

He concluded by thanking the members for listening. He apologised if anything said during the meeting was offensive or unwelcome and reiterated that SARU had tried its best to provide clarity and responses.

Mr Khaya Mayedwa, Senior Manager: Government and Stakeholder Relations SARU, began by encouraging the honorable members to take up the SARU President's offer to visit their offices for further clarity or more information on the matters discussed. He acknowledged that the limited time during the meeting made it difficult to cover everything in detail but reassured members that unanswered questions could be followed up and clarified afterwards.

He then addressed SARU's progress regarding female representation, comparing it favourably to other organisations, including political entities. He highlighted SARU's significant strides and emphasised their commitment to ensuring alignment with the country’s demographics. He pointed out that at higher levels of the organisation, such as the boards and chairpersons, women are already in leadership positions, reflecting SARU’s active efforts to promote gender equity.

He reiterated SARU's determination to continue these efforts and emphasised that they are working towards achieving greater representation and inclusivity across all levels of the organisation.

Closing Remarks by the Deputy Minister

Deputy Minister Peace Mabe began by thanking everyone present and shared her observation that there appeared to have been poor communication between SARU and the portfolio committee. She questioned whether this type of meeting had occurred in the past and acknowledged the possibility that it had not.

She urged that while the committee was only three months into its term, it was important not to be overly critical of the situation, noting that such challenges can happen. However, she emphasised that communicating through the media was ineffective and would not resolve issues. She made a humble plea for SARU to improve communication by finding ways to keep the portfolio committee informed about every step they take. She suggested that even if SARU cannot present to the full committee in the same format as this meeting, they should consider inviting the chairperson and whip of the committee for regular updates.

Following the discussion, she expressed hope that the nation now understood that the team was not being sold. She believed the questions and answers provided during the meeting had helped clarify the status and decisions involving the national asset. She described the process as a work in progress and recommended that SARU and the portfolio committee focus on improving communication moving forward.

Closing Remarks by the Chairperson

The Chairperson began by expressing his strong belief that the Springbok A and B teams are the best rugby teams in the world, setting a tone of pride and admiration. He reflected on the challenging period between 2016 and 2020, emphasising the struggle to save rugby during a particularly difficult phase, including the battle against the significant challenges posed by COVID-19. He suggested that this period of survival warrants further emphasis, possibly through a book or documentary in the future.

He turned his focus to the current and future state of rugby, emphasising the importance of progressing the sport while respecting the oversight role of parliamentarians. He highlighted rugby's contribution to social cohesion and its role in addressing inequalities in sport, noting that when one looks at a rugby team, one does not see race or colour but competence and unity. He also appreciated the contributions of individuals who have elevated rugby, including those from historically marginalised areas. He requested that SARU convey a message of gratitude to Mr Rassie Erasmus for his contributions.

He expressed disappointment over Mr Erasmus's not being nominated as the best coach, particularly considering his achievements compared to others with fewer accomplishments. He also pointed to Cricket South Africa's success in generating revenue, suggesting that rugby could learn from cricket's financial strategies while continuing to share and exchange best practices between the two sports.

He acknowledged the challenges and criticisms that both SARU and the parliamentary committee faced, emphasising their shared responsibility to uphold the nation's sporting interests. Reflecting on their collaborative efforts, he noted moments of miscommunication but stressed the importance of moving forward with clarity and determination.

He concluded by thanking the committee members and professional staff for their support, noting that this was likely the last meeting before the holidays. He extended his best wishes to SARU for upcoming games, including the Sevens, and expressed optimism about taking the country forward together, as echoed by the Deputy Minister.

He announced a 30-minute lunch break, inviting SARU representatives, the Department, and members of Parliament to join. He clarified that while SARU representatives were welcome to recuse themselves after lunch to prepare either for the equity deal or an upcoming match, the meeting for honourable members and professional staff would resume after the break to address pending agenda items, including the adoption of minutes. He formally adjourned the meeting for SARU but reminded members that their work would continue post-lunch.

Adoption of minutes

The consideration of the 2023/24 fourth-quarter performance report was formally moved for adoption by Ms Mmolotsane and seconded by Ms Nkosi.

The consideration of the 2024/25 first-quarter performance report was moved for adoption by Adv Salie and seconded by Mr Jacobs.

The consideration of committee oversight dated 8–11 October 2024 was moved for adoption by Mr Jacobs and seconded by Ms Mmolotsane.

The consideration of committee minutes dated 29 October 2024 was moved for adoption by Ms Nkosi and seconded by Ms Mmolotsane.

The consideration of committee minutes dated 1 November 2024 was moved for adoption by Adv Salie and seconded by Mr Jacobs.

The consideration of committee minutes dated 19 November 2024 was moved for adoption by Mr Jacobs and seconded by Ms Nkosi.

The consideration of committee minutes dated 26 November 2024 was moved for adoption by Ms Mmolotsane and seconded by Adv Salie.

The Chairperson expressed his gratitude to all the members present, acknowledging their contributions and stating that it would be recorded as such. He also thanked the support staff, emphasising how much he values their work and contributions to the portfolio committee. He made it clear that he did not take their efforts for granted and appreciated everything they had done so far.

The meeting was adjourned.