(MENAFN- Live Mint) (Bloomberg) -- Rugby unions linked to South Africa's richest men and the nation's sports Minister have set back a controversial private equity deal over the commercial rights to the country's world championship-winning Springbok team.
SA Rugby, which oversees the national Springbok team, planned to sell a 20% stake in a newly created commercial-rights company for $75 million to Seattle-based Ackerley Sports Group LLC. Its member unions were due to vote on the deal on Oct. 17. Those unions run clubs linked to South Africa's richest man, Johann Rupert, as well as Patrice Motsepe, the country's only Black billionaire, and pharmaceutical tycoon Stephen Saad.
SA Rugby postponed the ballot following a request by South African Sport, Arts and Culture Minister Gayton McKenzie to“more fully brief government on the proposal,” the organization said in a statement on Wednesday. While it didn't give a new date for the vote it said it would take place this year.
The proposed deal is an attempt to capitalize on the success of the team: The Springboks won the last two Rugby World Cups and last month secured the Southern Hemisphere's Rugby Championship.
It would follow a growing trend among national federations of successful rugby teams, most notably, New Zealand's All Blacks, to raise funds from private equity as money managers increasingly turn to sports leagues and associations rather than teams to diversify their investment risk.
The delay is a blow to South African rugby authorities, who despite the Springboks success, lag the commercial income of their largest rivals. SA Rugby has tried to clinch a private equity deal since 2018.
Rupert, who controls the top luxury watchmaker Cie Financiere Richemont, has a stake in the Bulls together with Motsepe, a mining and finance billionaire who's also a brother-in-law of President Cyril Ramaphosa. Saad, the founder of the Southern Hemisphere's biggest drugmaker, Aspen Pharmacare Holdings Ltd., is the chairman of the Sharks, a rival team that's controlled by Wall Street lawyer Marco Masotti's US group. Their unions were among seven of SA Rugby's 14 member associations to sign a letter opposing the deal.
The unions raised concerns about the fee structure, governance and ethics of the deal as well as potential changes to SA Rugby's commercialization and revenue mechanisms, according to a copy of the letter published by Johannesburg-based Business Day newspaper.
SA Rugby addressed the concerns raised by the letter at a meeting of the Presidents' Council on Wednesday, it said in a statement.“A task team was mandated following the meeting to provide more information on key issues for additional clarification to members,” it added.
Ackerley was formed last year by brothers Christopher and Ted Ackerley of Ackerley Partners LLC. The family invests in the sports sector, with holdings in Seattle-based soccer, ice-hockey and basketball teams as well as English soccer team Leeds United.
Under the proposed deal, Ackerley would take three of the seven voting board seats in the new commercial company as well as have the right to appoint a chairman, effectively controlling the Springbok Rugby brand's commercial rights.
It was selected over the Northern Hemisphere's Six Nations Championship investor CVC Capital Partners as the preferred bidder for the a stake last December after presentations by both entities. Details about the associated“success fees” and transaction costs were included in the presentations, said SA Rugby said fact sheet dated Oct. 15.
The Springboks have won the World Cup a record four times. Once regarded as an emblem of apartheid due to its formerly all-White composition, it's now seen as an example of successful racial integration with a Black captain and representatives from most of the country's largest ethnic and religious groups.
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--With assistance from Thomas Hall.
(Updates with SA Rugby comment in ninth paragraph)
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