Deadline Approaching for SARU to Make a Decision Regarding Private Equity Deal

Chester Khangelani Mbekela
Oct 16, 2024
5 min read

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Published by: Zila Mbekela, 16 October 2024

Private equity (PE) has been making significant inroads into the world of rugby, with deals worth over $1 billion involving some of the sport's biggest stakeholders. Now, South African Rugby is about to join the fray, with the Ackerley Sports Group (ASG) poised to acquire a 20% commercial stake in the Springboks, South Africa's legendary national rugby team.

This monumental move comes hot on the heels of similar investments by PE firms in New Zealand Rugby, Six Nations Rugby, and Premiership Rugby, and it's set to reshape the business of rugby in South Africa.

This article delves into the upcoming deal, its significance, and how it aligns with the growing trend of private equity's involvement in rugby.

The Springboks' New Era of Private Equity

As private equity continues to reshape the business landscape of global rugby, the South African Rugby Union (SARU) is now finalizing its own commercial partnership with ASG. The deal is expected to be voted on and confirmed by October 17, 2024, with the Springboks' commercial rights being valued at a substantial $375 million (approximately R6.6 billion).

If the deal is approved, SARU will receive around $75 million in exchange for ASG acquiring a 20% stake in the Springboks' commercial operations. This investment will be made in a newly created Commercial Rights Corporation (CRC), which will hold all current and future revenue-generating assets tied to the Springboks and SARU. While SARU will maintain majority ownership of the CRC, ASG will become a significant minority stakeholder, allowing both parties to grow and leverage the commercial opportunities of one of the world's most iconic rugby brands.

Following a Well-Trodden Path

The Springboks' deal with Ackerley Sports Group mirrors other major PE investments in global rugby. One of the earliest and most high-profile deals was New Zealand Rugby's (NZR) partnership with Silver Lake, a U.S.-based private equity firm. In 2022, Silver Lake invested $262.5 million for a 7.5% stake in NZR, valuing the organization at NZD $3.5 billion. As part of the arrangement, NZR established a new body—the New Zealand Rugby Commercial (NZRC)—which is responsible for growing the commercial arm of the All Blacks and other assets.

This deal also enabled NZR to invest $60 million into a legacy fund, launch its own streaming platform, and develop a fully-fledged commercial division led by former Google executive Craig Fenton.

Other notable private equity deals in rugby include:

Six Nations Rugby, which sold a 14.3% stake to CVC Capital Partners for £365 million.
Premiership Rugby, which saw CVC acquire a 27% stake for £200 million.
Rugby Australia, which secured an $80 million credit facility from Pacific Equity Partners as part of a five-year deal, with record revenue projections tied to upcoming events such as the Lions Tour (2025) and the Men's and Women's World Cups (2027, 2029).

With these precedents in mind, it’s clear that the Springboks are in good company, and the potential financial upside is significant.

The Ackerley Sports Group: A Proven Player in Sports Business

For those unfamiliar with the Ackerley Sports Group, the company is no stranger to the world of professional sports. Ackerley Partners has owned or been involved with various franchises across different sports, including:

The Seattle SuperSonics (NBA)
The Seattle Storm (WNBA)
The Seattle Seawolves (Major League Rugby)
The Seattle Kraken (NHL)
The Coachella Firebirds (AHL)

Their experience in managing and building sports brands globally positions them as a valuable partner for SARU. The Ackerley Sports Group has a reputation for identifying high-potential opportunities and maximizing them through strategic investments, digital innovation, and global marketing strategies. Now, they are looking to bring that same expertise to the Springboks.

A Lucrative Future for the Springboks and South African Rugby

The timing of this deal couldn't be better for South African rugby. The Springboks are not only the defending World Champions but also boast an impressive list of titles, including winners of the Rugby Championship and holders of the Freedom Cup.

As one of the most successful teams in rugby history, their commercial value is immense, and the opportunities to grow that value are numerous.

The newly formed CRC will focus on enhancing all of SARU's revenue-generating activities, including:

Sponsorships
Broadcasting rights
Digital marketing and content creation
Match-day revenues

In the modern sports landscape, leveraging digital assets such as owned data, online platforms, and emerging technologies like web3 and tokenization can significantly increase a team's commercial reach. With Ackerley Sports Group's expertise, the Springboks will have more opportunities to capitalize on these innovations.

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A Conservative Approach to a Transformative Deal

It's worth noting that SARU has approached this deal with a degree of caution. They have been exploring the idea of a private equity partnership since early 2023 when ASG was selected as a preferred partner over CVC Capital Partners. This measured approach has allowed SARU to carefully consider the financial and operational implications of bringing on a private equity partner.

Although the finer details of the agreement have yet to be disclosed, it is clear that the goal of this partnership is to maximize the Springboks' commercial potential while ensuring that SARU maintains control over its assets.

The Global Trend of Private Equity in Rugby

This deal with ASG marks another milestone in the growing trend of private equity investments in rugby. As the sport continues to evolve, so too does its business model. Historically, rugby has lagged behind other major sports like football and basketball in terms of commercialization. However, recent developments have shown that rugby has vast untapped potential as a commercial product, especially as private equity firms bring their expertise to the table.

The Springboks' upcoming deal with ASG is another step forward in the professionalization and financial growth of the sport. With rugby's global appeal continuing to rise, private equity partnerships like these will likely play a key role in shaping the future of the game.

Conclusion: The Springboks' Bright Commercial Future

With a history of success on the field and a growing commercial footprint off it, the Springboks are on the verge of unlocking new financial potential through their partnership with Ackerley Sports Group. This deal represents an exciting opportunity for South African rugby to build on its legacy and grow into a global powerhouse both in terms of sports performance and business acumen.

As private equity continues to influence the sport, the future of rugby looks brighter—and more lucrative—than ever. The Springboks, along with their new partners, are well-positioned to be at the forefront of this evolution.