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A Privatised South African Rugby

A privatised South African rugby is critical

A privatised South African rugby is critical and the 2016 Super Rugby season could not have been clearer in the urgency of a serious discussion around the matter.

The player drain to Japan and Europe and the inability, or unwillingness of SARU to fix the Southern Kings ‘problem’ is a point of critical mass that should be a clear and present sign that it is time for something to change.

South African rugby requires an injection of investment, management skills and fair business competition to build a foundation that would pull back the 400 players, coaches and associated rugby talent that are currently playing and working abroad. It also requires a competitive structure that will make franchises such as the Kings and the Cheetahs competitive in the current Super Rugby environment.

This can only be achieved through the privatization of South African rugby.

Privatised South African Rugby

You needn’t delve into the corporate, political, operational affairs of the current structure of SARU to know that the system isn’t working. Albert Einstein quoted “You can’t save a system, using the thinking that created it”. The inevitable way forward to create a new system. A system that will pull South African Rugby out of the slurry of the past and into the professional world of sport.

The socio-economic landscape in South Africa doesn’t allow for the governmental funding needed to achieve the objectives of growing the sport, ‘transformation’ in rugby and achieving excellence at the top level of the code. SARU and government are just not capable of delivering the change that is required.

Presently SARU does allow private investment into Unions with ownership capped at 49%. While this does allow for private capital investment, it doesn’t allow for autonomy in decision-making and collective bargaining at the level the sport requires.

A privatised South African Rugby shifts the levers of power from one to many. It opens the door to an injection of local and foreign investment. As a product in its own, South African rugby is highly attractive. This underpins why SARU would fight tooth and nail to prevent any sort of full privatization. This disinclination to let go further underlines the intrinsic appeal to private investors.

A privatised South African rugby landscape

A privatised South African Rugby landscape isn’t hard to envision. The Stormers, Kings, Sharks, Cheetahs, Lions and Bulls would be an easy shift to privatisation as many of the structures are ripe for a conversion. Further down the road the addition of two to four teams would be viable as the shift in economic structures creates demand for talent to return.

Because SARU would no longer be the controlling body, the private unions would have to form a trade association and elect a Chairman that presides over disputes and negotiations. This step effectively dissolves SARU and government intervention at the premium end of franchise rugby.

SARU and Government would focus on the base provincial unions who would in turn be responsible for grass root development of the game at school, club and university level. Government and Lotto funding would also exclusively focus in this area. The private franchises would as a group be responsible for paying a premium back into the unions to support player development.

How the funding works:

The teams combine to form a single entity (lets call it ZA Rugby Pty.Ltd). Collectively they negotiate and receive sponsorship deals, TV rights money and merchandise income. Away and home game gate sales are split between teams with 70% going to the home team and 30% going to the visitors.

This type of collective agreement ensures that no one franchise benefits more than the rest. It levels the playing field and starts to address equality and imbalance with the larger and smaller franchises, particularly those outside of the four major metro’s.

Players would share revenue with the clubs at a gross level (through collective bargaining) after their costs have been deducted. So the players almost have a net profit share agreement with the franchise. This type of structure can be bonus related and performance driven, but it does ensure that we are closer to being able to match European funding.

Distribution of Talent

The system would require the use of a salary cap. This prevents one team from over capitalizing and hording talent. As an example it would be impractical for one team to keep Handre Pollard, Elton Jantjies and Pat Lambie on the payroll.

The introduction of a draft system from Varsity Cup or the U20 championships would allow for the even distribution of top talent. Linking the draft system to tertiary institute graduates or final year students is an essential step in safeguarding the future of young players.

The NFL enforces a rule that once you enter the draft you give up the right to return to college and play football. This is done to ensure that the player is ready and fully understands the implications of leaving tertiary education to pursue a professional career.

This is beneficial in a number of ways. Firstly it puts the young athlete’s future first, ensuring that they have an education to fall back on. Secondly it prevents athletes from being exposed to top level rugby before they are 100% ready. Finally, this retains top talent at universities for longer, increasing competitiveness and bolstering the sport at that level, which in turn makes it more attractive for investment.

The Springboks

The first question many would ask is how the Springboks would be affected? The Springboks are still the overriding national priority and as such the league would have to release players for National duty. The management of fixtures here is the key to eliminating an overlap between league and National fixtures. This crazy thought based on logic, once again begs for a serious look at a global rugby calendar.

Full privatization and accountability should allow for an increase in profits for the SARU as they have already noted that much of their profits are directed to bailing out struggling unions.

The privatised South African rugby structure forces the people who should be developing the sport to do just that, and only that. A grass roots focus is impossible when you constantly have to worry about the upper end of SA Rugby.

Publicly owned teams

Aside from the option of having a wealthy investor or conglomerate in charge of a team, there is always the option for a publicly held team. If you have doubts over the ability of this to work, the Greenbay Packers in the US have been a publicly traded team since the 1920’s.

The Packers are the smallest town to have an NFL franchise, as a non-profit organization there are no dividends paid out, all profits are maintained for future developments such as stadium renovations.

The stock have limited rights, they can’t be traded (only sold back to the team at a reduced price). There is no discount on season tickets or merchandise, but they do have voting rights and access to exclusive shareholder merchandise.

Whilst this is by no means an investment that will put the kids through college, it is a working solution that has withstood a great depression a great recession and a world war. Its a economic anomaly that quantifies peoples passion for sport, and you will be hard pressed to find more passionate sport fans than the South African rugby supporter.

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