SA Rugby has reported a minor deficit in the last financial year, despite the governing body enjoying record broadcasting and sponsorship revenues for 2022.
SA Rugby made the announcement at its Annual General Meeting in Cape Town, explaining that the deficit was due to its investment in gaining entry into northern hemisphere competitions.
The country’s top franchises now participate in the United Rugby Championship and the European Champions and Challenge Cups.
SA Rugby said its group revenues increased to R1.54bn (2021 – R1.28bn) thanks principally to increases in broadcasting (R828m from R654m) and sponsorship (R396m from R222m) income, but the group’s pre-tax deficit of R2.62m included expenditure of R330m attributable to participation in the URC and European Professional Club Rugby competitions.
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“From being a recipient of nett income from Super Rugby as a founding member of SANZAAR, we are now a nett contributor to European club rugby as our participation costs on the way to once again becoming a nett recipient in the medium-term,” said Oberholzer. “Historically, SA Rugby might nett around R160m from SANZAAR. But we are now in a situation where we are having to pay our way into an already established entity.”
SA Rugby President Mark Alexander highlighted the importance of taking a long-term view on European participation.
“It’s essential as we carve our way to full membership and shareholding, even though the financial aspect of this pathway is hurting us in the short-term,” he said. “The long-term goal and returns that will come will validate this position, both from financial and high-performance points of view. Our participation in the URC and EPCR happened in quick succession and came at a significant cost to SARU, but the commercial opportunities to be realised within the next two to three years will render the competitions profitable and strengthen the financial sustainability of South African rugby.”
The increased broadcasting revenues were in part due to the higher value attributed to the 2022 Springbok calendar, featuring a home series against Wales as well as a full Rugby Championship programme.
However, despite these promising figures, Oberholzer warned that broadcast revenue would be significantly reduced in 2023. This is because in this World Cup year there will be no touring team from the northern hemisphere, as well as a truncated Rugby Championship.
Interestingly, Alexander went on to stress the future importance of private equity investors in the sport at national and provincial level.
“Private equity investment contributes in a significant way to our rugby ecosystem nationally,” he said. “We must ensure that everyone benefits on an equitable basis from our growth as an organisation – and that we don’t kill the golden goose within our franchises in the process. It stands to reason that the more we succeed in international competitions, the more marketable we become, and the more all rugby will benefit. We need to address ways to include the private equity structures in our decision-making processes, to ensure that everyone has a seat at the table, and always be mindful of how membership is constituted. I am sure we can find the model that will be to the benefit of the greater good of the game. Managing the sport’s finances is a daily challenge, but our basic asset – the Springboks and rugby in South Africa – remains a blue-chip resource in the market.”