The Blue Bulls Rugby Union (BBRU) aims to sell its shares in its commercial arm to raise capital to keep the business sustainable in the short and long-term.
Despite a recent change to the SA Rugby constitution allowing provincial unions to have up to 74% in private equity ownership‚ the BBRU are seeking an amendment to allow 100% outside ownership of unions. The BBRU plans to sell its shares in The Blue Bulls Company (Pty) Ltd (BBCO)‚ its commercial subsidiary‚ to an equity partner.
The BBRU made the request at SA Rugby’s 25th annual general meeting (AGM) in Cape Town on Thursday. But the resolution could not be put to the vote because the Bulls did not give 60 days notice.
Revenue streams are drying up and by the BBRU’s own admission in documents it submitted to the AGM‚ it is “under financial pressure”.
“The BBRU acknowledges that it is not in a position to‚ in the long term‚ financially support the BBCO‚” the BBRU stated in its amendment request. “In fact‚ it is dependent on the rent‚ interest and dividend income generated from the BBCO to achieve its main objective.
“The only option available to the BBRU to ensure its own sustainability and the sustainability of the BBCO and that of amateur (BBRU) and professional rugby in its jurisdiction‚ is to sell its shares in the BBCO to an equity partner(s) and enter into an agreement with the BBCO to secure revenue for the BBRU and its operations in future.”
The BBU believes that selling 100% of its equity instead of the allowed 74% would make it a more attractive proposition to potential investors.
BBRU chief executive Eugene Hare stressed that the union was not immediately headed in the same direction as the Western Province Rugby Football Union (WPRFU)‚ which recently liquidated its commercial arm due to financial stress.
“We are in favour of having a 100% ownership but we withdrew the amendment at the AGM because of a technicality [60 days notice]‚” Hare said.
“We feel that professional rugby can have a 100% equity partner that would handle the business professionally with certain resolutions and guarantees.
“We are under financial pressure in the sense that we have seen a decline in season ticket holders and attendances because fans are much more selective about which games they come to.
“The product and the tough economic times are contributing factors. Companies are cutting back on luxuries like corporate suits and of course the team’s performances have an influence too.
“That places us under pressure because we’re not meeting certain income projections.
“We will survive and won’t easily follow the path that Western Province recently took. We are relatively secure because our financial controls and management are very good.
“But having a 100% equity owner will help the situation‚ because the money from SA Rugby isn’t enough to sustain the amateur side of the game. We need additional funds so that the amateur rugby structure won’t disappear.”
Currently the BBCO receives approximately R28m annually for SA Rugby as part of its share of the international broadcast rights for Super Rugby and international rugby.
Other income is derived from match day ticket sales‚ hosting a Test match‚ corporate suite leases‚ sponsors and investments.
- TMG Digital/TMG Sport
Blue Bulls Rugby Union looking for buyers due to financial pressure
The Blue Bulls Rugby Union (BBRU) aims to sell its shares in its commercial arm to raise capital to keep the business sustainable in the short and long-term.
Despite a recent change to the SA Rugby constitution allowing provincial unions to have up to 74% in private equity ownership‚ the BBRU are seeking an amendment to allow 100% outside ownership of unions. The BBRU plans to sell its shares in The Blue Bulls Company (Pty) Ltd (BBCO)‚ its commercial subsidiary‚ to an equity partner.
The BBRU made the request at SA Rugby’s 25th annual general meeting (AGM) in Cape Town on Thursday. But the resolution could not be put to the vote because the Bulls did not give 60 days notice.
Revenue streams are drying up and by the BBRU’s own admission in documents it submitted to the AGM‚ it is “under financial pressure”.
“The BBRU acknowledges that it is not in a position to‚ in the long term‚ financially support the BBCO‚” the BBRU stated in its amendment request. “In fact‚ it is dependent on the rent‚ interest and dividend income generated from the BBCO to achieve its main objective.
“The only option available to the BBRU to ensure its own sustainability and the sustainability of the BBCO and that of amateur (BBRU) and professional rugby in its jurisdiction‚ is to sell its shares in the BBCO to an equity partner(s) and enter into an agreement with the BBCO to secure revenue for the BBRU and its operations in future.”
The BBU believes that selling 100% of its equity instead of the allowed 74% would make it a more attractive proposition to potential investors.
BBRU chief executive Eugene Hare stressed that the union was not immediately headed in the same direction as the Western Province Rugby Football Union (WPRFU)‚ which recently liquidated its commercial arm due to financial stress.
“We are in favour of having a 100% ownership but we withdrew the amendment at the AGM because of a technicality [60 days notice]‚” Hare said.
“We feel that professional rugby can have a 100% equity partner that would handle the business professionally with certain resolutions and guarantees.
“We are under financial pressure in the sense that we have seen a decline in season ticket holders and attendances because fans are much more selective about which games they come to.
“The product and the tough economic times are contributing factors. Companies are cutting back on luxuries like corporate suits and of course the team’s performances have an influence too.
“That places us under pressure because we’re not meeting certain income projections.
“We will survive and won’t easily follow the path that Western Province recently took. We are relatively secure because our financial controls and management are very good.
“But having a 100% equity owner will help the situation‚ because the money from SA Rugby isn’t enough to sustain the amateur side of the game. We need additional funds so that the amateur rugby structure won’t disappear.”
Currently the BBCO receives approximately R28m annually for SA Rugby as part of its share of the international broadcast rights for Super Rugby and international rugby.
Other income is derived from match day ticket sales‚ hosting a Test match‚ corporate suite leases‚ sponsors and investments.
- TMG Digital/TMG Sport
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