Rugby

Troubled WP Rugby rocked by R72m claim

2016-10-27 13:01
Thelo Wakefield (Gallo)

Cape Town - Western Province Rugby is in financial meltdown - with the potential for it to deepen considerably over a potentially crippling lawsuit.

WP Rugby (Pty) Ltd had already projected at a board meeting in July to make a loss of R11.2 million for the year, but that may pale into relative insignificance if legal proceedings instituted against them by Aerios, a company whose stated commercial focus is to sell sponsorship rights predominantly in sport, are successful.

Sport24 has reliably learnt that Aerios (Pty) Ltd is claiming just over R72m from WP Rugby. The dispute centres on a sponsorship contract entered into between WP Rugby and DHL (headline sponsors of Newlands, plus the Stormers and WP) without the consent of Aerios - holders of the commercial rights of the union.

The deal was clinched during the term of long-serving chief executive Rob Wagner in 2013.

WP Rugby has agreed, in terms of a draft order made by the Western Cape High Court on September 1, to stop dealing with rights, as defined in their advertising rights agreement with Aerios, with any third-party advertisers.

They are also to involve Aerios in “all communications, discussions and negotiations with potential sponsors insofar as they pertain to the Advertising Rights” and will not enter agreements with a third party without Aerios’s prior written consent.

Aerios is claiming immediate payment of R72 million, understood to be related to the HSBC Sevens (World Series, SA leg now held annually in Cape Town), outstanding invoices for stadium advertising, and over suite names and branding.

Sport24 has further learnt that four board members - Judge Nathan Erasmus, Johan van der Merwe, Viola Manuel and Suliman Mahomed - resigned late last month as independent directors from the board of WP Rugby, stating jointly that “an acceptable level of governance is absent which contributes to the current financial status”.

They also charged, in correspondence to WPRFU president Thelo Wakefield and WP Rugby (Pty) Ltd chairperson Sam Dube, that “the situation has been exacerbated by lack of transparency ... we have not found satisfactory engagement on our concerns”.

Further, conditions were “not conducive to perform our duties and act in accordance with our conscience, which leaves us with no option (but to resign)”.

The quartet added that they would remain “willing to engage in discussions to enable the advancement of the objectives of the organisation”.

Manuel is a former executive director of the Cape Chamber of Commerce and Industry, and Erasmus a serving judge in the Western Cape High Court. Neither could be reached for comment.

After 25 years at WP Rugby in various capacities, Wagner took long leave, effective immediately, in March this year.

He did not respond to a request for comment on the Aerios matter.

International sports lawyer David Becker, the former General Counsel for the International Cricket Council, acting for WP Rugby in the legal proceedings, said earlier this week he would need to consult his clients before providing any input on the matter.

Rugby at Newlands has been buffeted by disturbing developments in recent times, with the anticipated R11.2m loss believed to include:

* The impact of 36 unsold suites at the ground

* Season tickets being down on budget by 3 036

* Public ticket sales down by approximately R5m

Adding to the present climate of uncertainty at the once juggernaut union, Western Province failed recently for the second time in as many years to bank at least a home semi-final in the Currie Cup, meaning further lost revenue opportunity in challenging times for the domestic competition nationwide.

They traditionally pride themselves on their strong youth structures, but WP were trounced 60-19 by the Golden Lions in the final of the 2016 Under-19 Provincial Championship in Bloemfontein on Saturday, a curtain-raiser to the Currie Cup final, while the Under-21 side were beaten 38-34 in their showpiece, also by the Lions.

When the Johannesburg-based union announced several signings earlier this week, they included four WP under-21 players in hooker Ruan Brits, flank Nyasha Tarusenga, centre Cyprian Nkomo and lock Jaco Willemse.

But it is at senior level where Stormers/WP enthusiasts have seen stocks quite violently depleted over the last two seasons.

Since 2015, the franchise have surrendered - mostly but not exclusively to overseas clubs - men like Duane Vermeulen, Deon Fourie, Steven Kitshoff, Michael Rhodes, Ruan Botha, Chris Cloete, Demetri Catrakilis, Manny Carizza, Schalk Burger, Nic Groom, Kobus van Wyk, Vincent Koch, Jean Kleyn and others.

That will have represented a considerable slashing of their wage bill, whilst significant new purchases have been few and far between.

Scrumhalf Dewaldt Duvenage, 28, recently re-joined from Perpignan after serving WP Rugby in a prior spell from 2008 to 2013.

They did, in mid-2015, secure the blue-chip recruitment of Springbok lock Pieter-Steph du Toit - this week named SA Player of the Year - from the Sharks, although it was a “homecoming” in some respects as he hails from Cape Town.

But the mass surrender of both quality and depth does little to suggest the Stormers are any nearer to an elusive maiden Super Rugby title - their last appearance in a final was in 2010 - despite new CEO Paul Zacks (appointed in April) saying in an interview earlier this year that they were targeting qualification for the 2018 showpiece.

The Stormers’ 2017 task will be made immensely more difficult even than this year’s (when they were beaten quarter-finalists), as they must play all the crack New Zealand sides in ordinary season.

Wakefield replied to Sport24’s range of questions by saying: “WP Rugby (Pty) is governed by a board of directors … as you are aware, I am president of the WPRFU. I have forwarded your (inquiries) to the CEO of the company for comment.”

The WPFRU owns 75 percent of WP Rugby (Pty) Ltd.

Wakefield almost certainly shifts into a new post very shortly, as he is widely tipped to be elected SARU vice-president on Thursday, when Mark Alexander is expected to be picked unopposed as president.

Neither WP Rugby, nor Zacks responded to our questions.

*Additional reporting by Liz McGregor

*Follow our chief writer on Twitter: @RobHouwing

Read more on:    stormers  |  wp  |  thelo wakefield  |  cape town  |  rugby
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