Kings players paid, but alarm bells ringing

Alarm bells are starting to sound regarding the governance of South Africa's prized sixth franchise, the Southern Kings.

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After 10 excruciating days without pay, Kings players, staff and coaches were finally paid salaries late on Tuesday but questions linger whether the PRO14 side will remain solvent, especially in the aftermath of the Covid-19 pandemic that has ground all rugby to a halt.

Without any rugby for the foreseeable future, SA Rugby is bracing for between R700 million and R1 billion in losses due to the impact of the coronavirus.

But they may also have another headache on their hands: the increasingly tenuous financial state of the Eastern Cape franchise. Were it not for a R6 million bailout from the Nelson Mandela Bay municipality, salaries would have continued to go unpaid - which then begs the question as to whether the Kings will meet their salary obligations at the end of May or June.

Before salaries were paid for Kings staff, SA Rugby president Mark Alexander expressed concern about the situation that had unfolded in Port Elizabeth but said their hands were tied for the meantime.

"We are concerned and we are watching it closely," Alexander told Sport24.

"It is a real concern but they are a private entity. We cannot step in because they are private owners. The moment our member, which is Eastern Province Rugby Union, asks us to step in, then we will be able to."

The salaries saga put the majority stakeholders, the Greatest Rugby Company in the Whole Wide World (GRC), on a collision course with its minority equity partner, the Eastern Province Rugby Union (EPRU).

Desperate to avoid the ignominy of failing to pay staff, the Loyiso Dotwana-led consortium knocked on the Nelson Mandela Bay door to request that a R10 million bailout be expedited, over and above the R6 million the franchise received in July last year from the municipality as part of their three-year agreement. But the municipality was only able to provide R6 million, the director of sports and recreation at the Bay, Charmaine Williams, confirmed.

"In terms of an agreement, we were still owing them money. However, this request was an additional request to the executive mayor (Thsonono Buyeye) of an amount of R10 million. However, we were only able to allocate R6 million from savings from other projects," Williams said.

"For now, that is all I can say."

In a City Press report over the weekend, the two equity partners blamed each other for the delay in staff payments. In the report, the EPRU was accused of intercepting the municipality payment, claiming it was owed money by the private consortium. The EPRU denied this allegation.

The Kings' sticky financial situation apparently began when they failed to service a R45 million debt to SA Rugby that the GRC inherited when the consortium were granted commercial co-ownership of the franchise in March last year. Within a year, it's alleged that they defaulted on payments at the end of last year and the beginning of this year.

The franchise's main revenue streams are said to come from the R10 million three-year-deal with Isuzu, R6 million from the Nelson Mandela Bay municipality as well as R24 million broadcast deal funds from SA Rugby. The latter income stream has been withheld because of the unserviced debt owed to the mother body.

"They (the consortium) didn't inject any money into the operations; in fact they are relying on the very same public funds that the union had access to already," an internal source close to the board said, speaking on condition of anonymity.

"All these funds from the municipality, government and SA Rugby come through their association with the EPRU. Even the (Isuzu) sponsorship, they inherited it. That deal was signed by (former Kings COO) Charl Crous and (EPRU president) Andre Rademan.

"It's clear that they do not even have their own funds to plough into the business as an investment.

Alexander, however, would not be drawn to comment on the matter.

"I can't talk about the that issue (the money in arrears)," he said.

Adding to the woes, the Kings are said to be carrying a bloated wage bill after procuring the services of top coaching names such as Braam van Straaten (defence and kicking), Swys de Bruin (consultant) and New Zealander Wayne Taylor (strength and conditioning).

Members of the amateur wing have asked for an stakeholders' meeting to discuss the apparent solvency issues in the organisation.

"EPRU has requested an urgent stakeholders meeting within seven days to try address these important matters," Rademan said on Tuesday.

"Furthermore, the union has in no circumstances tried to block or encourage the non-payment on Southern Kings from the municipality as it has been reported out there. After the stakeholders meeting, EPRU will hold a press conference on the way forward."

Attempts to reach chairperson Dotwana failed by the time of publishing.