Cape Town - The Western Province Rugby Football Union (WPRFU) applied for and obtained a court order for a provisional liquidation of their commercial arm.
WPRFU president Thelo Wakefield said on Monday: ”The tipping point for our finances was the persistent and complex legal disputes relating to certain commercial, media and wi-fi rights with one partner in particular, Aerios, over the last year.
“This has hampered our ability to conclude key sponsorship and suite agreements which, in turn, has destabilised our relationships with key stakeholders and supporters, impacted on our cash-flow, and ultimately led to the business of rugby being commercially unviable.
“The situation has become untenable.”
However, players and staff will receive their salaries and it will be “business as usual”, Wakefield said at Newlands on Monday.
Asked where the money was going to come from to pay the players and staff of the WPRFU, Wakefield replied: “Don’t worry about that, that’s all looked after.”
The union owned 75.1 percent of the commercial arm, WP Rugby (Pty) Ltd.
Wakefield said the union and the 24.9 percent shareholder, Remgro, agreed to liquidate the commercial arm of the company.
“The reality is that WP Rugby (Pty) Ltd has been forced to deal with a worsening financial position in recent years.
“There are a number of factors which have contributed to this, many of which are not unique to WP Rugby: a difficult economic climate, resulting in a smaller sponsorship pool; increasing player wages; a confusing Super Rugby format; a diminished Currie Cup; an improved home-viewing experience; and declining gate and season ticket sales.
“These issues were exacerbated by the fact that over time, certain commercial contracts, with terms which have proved not to be favourable to WP Rugby (Pty) Limited, were entered into and which had a cumulative effect of putting the company’s short-term and long-term sustainability at severe risk.”
New chief executive Paul Zacks said all sponsorship agreements will be honoured and that the WP Rugby (Pty) Ltd’s current liabilities to the end of October were settled in the ordinary course of business.
He added the process would take about eight weeks until the final liquidation order is granted.
Zacks stated the union has projected a “substantial loss” for the financial year, but was not willing to state the amount.
“The financial numbers are confidential, other than to say that we have forecast a loss, a substantial loss, for this financial year ending October.
“Other inaccuracies in (a recent media report), as the president indicated, were around the R72 million and I think there was a comment around legal proceedings (a possible court action by Aerios). No legal proceedings have taken place.
“The report also mentioned about Aerios holding all our commercial rights. That also was not necessarily true.
“They were granted certain advertising, digital and wi-fi rights in the stadium, but not holding all our rights.”
Wakefield said Zacks has been tasked to present a turnaround strategy for the WPRFU going forward. He added that the “top leadership” of the union will make the important decisions in the immediate future “until something new is born”.
“Like Paul has said, with the eight weeks going forward, it is the top leadership who will deal with all these issues.
“Thereafter, it will revert back to normal with all the structures being in place.”
Zacks also confirmed Robbie Fleck signed a three-year contract to continue as Stormers head coach and that the players started their pre-season training on Monday.
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Cape Times