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SA Rugby President Mark Alexander during the South African national rugby team arrival press conference at OR Tambo International Airport on November 5, 2019 (Photo by Sydney Seshibedi / Gallo Images)
- The Southern Kings franchise has been put into voluntary liquidation.
- Currently, the franchise has debts of 55 million rand.
- The decision was made as the franchise faces the prospect of zero revenue for the remainder of 2020.
The board of SA Super Rugby (Pty) Ltd, which is listed as Kings of the South – has put the insolvent company into voluntary liquidation to secure the long-term financial future of rugby in the Eastern Province.
The shareholders, Eastern Province Rugby Union (EPRU) and SA Rugby, made the decision in the face of a cumulative deficit of R55m and with zero revenue in the offing for the remainder of 2020.
“The hard fact is that the Kings are insolvent, with significant debt and zero assets, and it would have been reckless for the board to continue negotiating,” said Andre Rademan, chairman of the board.
“Its continuation would have required loans from the EPRU and loans in addition to the R45m the company already owes SA Rugby.
“In the absence of any rugby in 2020, and without any guarantee as to the revenue prospects for 2021, it would have been financially irresponsible for shareholders to have injected more funds.”
Mark Alexander, president of SA Rugby, said extending additional credit to an insolvent entity at a time when the rugby industry must save 1.2 billion rand to stay afloat this year was not an option.
“The history of the Kings has been one of expectation and anticipation, but unfortunately the parallel history of business failure cannot be dismissed any further,” Alexander said.
“The debts that the organization has accumulated over the years are considerable and in today’s environment the only certainty was that they would grow.
“The SA Rugby membership has invested heavily in the Kings project, but now is the time to re-examine what is the appropriate and sustainable path for rugby in the Eastern Province.”
SA Rugby resumed ownership of a 74 percent stake in the Kings in June after the previous owners, the world’s largest Rugby Company (GRC), failed to honor contractual commitments in relation to the purchase of the shares. .
GRC had acquired the stake in January 2019, but was unable to deliver on the promised turnaround strategy.
The Kings’ struggle to build a sustainable business model had twice seen it fall under the control of SA Rugby management.
Rademan said: “It is time for the Eastern Province rugby community to consolidate and take stock.
“We have managed to lay firm foundations in the EPRU, after historical financial problems, and we can look to build rugby in the region from that platform.
“It gives us the opportunity to refocus on creating a business model that is sustainable and suitable for rugby in the Eastern Province.”
Rademan said the decision had been communicated to staff and players.
“This is very difficult news to give people and the board would not have wanted it this way. But sport is a business and we are in an unprecedented time. There was no other option. “
Chronology of the Kings of the South:
• November 2010: SA Rugby announces its intention to field the Southern Kings in Super Rugby in 2013.
• February 2013: The Kings compete in Super Rugby competition as one of five South African teams.
• August 2013: The Kings lose their Super Rugby spot in a home and away match against the Emirates Lions.
• November 2015: SA Rugby takes control of the franchise when EPRU, who had been awarded the franchise operation, ran into financial problems.
• February 2016: The Kings return to Super Rugby as competition expands to 18 teams.
• April 2017: SANZAAR announces that Super Rugby will sign 18 teams to 15 teams in 2018.
• September 2017: The Kings (and Cheetahs) are listed as South African Innovators in the PRO14 competition.
• January 2019: GRC acquires a 74% stake in the franchise; EPRU maintains a 26% stake.
• June 2020: SA Rugby retakes control of the Southern Kings after GRC failed to meet contractual commitments.
• August 2020: Southern Kings withdraws from possible resumption of national competition due to ongoing financial challenges.
• September 2020: The board of SA Super Rugby (Pty) Ltd, listed as Southern Kings, places the company in voluntary liquidation.
– Rugby SA
