The top franchises in SA rugby have all but scuppered a R1.3bn private equity deal that would have seen SA Rugby (Saru) selling a stake in its commercial arm to the Seattle-based Ackerley Sports Group (ASG).

A News24 report says the deal – considered to be set in stone over the weekend – is now unlikely to proceed on Thursday when the Saru council meets to vote on it.

In a hard-hitting letter, the leaders of the country's top unions – including the Lions, Blue Bulls, Sharks and Western Province – plead with Saru president Mark Alexander and CEO Rian Oberholzer to postpone Thursday's meeting and ‘prevent a public spectacle which is not in the interests of Saru or its members’.

The letter was circulated to union bosses yesterday.

By last night, seven out of Saru's 14 member unions appear to have signed the letter, opposing the ASG deal. They want to put an alternative deal on the table in three months' time.

For the ASG deal to have proceeded, 75% of unions would have had to vote for the establishment of a commercial entity and the sale of 20% of the new company's shares to Ackerley, which has no footprint in Africa or rugby.

Now it seems that deal is on the verge of collapse at the first hurdle. The letter addressed several concerns, including:

* Investor transparency: The identities of ASG's consortium members and the sources of their funding remain unclear, raising questions about the financial capacity of ASG to implement the transaction fully and who would be the ultimate partners in the deal;

* While we understand and support the need for Saru to explore opportunities for international brand growth, the purported contribution and involvement of ASG in these efforts remains unclear. Equally unclear is the involvement of a private equity sponsor to unlock these opportunities, when this should be the remit of commercial management.

The letter stated: ‘Many of the senior executives of the undersigned members and their shareholders have significant experience in public and private capital markets and the fee proposed is not appropriate by any measure. The fee structure as proposed furthermore raises serious issues of governance and ethics around the transaction, and the independent advice, if any, received by SA Rugby.’ 

News24 reports the letter also suggested that the move puts SA Rugby at risk of permanent change to their commercialisation and revenue control mechanisms.

Full News24 report