Lions ‘expected to pay back millions’

2011-07-01 08:53

The cash-strapped Golden Lions Rugby Union (GLRU) will be expected to pay back more than R14 million invested by the union’s potential equity partners, the Guma TAC group, following negotiations that broke down earlier this week.

In a confidential letter anonymously leaked to the media, which was addressed to GLRU president Kevin de Klerk and signed by Guma TAC partners Robert Gumede and Ivor Ichikowitz, the potential investors detailed why they had withdrawn from talks to buy a 49.9% stake in the club.

“Our attorneys will be in contact with you shortly to discuss terms for the repayment of all monies spent to date for the Lions,” Gumede and Ichikowitz write in the letter, dated June 27, a day before the Lions announced negotiations had ended.

De Klerk however told Beeld today that every item in the leaked document, which alleged the Lions were in deep financial trouble, was arguable.

“All I want to say is that the Lions will survive. The rugby union has survived for 120 years and will continue surviving,” De Klerk told the newspaper.

According to the Guma TAC partners, they had spent more than R14 million on the GLRU in salaries and transfer fees since October, and had introduced sponsorships of close to R100 million in deals that would last up to three years.

“These sponsorships were sold on the transformational agenda of the new Lions vision,” Guma TAC said in the letter.

“These sponsors will now have to decide whether to remain as Lions partners, with Guma TAC no longer being part of the future.”

Gumede and Ichikowitz accused the Lions executive of keeping the potential investors in the dark and preventing them from playing an active role in the union.

“We have no understanding of what is going on within the Lions, namely all board meetings since April 2011 for the Lions have been cancelled by the Lions CEO (Manie Reyneke).

“We find that we have been deliberately excluded from these interactions, despite a clear format being agreed by the board of directors for the implementation of weekly meetings.”

Listed among their numerous reasons for the breakdown of negotiations, the Guma TAC partners said they had loaned the GLRU money in December and January to pay salaries.

The union had an “excessively high” contracted player base of about 90 players, some of whom did not even attend practice sessions.

They said the Lions had continued to pay Dick Muir a salary of R2.2 million a year despite the former coach playing no active role at the union since May last year.

The Guma TAC letter alleges that the potential investors had helped in extending a R30 million loan repayment to Absa Bank, which was initially due to be paid in May, and now needed to be paid by Sunday.

Gumede and Ichikowitz said the Lions were in danger of losing potential players they hoped to sign for next year’s Currie Cup and Super Rugby seasons.

“Many of the marquee players identified by the head coach (John Mitchell) that we have been in discussion with, are now pushing us for assurances, which we cannot give them,” the group said in the letter.

Guma TAC accused the Lions of failing to improve transformation at the union, which they believed would have far-reaching consequences for the sport in South Africa.

“The announcement of the investment created so much excitement amongst black people in South Africa, and was broadcast throughout the world, for heralding in the next wave of transformation in South Africa,” Guma TAC said.

“The Minister of Sport (Fikile Mbalula) not only supported the transaction, but demonstrated his support in coming to Ellis Park to address the player awards function.

“It is a sad day as one of South Africa’s greatest opportunities to demonstrate change has failed.”

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