- SA Rugby is set to assume control of the Southern Kings after the franchise teetered on the brink of collapse under the ownership of the Greatest Rugby Company in the Whole Wide World.
- The Kings missed player and staff wage payments by 10 days in April and fears were high that a repeat would occur in June and July.
- SA Rugby CEO Jurie Roux told media less than two weeks ago that their constitution allowed them to take over if certain agreements weren't met, such as avoiding bankruptcy or failing to pay wages.
- Kings staff are set to be notified of the management changes in a meeting on Monday.
SA Rugby is set to take administrative control of PRO14 franchise, the Southern Kings, as of Monday, Sport24 has been reliably told.
Three Eastern Cape sources informed Sport24 of the developments, one adding that staff were called into a Monday meeting to officially inform them of the administrative takeover.
The beleaguered Kings have been beset by management problems, leading to a failure to pay salaries on time at the end of April, falling 10 days behind on their scheduled date.
The Port Elizabeth-based team needed a R6 million emergency bail-out from the Nelson Mandela Bay Metro to avoid going further into the red. But, with a playing salary bill north of R3 million per month, it is understood that the Kings were once again on the brink of defaulting on staff and player wages.
Sport24 reported recently that South African rugby players' union, MyPlayers, wrote to SA Rugby asking them to step in to avoid another calamitous financial situation affecting the players, especially during the Covid-19 pandemic.
Less than two weeks ago, SA Rugby CEO Jurie told media that the only way the rugby governing could intervene would be if the private equity shareholders - the Greatest Rugby Company in the Whole Wide World (GRC) - broke clauses in its agreement such as failing to avoid going bankrupt, not paying salary bills, SARS or suppliers.
An SA Rugby spokesperson said: "We are engaging with the Southern Kings and its minority shareholder, the Eastern Province Rugby Union (EPRU), to address the challenges currently faced by the board."
It appears, with the Kings and Cheetahs confirmed to be part of the PRO14's restart plans, SA Rugby felt it prudent to take over the running of the franchise, to avoid South Africa getting embarrassed and players going unpaid before or during the restart.
An abbreviated PRO14 tournament has been scheduled to start on 22 August, three months after the coronavirus pandemic brought all sport to a standstill. The planned return includes derbies in South Africa, Italy and Scotland, with two rounds of pool matches in Ireland and Wales, followed by the semi-finals and the final in September.
SA Rugby's administrative takeover could spell the end for the GRC's short-lived private equity stay in rugby. Last year SA Rugby awarded them 74% of the Kings franchise, with the EPRU retaining a 26% minority share.
It transpired that the GRC, led by chairperson Loyiso Dotwana, brought in no investment capital of their own but signed an agreement to inherit the R45 million debt the Kings owed to SA Rugby.
Conditions of the deal were that the GRC services the debt by paying R5 million annually, every September, until the debt was wiped out.
Last September, the GRC defaulted on their very first repayment and did so again in February, after SA Rugby extended their deadline.
"They thought this thing was easy," said an administrator, who spoke on condition of anonymity.
"The cost of running a franchise is unbelievably high and it's made worse when there are people in a consortium who don’t bring in any money themselves.
"They could go into the region of R80 million a year and these guys (GRC) want to run a franchise with as little as R20 million odd. They didn’t even know the rugby space."
This is SA Rugby’s second administrative takeover of the franchise in less than five years, after they assumed control in 2016 under similar circumstances. Previous EPRU president Cheeky Watson was voted out following failure to pay franchise and union salaries, leading to SA Rugby stepping in.