Southern Kings lose title sponsor

Southern Kings
PORT ELIZABETH, SOUTH AFRICA, SEPTEMBER 16: JC Astle of the Southern Kings during the Guinness Pro14 match between Isuzu Southern Kings and Ulster at Nelson Mandela Bay Stadium on September 16, 2018 in Port Elizabeth, South Africa. (Photo by Michael Sheehan/Gallo Images/Getty Images)

In a hammer blow to the quest to have a top-flight rugby team in the Port Elizabeth area, the Southern Kings have had their title sponsor, Isuzu Motors, cancel their sponsorship agreement.

This decision was allegedly made on the grounds of reputational damage to the Isuzu brand.

A soft exit

There has been no official statement issued. No press release from Isuzu Motors explaining their reasoning. No joint statement from both parties advising of “a mutual agreement to part ways” and wishing each other success in the future. It may just be that someone has pulled off a PR masterpiece during a difficult time. No statements made, simply exiting with no fuss.

Isuzu Motors spokesperson Denise van Huyssteen stated:

“Our sponsorship contract with the Kings is confidential. Any discussions relating to the contract will be held directly with the shareholders of the franchise, and we are therefore unable to make any further comments at this stage.”
The subtle confirmation
No press releases do not mean things have not changed though. To the casual observer, this is an ongoing saga.
A source close to the franchise claims that Isuzu sponsored vehicles were returned to them on Wednesday morning. The official Twitter account has changed from Isuzu Southern Kings to simply Southern Kings.
Southern Kings
The same has happened on the official fan club page. All references to Isuzu have been removed.
Southern Kings

 

Southern Kings back to square one

Current situation

SA Rugby has once again assumed control of the Southern Kings and a new board appointed. Mr. Andre Rademan, the Eastern Province Rugby Union (EPRU) President, has been appointed as the new chairman, Mr. Mbulelo Gidane, chairman of the EPRU Finance and Human Resources Committee, SA Rugby Executive Council nominees, Mr. Monde Tabata and Mr. Jannie Louw, and independent, Mr. Gugu Nxiweni, who has been retained from the previous board. Notably, the title sponsor’s representative on the Southern Kings board was not invited to be part of the new board. This was surely a critical error on the part of SA Rugby. Sidelining the franchise’s only significant sponsor lacks an understanding of the critical need to protect that sponsorship and why they were on the board in the first place.

Touching on the past

For the fans, it is groundhog day all over again. As soon as it appears that the franchise is settling down and working towards a more secure future, something happens to crush their dreams. The 2017 Super Rugby season was an example of this. They finished the season ahead of local rivals the Bulls and the Cheetahs but were cut from Super Rugby along with the latter due to SANZAAR’s need to reconfigure the competition.

This time around a mixture of internal politics and the strange arrangement of their major shareholder has caused them to stumble again.

The Greatest Rugby Company in the Whole Wide World (GRC) was awarded a 74% shareholding of the Southern Kings with the remaining 26% being held by the amateur arm, the Eastern Province Rugby Football Union. There was no direct cash injection from GRC, but they assumed the debt of the franchise. Notably, the Directors of GRC have no significant history in rugby management. What they can be credited for is securing the Isuzu Motors sponsorship. The EPRFU has been unable to secure any sponsorship.

The Isuzu sponsorship

Motor manufacturer, Isuzu Motors South Africa, has deep roots in the Eastern Cape. They took on the title sponsorship of the Kings in 2019. This was an investment in the area in which they operate as much as an investment in their brand. This investment in the team should have been the catalyst to attract further sponsorship, but this simply never happened. Big business sat back to see what would develop.

Default on debt repayments

The GRC missed their first debt repayment, due in September 2019 and has still not made a payment. Assuming responsibility of the franchise’s debt was the way that the GRC was awarded the franchise without bringing equity to the table. Herein lies one of the main issues with the GRC being awarded this franchise. As a PTY Limited, any failure to pay the historical debt would have no direct impact on the shareholders. If they couldn’t pay, the company would be liquidated. As they had not put up money of their own, there was no risk to the shareholders and therefore no “skin in the game”. We have to ask why SA Rugby was so happy to hand the reigns over to a consortium that did not have the pressure of performance driving them? Desperation to offload the franchise?

Unable to pay salaries

Despite the injection of cash from their title sponsor, the franchise was unable to pay salaries at the end of May and had to rely on a loan from the Nelson Mandela Bay Municipality to pay the players and staff.  The question here is where was the GRC? Again, we have to question their credentials as the majority shareholder in the franchise.

Was the hope that the Kings would turn an immediate profit to allow them to pay players and service the debt? Again, we look to SA Rugby and wonder how meticulously the Business Plan was interrogated? Surely it was obvious that there were no cash reserves in place to cover the short to medium term needs of establishing the franchise?

SA Rugby once again taking control of the Southern Kings is an emergency measure and should not be heralded as a good thing. They also have to watch their wallet and funding the Kings needs to be covered in their budget.

Political infighting

This is nothing new in rugby in Eastern Cape and harks back to the start of the professional era. In 1994, they qualified to play in the then Super 10 competition and finished fourth. It has been a calamitous decline into ignominy since then. The political infighting between the clubs that constitute the EPRFU has been well-publicized. The EPRFU has also been agitating for a more relevant role in the Southern Kings franchise. They are once again mired in maladministration issues, with board members having to resign.

The talent pool

The main loser in the whole episode is the immense talent pool that the broader Eastern Cape does possess. Talent scouts, most notably from the Sharks and Western Province, will still give young talent the opportunity to be contracted out of schools and have a shot at the big time. Recent Springboks coming out of the greater Eastern Cape include Siya Kolisi, Makazole Mapimpi, Lukhanyo Am and Lizo Gqoboka.

The harsh reality

No sponsor wants to be involved with the running of a franchise. A poorly run franchise attracting negative publicity would force any sponsor to get involved in the only way they can. To walk away. Rugby in the Eastern Cape has been dealt a body blow ad it would take a serious rethink from all parties involved to revive the sponsorship. A new title sponsor would take something of a miracle to pull off.

 

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