MyPlayers has voiced its concern on the regularity and manner in which commercial entities of amateur unions are being liquidated within the professional rugby environment, following the news of the Kings liquidation.
SA Rugby announced on Saturday that the insolvent Southern Kings company had been placed in voluntary liquidation to secure the longer-term financial future of rugby in Eastern Province; the Kings’ second liquidation in less than five years.
In July, the Valke Rugby Union filed for the provisional liquidation of their commercial entity, and in recent years, WP Rugby and Border’s commercial entities met a similar fate.
In reaction to the latest Kings news, MyPlayers CEO Eugene Henning said: ‘On all occasions, the Players’ Organisation has been in the trenches of this seemingly normal occurrence in our domestic game, and we have seen and experienced the human impact this has on players who lost their livelihoods as a direct result of the mismanagement of the professional game.
‘In South Africa, the amateur union is entitled to solely decide whether it wishes to set-up a separate commercial entity to manage its commercial affairs. The union drives such process, identifies the equity partners, performs the necessary due diligence and then co-manages such commercial entity with these partners.
‘In most industries, the liquidation of such a commercial entity is the last resort taken when it can no longer honour its commitments to its creditors. At the point of liquidation, a company is permanently shut down and it loses all intellectual property rights, assets and other means that enabled it to operate a business.
‘South African rugby’s approach to liquidation is different, and this has led to a lack of accountability and consequences for the amateur unions, who often voluntary liquidate their entities when they can no longer meet their obligations to their creditors, including professional contracted players.
‘After liquidation, a new company is created with no assurances given that the amateur Unions will do a better job at running this new business than the one they had just run into the ground.
‘It is just not good enough for a Union to shift all the financial blame to the commercial entity that was set-up and co-managed by the Union. It is an easy buck to pass when you suffer no consequences for the failings of your commercial entity.
‘Come Monday, it will be life as normal for the union. It will still enjoy its voting rights on the SA Rugby General Council and be allowed to make important commercial strategic decisions on the direction of the professional game even though their own commercial entity failed. They will still receive their normal financial distributions from the professional game from SARU and be allowed to participate on the field in the professional game although their own commercial entity was liquidated.
‘However unthinkable, they will be allowed to immediately set-up a new commercial entity like the one they had just voluntarily liquidated. There is thus a clear incentive for Unions to liquidate commercial entities and walk away from financial obligations to get a clean second bite at the cherry while creditors and employees are left in the dust to pick up the pieces.
‘Unless unions are held accountable for the failings of their commercial entities, there is no reason for this ‘rinse and repeat’ culture to be eliminated from professional rugby in South Africa,’ said Henning.
‘The Covid-19 pandemic has put all industries under considerable financial stress, and as a means of reducing those pressures on their employer, the Kings players have sacrificed a substantial share of their salaries since May. In the current market, players are unlikely to find employment elsewhere, which makes the timing of this decision, six days before salaries were due, downright coldblooded.’
MyPlayers proposes the following:
- After the liquidation of a commercial entity, the Union will not be allowed to participate in professional rugby until such time that they have demonstrated their capacity to adequately manage a commercial entity.
- During this time:
– Unions will receive substantially smaller distributions from SA Rugby.
– They will forfeit their voting rights on SA Rugby’s General Council on any matters pertaining to professional rugby.
– They will have to undergo a professional rehabilitation process and only be allowed to operate a company and participate in professional rugby competitions again once they have demonstrated that they are capable of running a successful and sustainable commercial entity.
The Players’ organisation represents a group of stakeholders in rugby who are young, have young families, and who have committed themselves to a career that seldom lasts more than 10 years before they enter the next phase of their lives. For reasons that have nothing to do with them, they are often the biggest casualties, when they can least afford it, in an industry that fails too often without any real accountability measures in place. The consequences for them remain long after the wrongdoers have been allowed to continue business as normal.
In no true professional environment is it normal or ethically defensible to sustain a culture of poor governance and financial management to the degree that it has become standard and without penalties as is the case in South African rugby. This sports code has been professional for 25 years, but its lack of commercial codes of conduct continue to hamper true professionalism.
Henning has called for the industry to engage in conversations about the level of governance, financial discipline and accountability prevalent in professional rugby. ‘The status quo is damaging to the game,’ he said.
Statement released by MyPlayers
Photo: Gallo Images