WP Rugby has filed court papers to provisionally liquidate its professional arm after facing a multi-million rand claim.
It was reported at the end of October that not only did WP Rugby (Pty) Ltd already project to make a loss of R11.2 million for the year, but faced a contractual dispute that ran into the millions.
Western Province confirmed their liquidation order at a press conference hastily called late on Monday afternoon, with president Thelo Wakefield moving to insist that the union would not be affected by the liquidation order, and that players' contracts remained secure.
It was also confirmed that four members had resigned as independent directors from the board of WP Rugby, with concerns over unacceptable levels of governance that have contributed to the current financial landscape believed to be the reasoning behind the decision.
The decision to liquidate WP Rugby (Pty) Ltd was unanimously decided at an executive meeting, while the tipping point is said to have been as a result of a legal battle with the company Aerios, who are the holders of considerable commercial rights.
Despite the WPRFU applying for, and obtaining the order for the provisional liquidation, the union sought to provide the following assurances:
(1) Although Western Province Rugby (Pty) Ltd is being placed into liquidation, the union will not be affected by the liquidation – the union is a voluntary association which is independent of WP Rugby (Pty) Ltd;
(2) As a member of SARU, the union is the ultimate custodian of both amateur and professional rugby in the Western Province. The union will ensure that the various Western Province teams continue to function as they normally do and that the contracts of players remain secure;
(3) All sponsorship agreements will continue to be honoured; and
(4) All Western Province Rugby (Pty) Ltd’s current liabilities as at end October 2016 have been settled in the ordinary course of business.
Wakefield said that WP Rugby (Pty) Ltd has been forced to deal with a worsening financial position in recent years.
'There are a number of factors which have contributed to this, many of which are not unique to WP Rugby: a difficult economic climate resulting in a smaller sponsorship pool; increasing player wages in order to retain players; a changed Super Rugby format; a modified Currie Cup; an improved home-viewing experience; and declining gate and season ticket sales; all of which are factors which have contributed to financial challenges, not just for WP but for other rugby franchises in South Africa and around the world.'
He added that issues had been exacerbated by the fact that over time certain commercial contracts have proved not to be favourable, and which had the cumulative effect of putting both the company’s short- and long-term sustainability at severe risk.
'The tipping point for our finances was the persistent and complex legal disputes relating to certain commercial, media and wi-fi rights with one partner in particular, Aerios, over the last year. This has hampered our ability to conclude key sponsorship and suite agreements which, in turn, has destabilised our relationships with key stakeholders and supporters, impacted materially on our cashflow and ultimately led to the business of rugby being commercially unviable. We have been forced to protect our legal rights, but it has been very costly.
'Frankly, we, as the board of WP Rugby (Pty) Limited, cannot continue to operate responsibly with the situation as it is. We face severe restrictions on our ability to conduct our business independently and with any degree of commercial freedom. The situation has become untenable.'
Meanwhile, in other news, WPRFU chief executive Paul Zacks confirmed that coach Robbie Fleck had signed a contract extension for the next three years.
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