Springboks sale controversy: Wheatley unpacks the deal, proposes local ownership
In a time when the sale of the Springboks to foreign investors has sparked outrage, Altvest's Warren Wheatley suggests a bold alternative—democratizing ownership of South Africa's beloved rugby team. Through private equity for citizens, players, and fans, Wheatley envisions a deal that could preserve national pride while allowing local participation in the Springboks' commercial success.
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Extended transcript of the interview ___STEADY_PAYWALL___
Alec Hogg (00:12.924)
But without a doubt, the biggest news story of the moment is the attempted sale by certain parties of the spring box to foreign buyers. There been some very wealthy South Africans who are not prepared to let it happen. They're trying to carbox the proposed deal. It's a mess. But actually, it could have all been done very differently. We'll talk to Altvest's Warren Wheatley.
Alec Hogg (00:45.062)
Warren, we know that Altvest is democratizing private equity. We've followed your story for a long time. And I've also followed your approach to SA Rugby to say, why not sell the Springboks through private equity to South Africans? And in particular to small South African investors. Before you unpack that, because this has got to be something that would be reassessed right now, given the fracas that we've had.
What was the reaction like from SA Rugby when you approached them?
Warren Wheatley (01:19.518)
Alec, so there was never a direct approach. The guys are quite difficult to get a hold of. And so we had a number of approaches through different mechanisms, but I never had the opportunity to sit in front of them and get told no precisely. But, I have it on good authority that, you know, the president, the CEO, all had sight of the presentation. And I'm not sure if it was a lack of appreciation of what the offering was or if they were just that deal fatigue.
But there was never any follow-up. And we had a credible, we had a team of players who took the proposal through. They've asked not to be specifically named, but they said a team of ex credible players had gotten together. I had spoken to them through the proposal. They loved it. And I can talk through the reasons why they loved it and why I think this is such a unique solution for SA rugby and why I think they should really be looking at it a lot more intently.
Alec Hogg (02:37.594)
Before you do that, just tell us your understanding of what actually has been happening that has caused such unhappiness amongst Springbok supporters and rugby supporters generally.
Warren Wheatley (02:51.244)
Well, I think, principally, my reading of the assessment is that a national team is owned by the nation, right? And for it to be bought by or any component of it to be foreign-owned feels like we're selling the family jewels or selling our heritage.
So I think fundamentally that doesn't sit well with people. Then you can start getting into the granular aspects of the deal that a lot of people have found unpopular.
For example the unions wouldn't have any further profit participation in terms of the TV rights or match revenue or merchandise and revenue as far as I can tell. I must caution that I haven't seen the final term sheet and so most of what I'm talking about is what's being expressed in the press from people who have seen it.
Also, the deal seems to be largely structured for the benefit of the private equity buyer. Now, the deal, as I understand it, is that the commercial rights of SA Rugby, which would include TV rights, radio rights, match revenue, and merchandising, would be sold to a private equity company out of the US.
They would structure a deal such that there's a big cash injection to SA Rugby and it would be sort of a mezzanine debt type equity structure. But at the end of the day, the private equity company would be repaid the capital they've injected and still hold 20 % of the commercial rights forever.
Warren Wheatley (04:58.7)
So the deal is not well structured as far as the major commentators are concerned. And there's also a lack of South African participation, which a lot of people feel just grumpy about. And I think correctly so.
Alec Hogg (05:18.114)
Okay, so we have the Springboks who are winning everything in sight at the moment, who are probably peak value right now. And there is a lot of demand for sports teams. We see that with the recent takeover of Manchester United and the Middle Eastern sovereign funds who've bought Newcastle United and of course Manchester City and so on.
Isn't there something here, though, for the South African public to become involved with? And that was the part of your deal when we spoke about it many months ago that certainly seemed that it would resonate if the South African public were given an opportunity. And indeed, was that the part that got the former players, the former Springboks who you interacted with, excited but
Clearly, the board of SA Rugby or whoever they spoke to had other ideas.
Warren Wheatley (06:23.426)
So I think my proposal is quite broad. So I want to talk through it quite slowly. And hopefully, you know, this gives people a chance to consider the merits of it. So the first thing is it doesn't need to be a mutually exclusive deal, right? It can be done in conjunction with the private equity consortium or private equity fund.
So the SA rugby board doesn't need to choose one or the other. They can do them combined. The second thing is that it creates ownership opportunities for four major categories of people. Number one, citizens – I think citizens should enjoy ownership of a national treasure like the springboards.
Number two, players. And you could structure the deal such that past players are also able to participate. But imagine a player who builds the brand, you know, when he runs onto the field and first puts on the green and gold and runs onto the field and earns his first cap, along with it earns an option to buy a share in that brand. Imagine how powerful that is.
You know, someone who then wins caps, all along his life, each cap translates into equity ownership in the brand. That is a powerful retirement planning tool for players who have such a short time span to build up financial wealth. Thirdly, you could structure it such that the staff involved in the running of the organization, the running of the brand, the maintenance of the brand.
And I'm talking about coaches, the administration staff, the board of directors, all of those could participate. And finally, and very importantly, you can allow for fans to take ownership of this. All of this could be facilitated by Altvest making a stake or a share of the private equity component available on our platform.
Warren Wheatley (08:44.908)
Fans would be able to buy. If you think about how this could change behaviour, as an example, would you be as a fan more or less inclined to buy the original product or the original jersey? I would hazard a guess that if you own shares, you would insist on owning the original merchandise. Would you be more or less inclined to attend matches at the stadium? I would, I would.
I would surmise that they'd be more inclined to attend matches. Would you be more inclined to watch it on the TV? Absolutely. To pass ownership to citizenship, that could be easily managed by 10 of our biggest pension funds buying stakes in these entities. You take the GEF, you take Transnet, you take the Eskom pension fund.
Four, five checks of a hundred million could include a million people in the ownership of this national treasure. For players, I just picture a young player winning his first cap and at the same time getting an option to buy shares or his sponsorship, earning that share through the revenue he's now gonna be contributing.
I think this is a unique opportunity for SA Rugby to take a very bold step. It's admittedly complex and requires work, but nothing worth doing comes easy. It would be a world first where a sovereign asset is owned by the nation and by the fans. So it would be a world first. I think we'd lead the way in doing that. And South Africans are good at stuff like that.
And we are open to helping structure the deal. And one of the best things is we don't need to turn away the offer from Ackerley or the Private Equity Fund. We would just need to invest alongside it. And if they didn't need the lion's share of the equity, we could structure a deal that is mutually beneficial and achieves all the things and ticks all the boxes that are making a lot of the stakeholders grumpy.
Warren Wheatley (11:07.168)
The unions could all continue to own shares and continue to enjoy profit participation. And they could quite simply use the proceeds from the sale to reinvest into the asset. There'd be a listed springbok share that hopefully keeps growing in value. But fans, instead of buying 10 flags, could buy shares in in the Springbok and participate in the glory and growth of the team and the brand and everything else.
So we think this is a fantastic opportunity for SRIB to relook at it. The nation is clearly upset. Many of the stakeholders are upset. And I think the unions are going to attempt to vote it down. It certainly looks that way.
Warren Wheatley (12:05.816)
I don't think they'll reach the 75 % special resolution threshold they need. It looks like half the unions are violently against them, particularly the bigger ones, the Sharks, the Bulls, et cetera.
Alec Hogg (12:21.35)
So from your perspective, Warren, Altvest is just recently listed now on the JSE, having been listed previously on the Cape Town Stock Exchange. Would you be able to facilitate then the trade in Springbok shares through the Altvest structure?
Warren Wheatley (12:39.128)
Correct. So how this would work is whatever percentage private equity essay rugby decide to make available to the public or to other, to South Africans, we would warehouse on our balance sheet. And the same way we've done for Bambinani or we've done for Mganu or for our credit fund, we would issue instruments that would be listed that give the holder thereof economic access to the growth of the underlying asset.
Warren Wheatley (13:10.036)
Now, you may say, why not just list this entity by itself? And the response would be is that listing it takes away the opportunity to still engage the private equity fund. In this instance, our mechanism allows for both transactions to be on it.
Secondly, it takes some time. You can't just jump into a listing. So ours is a nice halfway house for a company that wants access to the public, but is not quite ready to list themselves. And the listing or independent listing of the entity must be part of the plan, but could be put five years out allowing SA rugby the time to grow into that role.
And that would be a natural then exit mechanism for the private equity fund as well, while still retaining fan and player and staff ownership.
Alec Hogg (14:16.708)
So keep it nice and simple. I'm a Springboks supporter. I want to buy a stake in the Springboks. I might only have a thousand Rand to invest. How would the AltVest approach that you did float a long time ago and are now saying, Hey, let's relook at it. How would that facilitate it?
Warren Wheatley (14:41.858)
So we would, let's say the stake was a million, a billion Rand that Altvest wanted to make available. We would ring-fence that and have it on our balance sheet. And we would fractionalize those private equity shares and list them in affordable denominations on the JSE. So through their broker or through their unit trust or through their pension fund people would be able to buy for whatever denomination we set those shares at.
To make them affordable, we would do it at perhaps one rand per share, and each share would give you access or economic exposure to this asset that is linked to the spring box, whether that be the commercial rights or whatever nature that SA Rugby wants to put into that entity.
We could make it available so that citizens and fans and players could own it and participate in its growth.
Alec Hogg (15:46.694)
I can almost hear now that the bankers who've been looking at this are saying, why Altvest? Why can't we, we'll put a structure together. We'll do something different. We'll do it in our professional manner in the same way as these guys seem to have the inside track on the whole private equity deal. How would you respond to them?
Warren Wheatley (16:11.202)
Well, I mean, what I would say is that we've done this, so the platform exists, it works, and is ready to go. So we could start doing it, and we could actually move and do it this year if we wanted to, if we really got our heads around the table. But for someone to replicate our platform…
So it's something that could be easily done if you had the time and inclination and you wanted to age prematurely, you could quite easily do it. But it would take you time. So I guess it would take you at least a year to get up and running. And we've bought a name, we've bought the brand, we're starting to enjoy the patronage of the South African investors. And so I think we are quicker route.
We've got experience and the model works. And we've got the partnerships in place with crowds like Easy Equities, FNB Private Wealth, et cetera, et cetera, who can quickly facilitate the book build amongst fans and players, et cetera, et cetera. Look, it would be a model.
Alec Hogg (17:33.926)
So where to now, Warren? Where to now? What is your next step?
Warren Wheatley (17:41.654)
Well, my next step, this was me throwing the cat amongst the pigeons. My next step was to sit by the phone and wait for a call to say, we'd like to look at this in a lot more detail. We're open to working with SA Rugby, with Ackerley, so that all the objectives are simultaneously met. It would also be quite a complex transaction. So we're also open to bankers and other investment advisors helping us get it right for the country.
It's not something I think I could do on my own, nor would I try to. I think one of the issues I think as well is that there was very little consultation amongst the stakeholders. And this is something that would need to be designed with everyone at the table.
From the players, current and former, the staff, the unions, the governance structures, et cetera, et cetera. But what I'm saying is we have the tools. We can now use them to create a mutually beneficial structure and solution to the ownership issue that has caused such a ruckus.
Alec Hogg (19:04.388)
And what about those former players who did, who were so excited about it initially? Have you spoken with them and told them to re-approach SA Rugby, given that SA Rugby's got a big problem now?
Warren Wheatley (19:17.772)
Yeah, you know, the players, they get given a voice, but their anecdotal response to me was that, you know, the deal seemed almost inked and unreversible. And that was the impression or that's how they got batted away, is that, you know, if you had come three months sooner, we could have spoken, but we've signed the deal kind of thing.
So they were quite discouraged because it always felt like it was irreversible. I'm not sure what the current status is or if it is reversible, but it certainly looks like it should be. And it may not pass the voting, they may not get the votes they need to proceed with the sale, which is going to then just put it back at square one.
What we're saying is a lot of work has been done. All of that work doesn't need to be unravelled. We're quite happy to slot in and show how we could help make the private equity transaction to the US, which I think could be a good thing.
Now to bring the US expertise in merchandising and commercialization of various things. I think that could be a net positive for us. But I also think we have the opportunity to have national ownership of the asset and not in the bad way where fans, players, staff and other citizens can enjoy participation, wealth creation through ownership of probably our most popular, most loved brand in the country.
Alec Hogg (21:15.228)
Warren Wheatley is the founder and CEO of Altvest. I'm Alec Hogg from BizNews.com.
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