South African rugby’s player union, MyPlayers have expressed concern at the liquidation of the Southern Kings.
The union are alarmed at the regularity of liquidations of professional rugby teams and its knock-on effect into the amatuer game.
SA Rugby taking the easy way out
SA Rugby revealed on Saturday that the Kings would be liquidated in order to safeguard the future of the Eastern Province Rugby Union.
“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,” said MyPlayers CEO Eugene Henning.
“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.”
A dangerous precedent in Kings liquidation
MyPlayers believe that SA Rugby are encouraging maladministration and a lack of financial accountability among amatuer unions.
Henning went on: “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.
Rinse, repeat
“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.”
