DURBAN - The cash-strapped Western Province Rugby Football Union is entertaining an offer from a group of American businessmen to buy the Stormers for the sum of $6 million (about R100 million).
As the sport enters new financial waters because of the trauma of the Covid-19 crisis, the issue of private companies buying equity in rugby franchises has come to the fore, and this is exactly what New York-based MVM Holdings envisages with the Cape Town team.
The company is headed by former Durbanite Marco Masotti, who is recognised as one of the USA’s leading lawyers in the private equity and hedge fund fields.
Masotti, representing a group of former South African businessmen in the US, submitted an exclusivity agreement to the WPRFU on July 8 in which his consortium offer to buy 51% of the Stormers for the controlling interest.
Masotti, speaking to Independent Media from New York on Monday night, said that $2 million would go to the union and $4 million would go into the balance sheet of the Board of the Stormers.
Masotti, a partner at the New York-based law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP, said: “The Western Province RFU has come back to us with the concern that they should keep the controlling share, but that they would give us an equitable share of the Board (of the Stormers).
“They want to keep control of rugby affairs and we could control the commercial affairs, but that wouldn’t work for us. There needs to be one controller and the guys that are involved in this bid have extensive experience in enterprises of this kind — we are talking about owners of NBA and ice hockey teams.
“Our discussions with Western Province are ongoing and they are going to come back to us regarding our concerns.”
Masotti said that as a former South African he is passionate about rugby and that he and other expat businessmen want to re-engage in South Africa.
“The sport of rugby is stressed and needs change to survive and then flourish, and we see so much potential in Cape Town and the Stormers as a brand — they have iconic figures in an exciting team based in one of the world’s great cities.
“We see great opportunities to link the Stormers with (NBA team) Milwaukee Bucks and grow the brand in Europe and States,” Masotti added.
Masotti said that the Board of WP/Stormers had some time ago tasked one of its members, Andre van der Veen, to find equity investors and that had ultimately led to the offer from MVM.
Van der Veen, the former CEO of eMedia Holdings, last night at Masotti’s recommendation confirmed that the offer is on the WP table.
“The rugby landscape is going though change and you have to re-look at the model,” Van der Veen said.
“A lot is going to change and rugby has to position itself for change. The two things you cannot do without is capital and expertise. It is a simple formula — you need both. So when you are lacking in one department (WP is desperately short of cash) it has to be addressed... It would be invaluable to have an experienced, controlling shareholder assist a rugby team in these uncertain times.
“In addition, South Africa would like to keep as many of its rugby stars in the country, and this is one way to do it.”