Saru intervenes in Lions’ struggles
30 Jan 2012
The South African Rugby Union has committed to negotiating a settlement in a dispute between the Lions, Pumas and Leopards.
Keo.co.za reported last week that the Lions are on the verge of financial ruin and will retrench up to 15 players in a bid to ease the pressure. Now their woes are set to deepen with the possibility that they could lose up to R6.6 million in broadcast revenue.
The New Age reports that Saru will attempt to settle financial disputes between the Lions and their franchise partners, who maintain that the Johannesburg franchise have not honoured their commitments as detailed in the franchise agreements set out by Saru. With the Pumas still having outstanding debts to the Lions, the Leopards are expected to pocket the bulk of the broadcast revenue.
The Lions had previously banked on the significant cash injection from the Guma Group to settle their most pressing existing debts. However, that deal collapsed in 2011 after the Guma Group claimed the Lions would not honour their commitments on numerous issues detailed in shareholders agreement.
They group has subsequently lodged an application to have the union liquidated at the South Gauteng High Court, seeking re-payment of approximately R9 million for players and staff salaries. There is also a claim for R2,4 million from a subsidiary of the Guma Group.
In the affidavit, the Guma Group claims: ‘The [Lions] is hopelessly insolvent, both factually and commercially. As will reflect in the Lions’ financial statements over three years, their financial situation has deteriorated to a position where their liabilities exceed its assets by tens of millions of rands.’
The Guma Group also reveal that the Lions were nearly R74 million in debt by the end of the 2010 financial year, with little prospect of halting their slide.
Lions president Kevin de Klerk has consistently insisted that they are not in financial trouble and pointed to a ‘substantial’ investment from new equity partner, Altmann Allers of Glasfit.