South Africa's Rugby Union (SARU) is in the spotlight for its innovative approach to financial sustainability, which has created a 'virtuous circle' that many nations are envious of. This success story is not just about winning matches; it's about a strategic investment in the future of rugby, ensuring the sport's long-term health and prosperity. But what makes this model so compelling, and how does it work? Let's dive in and explore the fascinating dynamics at play.
The Virtuous Circle: A Self-Sustaining Feedback Loop
At the heart of SARU's success is a self-sustaining feedback loop, where one positive event triggers a chain of favourable outcomes, ultimately reinforcing the original event and leading to continuous growth or improvement. In this case, the focus is on nurturing strong national teams, which, in turn, drives commercial value and generates income. This income is then reinvested back into the system, creating a cycle of success.
"We have to ensure that we have strong national teams – the Springboks, Sevens, women, as well as our Under-20 and junior teams," says SARU CEO Rian Oberholzer. "The moment that happens, the commercial value of our entity increases. We can create proper commercial value, to feed back into the system and bring the next tier of players through." This is a powerful statement, as it highlights the importance of investing in the future, not just the present.
The Role of Playing Opportunities
Creating playing opportunities, especially at the schoolboy level, is a key factor in SARU's success. By nurturing young talent, they are not only building a strong foundation for the future but also creating a pool of players who can contribute to the national teams. This, in turn, drives commercial value and generates income, which can be reinvested into the system.
"We have a responsibility to keep on feeding that, and we must never forget what our focus is," says Oberholzer. "We must do everything we can, to keep our national teams strong, to earn money that flows back into our structures again." This is a powerful reminder of the importance of long-term thinking and the need to invest in the future.
Building a Reserve Fund: A Matter of Survival
Another critical aspect of SARU's success is its focus on building a substantial 'reserve fund'. This fund is essential for navigating disruptions, such as the COVID-19 pandemic, and ensuring the organization's survival. By having a reserve of at least six months' worth of expenses, SARU can weather financial storms and continue to support its unions and players.
"It is important for when we have ‘disruptions,” says President Mark Alexander. "All the new contracts [with commercial partners], since COVID, have a new clause. If we can’t deliver on our rights, we can’t generate money. If we don’t generate money, we can’t sustain the organization." This is a stark reminder of the importance of financial planning and the need to be prepared for the unexpected.
The Commercial Value of National Teams
The commercial value of national teams is a key driver of SARU's success. By investing in strong national teams, they are not only building a foundation for the future but also creating a pool of players who can contribute to the sport's commercial success. This, in turn, drives income and allows for reinvestment into the system.
"We make our money from the Springboks and the URC teams that play internationally," says Alexander. "If we can’t do that, a huge part of our revenue will dry up." This is a powerful statement, as it highlights the importance of international success and the need to invest in the players and teams that drive commercial value.
The Future of SARU: A Model for Others to Follow
SARU's success is not just a story of financial sustainability; it's a model for others to follow. By investing in the future, nurturing young talent, and building a strong foundation, they have created a self-sustaining feedback loop that drives continuous growth and improvement. This is a powerful message for the rugby world, and it's one that should be heeded by all nations.
"We haven’t looked at possible ‘equity’ since the failed Ackerley bid a couple of years ago," says Alexander. "SARU appointed an independent auditor to investigate ‘the best way forward’ for the organization." This is a powerful statement, as it highlights the importance of transparency and accountability, and the need to be open to new ideas and approaches.
In conclusion, SARU's success is a testament to the power of strategic investment and long-term thinking. By nurturing strong national teams, creating playing opportunities, and building a reserve fund, they have created a self-sustaining feedback loop that drives continuous growth and improvement. This is a powerful message for the rugby world, and it's one that should be heeded by all nations.
