The Nelson Mandela Bay Municipality is entertaining the idea of bailing out the cashstrapped Eastern Province Rugby Union (EPRU) with an amount of R15-million spread over three years in exchange for three tests in Port Elizabeth.
The proposal from the Mandela Bay Development Agency (MBDA) was, however, withdrawn from the mayoral committee agenda yesterday pending more details about the proposed deal.
In the report, the agency – which is managing the Nelson Mandela Bay Stadium – said if the city did not help EP Rugby with its R15-million debt, it could lose three test matches over three years, including the one against Argentina in August.
The EPRU is in the process of liquidation and the bailout will prevent the liquidation, according to the MBDA.
“The objective of such a payment is to enter into a compromise agreement with the liquidator,” the report said.
“The desired outcome of the payment is to secure the three tests [and] also to regain the commercial rights to professional rugby and create a clean slate for rugby going forward.
“Such a clean slate will enable a professional relationship with an equity partner and/or sponsor.
“In the past, rugby tests had only been hosted in Nelson Mandela Bay once every three years.
“It needs to be noted that any rugby test generates over R100-million in the form of a direct and indirect economic impact in the city.”
According to the MBDA, if the city does not help EP Rugby, it would mean no test matches would be allocated to the stadium, which is battling financially.
The municipality is spending more money on maintaining the stadium and covering hosting costs than it is generating from matches and events.
The proposal is to pay the R15-million in tranches of R5-million next month, R5-million in September next year and R5-million in September 2019.
This would be over and above the R6-million already paid to the SA Rugby Union (Saru) in the current financial year.
Motivating for the bailout money, the MBDA wrote: “The liquidation needs to be resolved to achieve any future competitive development in EP Rugby.
“Any litigation can delay the resurrection of EP Rugby and will prevent any possibility of reaching the Currie Cup Premier League or retaining the Southern Kings’ Super Rugby franchise status.
“It will also mean that no test matches will be allocated to the stadium, which will further exacerbate the dire financial situation of the stadium.”
It said the intention was to create a new company once EPRU was dissolved, with the name likely to be changed to Mandela Bay Rugby (Pty) Ltd.
The idea of renaming the EP Kings to the Mandela Bay Saints or The Saints was also being toyed with.
At yesterday’s mayoral committee meeting, budget and treasury political head Retief Odendaal said clarity was needed on the report before a decision could be made.
“It must be deferred until it comes with the necessary information from the MMCs [members of the mayoral committee] for economic development, tourism and agriculture and sports, recreation, arts and culture,” he said.
Mayor Athol Trollip said: “We agree that the matter be withdrawn until the next mayoral committee [meeting] for redrafting and for getting information required for us to make an informed decision.”
Saru administrator Monde Tabata said he could not comment on the request until they received a written report from the municipality.
“But it must be commended that the municipality is even considering the matter; not every municipality does that,” he said.