The shareholders – the Eastern Province Rugby Union (EPRU) and SA Rugby – took the decision in the face of an accumulated deficit of R55m, and with zero income in prospect for the remainder of 2020.
“The hard fact is that the Kings are insolvent, with significant debts and zero assets and it would have been reckless of the board to continue to trade,” said Mr Andre Rademan, chairman of the board.
“Its continuation would have required loans from the EPRU and loans additional to the R45m that the company already owes to SA Rugby.
“In the absence of any rugby in 2020, and without any guarantees as to income prospects for 2021, it would have been financially irresponsible of the shareholders to have pumped in further funding.”
Mr Mark Alexander, President of SA Rugby, said that extending additional credit to an insolvent entity at a time when the rugby industry is required to make a saving of R1.2bn to stay afloat this year was not an option.
“The history of the Kings has been one of expectation and anticipation but unfortunately the parallel story of commercial failure couldn't be wished away any longer,” said Mr Alexander.
“The debts the organisation has accumulated over the years are considerable and in the current environment the only certainty was that they would grow.
“The membership of SA Rugby has invested heavily in the Kings project but it is now time for a re-examination of what is the appropriate and sustainable pathway for rugby in the Eastern Province.”
SA Rugby resumed ownership of a 74 percent shareholding in the Kings in June following the failure of the previous owners – the Greatest Rugby Company in the Whole Wide World (GRC) – to honour contractual commitments in relation to its purchase of the shares.
The GRC had acquired the shareholding in January 2019 but was unable to deliver on the promised turnaround strategy.
The Kings’ struggle to build a sustainable business model had twice seen it fall into management control by SA Rugby.
Mr Rademan said: “It’s time for the Eastern Province rugby community to consolidate and take stock.
“We have managed to put in firm foundations at the EPRU, after historic financial troubles, and we can look to build rugby in the region from that platform.
“It gives us the opportunity to re-focus on creating a business model that is sustainable and right for rugby in the Eastern Province.”
Mr Rademan said that the decision had been communicated to staff and players.
“This is very difficult news to give to people and the board would not have wanted it this way. But sport is a business and we are in unprecedented times. There was no other option.”
Southern Kings timeline:
- November 2010: SA Rugby announces intention to field the Southern Kings in Vodacom Super Rugby in 2013.
- February 2013: Kings compete in the Vodacom Super Rugby competition as one of five South African teams.
- August 2013: Kings lose place in Vodacom Super Rugby in a two-legged play off against the Emirates Lions.
- November 2015: SA Rugby takes control of the franchise when EPRU, to whom the operation of the franchise had been granted, ran into financial trouble.
- February 2016: Kings return to Vodacom Super Rugby when the competition expands to 18 teams.
- April 2017: SANZAAR announces that Vodacom Super Rugby will contract from 18 teams to 15 teams in 2018.
- September 2017: The Kings (and Toyota Cheetahs) are included as South Africa’s ground-breaking representatives in the Guinness PRO14 competition.
- January 2019: GRC acquires 74% shareholding in the franchise; EPRU retain a 26% shareholding.
- June 2020: SA Rugby resumes control of the Southern Kings following the failure of GRC to meet contractual commitments.
- August 2020: Southern Kings withdrawn from potential domestic competition resumption because of on-going financial challenges.
- September 2020: The board of SA Super Rugby (Pty) Ltd – the holding company of the Southern Kings – places the company into voluntary liquidation.