Boks too rich for Sasol

Springbok rugby hopes to have a new sponsor by the end of September after Sasol's decision not to renew a contract that runs out this year.

SPRINGBOK rugby hopes to have a new sponsor by the end of September after Sasol's decision not to renew a contract that runs out this year.

After months of protracted negotiations, Sasol has decided not to renew its six-year deal after the SA Rugby Union's valuation of the Springbok brand exceeded the oil giant's budget.

"We followed a process and Sasol had the first right of refusal in contract negotiations," Saru's commercial manager, Khaya Mayedwa, told The Times.

"We employed a company to work out the market valuation of the Springboks, which we took back to Sasol. They decided that our valuation was beyond their budget at this stage.

"We have had no formal negotiations with other potential sponsors, but through our current stable of existing sponsors we hope to finalise a new deal by the end of September."

Sasol paid R150-million over six years for its involvement with Springbok rugby, which covered the senior national team, the A-team, the sevens team and the under-20s.

It is believed that the union's valuation of the Springbok brand is R60-million a year with an inflation-related increase annually. The union has also proposed unbundling the sevens team from the deal in search of a separate sponsor valued at about R15-million.

Sasol was unable to meet the amount in a tough economic climate where industry analysts are predicting that it will lay off several thousand workers in the coming months.

In 2008 Sasol was fined à318-million (R3.1-billion) by the European Commission for its role in a paraffin-wax cartel scandal, an amount that has hurt the company's financial position.

"As a business, we must take current market conditions into account, while at the same time recognising the enormous value this iconic team [the Springboks] has brought to our brand. We believe our offer reflected this approach but respect Saru's decision to consider alternative sponsorship options," said Sasol senior group executive Lean Strauss.

The union would not disclose which company did the valuation study and were reluctant to reveal who the potential sponsors are.

Vodacom, SA Breweries through their Castle Lager brand and Absa banking group are the obvious Saru targets at this stage.

However, Castle Lager is unlikely to enter the race as it is still locked into a R60-million-a-year deal with national football team Bafana Bafana, while Vodacom's strategic plan appears to be veering away from sport.

In May Vodacom chief executive Pieter Uys said that the company would be re-evaluating all its sports sponsorships, which includes the Bulls, the Cheetahs, the Stormers, the Vodacom Cup, the Tri-Nations, Kaizer Chiefs, Orlando Pirates and Bloemfontein Celtic.

Which leaves long-time Currie Cup sponsor Absa as the most likely target.

source: timeslive.co.za