There is something that has been weighing heavily on my mind. So I thought I would take this opportunity to bedevil your mind with it as well.
Good people, can we please discuss this for ten (10) marks.
If I buy your business, you and I would sit down and negotiate a price. Right? And then once you say “this is my price.” Then I have to ask, what do I get for that much money? Therefore the first phase one means we do a due diligence exercise to determine the value of the tangible assets. Then phase two is us wrestling over the value of the intangibles assets. √ (1)
Now for a football club we agree that the value of the intangible assets or Goodwill is largely related to the future earnings of the club. And that speaks to the league’s grant and contracts that have been signed for sponsorship etc. √ (2) Logic dictates that both values are largely related to the status of the club. In other words being in the PSL translates to a higher value as opposed to a club in the NFD. √ (3)
This explains why the sellers would want to do the deal just after the half a billion rand deal with ABSA was confirmed. Because that means there would be a grant adjustment which positively impacts the valuation, than if the deal was negotiated on the value of the old grant. Plus this being negotiated with a five year outlook rather than 2 or one year, means more earnings for a zero investment. √ (4)
Now I appreciate that the Platinum Stars transaction was well publicised at the start of the season. And while the status of the club makes a major difference in the value of the club as demonstrated above. You can manage that with a clause in the sale agreement. For example – If by this date the status is X then the price is Y. And if the status changes then the price is something else. Because the value of the tangible assets is what it is, and it will not change. √ (5)
Now that we know that Roger de Sa is part of the new ownership. How then did it happen that he was placed in charge of the biggest component of the value of the club? The same club he was is reported to be buying. Surely it serves his interests for the club to be relegated, because it means the price drops? Isn’t him coaching the team a conflict of interest? √ (6)
To what extent were the other stakeholders consulted about that decision? I have been asking myself why Roger de Sa looks so unaffected when his club concedes, as opposed to his angry expressive Latin self. Is this even ethical? Why are these questions not being prominent in the public discourse? Or am I over thinking this thing? √ (7)
Furthermore, the league needs to answer to that too. With a clear conflict of interest which affects the credibility of the league, Roger de Sa’s appointment has a bearing on the level of competition in the league.
The only thing that makes the league bear value is its degree of competitiveness within it. Or else if the results are obviously predictable then why would we watch? The top 8 competition, the different monetary rewards linked to the position a club finishes on. The prize money for winning each competition, and various rewards for outperforming your peers. these are example of measure taken by the league to manager the degree of competition. So the question begs – why is the board of governors not concerned by Roger de Sa appointment? √ (8)
What about the players union? Aren’t they stakeholders in the league? This transaction has bearing on their members. As far as I know once you initiate a transaction of a sale of business, you have to inform which ever union that is represented in your entity. Just out of interest, at what point are they informed about a transaction? And at what point where they informed about this transaction in particular? And what is they’re view on the matter. Because this is a clear conflict of interest. Why are they quiet? √ (9)
Lastly I find it interesting that the new owners are stage shy. Reports reference a Cape Town based consortium. But if I remember correctly, the lack of clarity on the identity of the buyer a major issue in the flop of the Moroka Swallows transaction? √ (10)
I am not sure about you, but for me there is something that does not rest well with me about this?
The tempest prognosticator
Themba A Dikgale