Thread by @CashNSport

Thank you all for your interest in the #AbsaPrem thread. As mentioned, I've also been going through the fortunes of @SAFA_net and today I delve into the latest Annual Financial Statements (AFS) of 2017-2018.

Thread!

To start, I will repost my disclaimer. I am not an auditor, accountant or statistician nor am I a financial journalist. I am merely a concerned football fan who likes to read up on the financial side of sport and this is all publicly available information. Let us begin

SAFA haven't released financials since 2017-18 and according to this report (sabc.co.za/sabc/annual-re…) are due to post a loss of around R74m for 2019. According to their 2018 results, current liabilities were R175m and current assets were R61m, pointing to serious liquidity issues

Key to SAFA is revenue generation which comprises sponsorships, broadcasting rights, income from CAF, FIFA & Host Cities, royalties, ticketing, club affiliation fees & advertising fees, government and other grants and the cash equivalent value of non-cash items supplied to SAFA

Another key part is cost containment and while looking at operating expenses, something jumped out at me which was worrisome: SAFA’s operating expenses showed really high administration costs R131m, almost triple what was spent on football development which was R41m

When I looked further into these administration costs I found a few of them listed and by far the largest figure was employee costs of R37m followed by legal and consulting fees of R15m, accounting fees of R13m and management remuneration of R10m

Now I will take you through the revenue implications that SAFA has to deal with due to Covid19, expiring contracts and massive sponsorship challenges. This is a list of their sponsors and commercial partners as at 2018

SAFA had seemingly found a great broadcast partner with a R1bn Siyaya TV deal in 2014. That deal was sunk by government essentially forcing SAFA to go with the SABC via an ICASA ruling. A curious ruling seeing as rugby, a national sport, isn’t on SABC channels

That ruling effectively meant Siyaya still hold the primary rights for all Bafana matches with the SABC taking up a sublicense to broadcast the matches. SAFA would then pay Siyaya for conceding to the agreement while Siyaya would still pay for the broadcast right

What is also interesting is, Siyaya didn’t have a track record, they were relying on Digital Terrestrial Television and yet SAFA still signed the deal?

Anyway, the SABC would go on to sign a deal of their own with SAFA

SAFA and SABC announced a “flexible” 4 year deal worth an initial R50m. The SABC recently reported a net loss of R482.4m and cash in March 2019 amounted to R72m. With no football to broadcast, one would think SAFA and SABC will again be having tough conversations

Onto SAA who signed a deal in 2016 to be the national carrier that would save SAFA up to R25m. The deal was meant to lapse in 2021 but with SAA having been placed into business rescue and being essentially bankrupt, SAFA will have to find a way to fill this void going forward

Next is the Nike kit deal which lapsed in December 2019. According to the media, that deal was replaced by a 5 year deal with Le Coq Sportif starting June 1, 2020. There has been no indication of how much the deal is worth

There's also the deal with Burger King (Grand Parade) reported in the media as having been for 5 years & signed in 2015. This is noted in the SAFA books of 2013-2014

Media reported the deal as worth R25m but the only mention I could find in the AFS is R1m which was received in advance in 2013-2014 with no specific mention of the amounts earned from the deal in subsequent AFS

If you are wondering why i haven't mentioned the 2010 FIFA World Cup Legacy Trust, it's because its a very complex matter and i am still wrapping my head around it. It was mentioned 16 times in the 2017 – 2018 and is a hot topic. I'll leave it for another day.

In conclusion on the AFS, there's work to be done to cover the revenue gaps. The women’s sponsorship with SASOL is a good start as is the Le Cuq Sportif deal. SAFA also announced that FIFA would provide funding to help mitigate against Covid but no financial details were given

We already know they are facing a R74m shortfall but it's what is contained in the rest of the AFS that will tell us just how bad the situation is. There is a lot of drama out there at the moment and one can only guess that the smoke is a sign of a fire..

You can find the AFS here if you want to go through them yourself. safa.net/annual-reports/

Cheers until next time.

@threader_app compile