SAFA Presentation Parliamentary Portfolio Committee on Sport and Recreation

30 APRIL 2013

Documents in the Pack

Consolidated Presentation which contains the following Governance Framework Transformation Technical Master Plan Legacy of the 2010 FIFA World Cup Match Fixing Financial Statements Report on sale / purchase of cars and buses

2011-12 Annual Report with Financial Statements Executive Summary of FIFA Report into Match Fixing Dossier on alleged corruption and maladministration in SAFA SAFAs Response to the dossier

Introduction

SAFA Presidents Introductory Remarks Delegation 1. SAFA President: Mr Kirsten Nematandani 2. SAFA Vice President: Chief Mwelo Nonkonyana 3. Mr Mandla Mazibuko: Vice-President 4. SAFA Vice President; Dr Danny Jordaan 5. Mr Elvis Shishana: NEC Member 6. Mr Morris Tshabalala NEC Member 7. Mr Gerald Don: NEC Member 8. Mr Poobalan Govindasamy: NEC Member 9. Mr Dennis Mumble: SAFA CEO 10.Adv Norman Arendse 11. Dr Robin Petersen: CEO of SAFA Development Agency

Presidents Remarks

There is no crisis in SAFA Developments of the past few months are unfortunate Documents by nameless and faceless persons led us to this stage

We have been subjected to trial by the media

-Match-fixing -We still support the independent judicial commission of enquiry -The Legacy Trust -This is FIFAs money -FIFA has reiterated that their money has been accounted for

SAFAs GOVERNANCE STRUCTURE

SAFA

The SAFA Mission Statement

The South African Football Association, as the governing body of football in South Africa, is committed to: Promoting and facilitating the development of football through sustainable infrastructural and training initiatives; Engaging in pro-active dialogue with the government to generate a partnership in recognition of football as a national asset; Creating an image of being a stable, progressive and innovative institution; Creating a mutually beneficial relationship with the corporate world; Contributing to Africas ascendancy in world football through the hosting of major events in Africa, while aspiring and striving to become a leading football playing nation.

Governance Structure SAFA GENERAL COUNCIL 52 Regions

(311 Local Football Associations)

SAFA NATIONAL EXECUTIVE COMMITTEE

8 COMMITTEE CLUSTERS
(consisting of 23 Standing Committees)

SAFA-FIFA LEGACY TRUST

SAFA INFRASTRUCTURE FOUNDATION

SAFA SECRETARIAT SAFA ASSETS -SAFA House = R70m -Cars & Buses = R73m --Raphael House = R4.5m Hyde Park = R7.5m -Netcare Shares = R10m

SAFA DEVELOPMENT AGENCY

R471m in the bank

R18m in the bank

Governance Structure of the NEC

STRUCTURE - SAFA NATIONAL EXECUTIVE COMMITTEE
President Vice-Presidents 1 4 (including the VP from the NSL)

Provincial Representatives
National Representatives Honorary Life President Honorary President Honorary NEC Member NSL Representatives Chief Executive Officer

18 (2 per province)
10 1 1 1 4 (incl. 1 VP) 1 (non-voting)

Financial Update

Historical Financial Position (2001 2012)

YEAR 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

PROFIT/LOSS (R7,527,203) R12,928,361 (R38,945,247) (R22,337,895) (R24,789,376) R87,497,172 R53,481,907 (R3,632,285) R25,166,167 (R24,398,197) R59,262,294 (R56,471,977)

RETAINED EARNINGS (R25,467,387) (R12,539,026) (R51,484,273) (R73,822,168) (R98,611,544) (R11,114,372) R42,367,535 R38,735,250 R63,901,867 R39,503,670 R98,765,964 R42,293,987

Snapshot of Finances

POSITION Loss of R56.4m reported for 2011-2012 financial year:

Impairment of assets (scanners, buses) Accounting provision for loss in AFCON 2013 Depreciation of unproductive assets (Hyundai buses, Hyde Park House, Raphael) Total depreciation = = = = R16m R6m R7m R24m

Expenditure decreased by R3m despite an increase of R12m accruing from additional depreciation increased and insurance costs of the assets Investment in football:

National team expenditure rose by R15m (full program for all teams) Expenditure on competitions, leagues and football development rose from R79m to R92m

Governance expenditure increased by only 10% Plan to close the liquidity gap on the next slide

Snapshot of Finances (continued)

POSITION Loss of R56.4m reported for 2011-2012 financial year:

Non-recurring items
Impairment of assets (scanners, buses) Accounting provision for loss in AFCON 2013 Depreciation of unproductive assets (Hyundai buses, Hyde Park House, Raphael)

=
=R16m =R6m =R7m

R29m

Operating loss

R27.4m

Closing the Liquidity Gap

Liquidity Gap Recovery Plan 1. Appointment of Financial Platform (Ernst & Young) 2. Sold 22 Buses 3. Sold 40% of Netcare shares -Further 20% awaiting decision 4. Sold Hyde Park; Raphael on the market 5. SARS refund obtained
6.
7.
8. 9.

R92,9m

R3,5m R17m R10m R6m R7.5m R7m

R8m

Renegotiated HPC debt

(previously done by NEC)

(3 years, interest at prime 8.5%)

AGM Approved a financial Budget for first time

Limited progress with restructuring organogram Regional grants paid to March 2013 Suppliers largely under control Stricter cost control measures in place

10.
11.

R21m

Closing the Liquidity Gap

Recovery Plan (continued)
1.

2.
3. 4. 5. 6.

7. 8. 9.

Sponsorship for SAFA 2nd Division nearly concluded Additional sponsorship for U13 and U15 boys and girls leagues Sponsorship with telecommunications partner concluded SuperSport broadcast contract concluded Negotiations with vehicle sponsor taking place today (30 Apr 13) Negotiations with potential sponsor for professional womens league commenced in Apr 13 Banyana Banyana sponsorship negotiations concluded Secured grant from 2010 FIFA Legacy trust R20m Received VIK from Tsogo Sun R2m

Cars & Buses

1996 - SAFA Referees program sponsored by Toyota (sponsorship ended in 1997) 1997 - 10 VW Kombis, 1 Audi A4 and 1 Audi A6 1998 - 25 Mercedes Benz Sprinter buses, 25 Neons vehicles 2005 - 6 Fiat vehicles sold after sponsorship ended 2006 - Sold the 1998 Mercedes Benz Sprinter buses 2009 - Mercedes Benz contract renewed and 10 cars added to SAFA fleet 2009 - Purchased 2 S-Class Mercedes Benz vehicles for VIP transport 2011 - 53 Mercedes Benz Sprinter buses 2011 - 53 Hyundai sedans from FIFA 2011 - 35 buses from a FIFA World Cup partner 2011 - 26 Mercedes Benz C180/C200 cars for Provincial representatives and those who service SAFA Regions 2012 - Mercedes Benz sponsorship ends and fleet returned TOTALS 239 vehicles over 15 years 131 Mercedes Benz vehicles 2 Toyotas 88 Hyundais 6 Fiats 12 Volkswagens -10 Kombis given to poorest Regions in 2001 -25 Mercedes Benz Sprinter buses sold in 2006 due to high maintenance costs -25 Neon vehicles sold as a result of the high cost of maintenance in 2001 -22 of the 45-seater buses sold as they were non-productive (in 2012)

Role of the PEC

SAFAs Provincial Representatives

Comparison with Cricket/Rugby

SAFA Year end date Revenue Broadcast Sponsorship Other Salary cost (Rugby incl players) Number of employees (excl players) Average salary per employee p.a. Revenue per employee Non exec director fees and allowances Number of non exec directors Average annual fees per non Exec p.a. Revenue per Non exec Fixed assets (at cost) Motor vehicles/Busses Leasehold improvements Land and Buildings Computer equipment Furniture Reserves June 2012 R' Million 312 27 202 83 54 105 514,286 2,971,429 10 36 277,778 8,666,667 161 80 61 8 8 4 42 533 2 Cricket SA April 2012 R' Million 430 277 55 98 27 55 490,909 7,818,182 2 19 89,474 22,631,579 31 22 7 9 6 68 SA Rugby Dec 2012 R' Million 689 307 272 110 59 80 737,500 8,612,500 4 12 358,333 57,416,667 22 7

Transformation in SA Football

Transformation of South African football is a process of assessment, implementation, re-evaluation and re-invention. Transformation, in its broadest context, must be tackled on several fronts and is being implemented accordingly:
1. Racial
6. National Priorities 2. Economic

5. Admin

3. Sport Performance

4. Governance

Aims & Objectives of SAFA Article 2 - SAFA Constitution

SAFA shall have no other objectives save for objectives provided for below and the funds be employed exclusively in the promotion of such objectives and provided further that SAFAs activities shall be limited to the Republic of South Africa. SAFA shall have the following aims and objectives:
2.1 to carry on the public benefit activity of administering, developing, co-ordinating and promoting the game of football in which the participants take part in accordance with the principles as laid down in the statutes of FIFA. to improve the game of football constantly and promote, regulate and control it throughout the territory of South Africa in accordance with the principles of fair play and its unifying, educational, cultural and humanitarian values, particularly through youth and development programmes;

2.2

2.3

to organise competitions in Association Football in all its forms, by defining precisely, as required, the areas of authority delegated to the various Members and Leagues of which it is composed;
to draw up regulations and provisions and to ensure their enforcement; to protect the interests of its Members; to respect and prevent any infringement of the statutes, regulations, directives and decisions of SAFA, COSAFA, CAF and FIFA as well as the Laws of the Game and to ensure that these are also respected by its Members; to prevent all methods or practices which might jeopardise the integrity of matches or competitions or give rise to abuse of Association Football; to control and supervise all football matches of all forms played throughout the territory of South Africa;

2.4 2.5 2.6

2.7

2.8

Aims & Objectives of SAFA Article 2 - SAFA Constitution

2.9 to manage international sporting relations connected with Association Football in all its forms;

2.10 to host competitions at both National and international levels; 2.11 to settle disputes arising between members or bodies or persons connected directly or indirectly with football within the jurisdiction of SAFA; 2.12 to raise and administer the funds of SAFA in such a manner as SAFA may deem advisable and in particular by means of subscriptions, donations and sponsorships;

2.13 to acquire and develop playing facilities including the construction of stadia;
2.14 to distribute monies to its members for the protection, promotion and advancement of amateur football;

2.15 to affiliate to FIFA, CAF, COSAFA and SASCOC;

2.15 to do all such things as may be incidental or conducive to the attainment of the objective or any one of them;

THE TRANSFORMATION OF SOUTH AFRICAN FOOTBALL

SAFA

MODERN FOOTBALLS NEW REALITY

The river used to flow freely and everyone could draw water downstream ........ until someone built a dam upstream and caused the river to run dry downstream.

 A strong national centre is therefore needed to acquire resources using economies of scale to negotiate sponsorships and to provide proper levels of support for development

Racial Transformation

1. Racial and Gender Transformation

Objectives

To strengthen participation by all racial groups in the country To increase female participation in the sport More coaching courses for school teachers and SGBs Introduce Grassroots football in communities

Challenges

Accessibility to school sports thru Phys Ed in the curriculum Lack of infrastructure Inadequately trained human resources Parental involvement Cultural challenges in rural areas

2. Economic Transformation Objectives

To diversify income sources for football Ownership and/or control of facilities Football Pools Capacity-building in our Regions Broadcasting revenue base needs to increase drastically Exploit hidden value embedded in the sport (merchandising, business potential)

Challenges

Mindset of Corporate South Africa is racially based Lack of an entrepreneurial culture in football Negative public image of the sport

3. Sport Performance Objectives

Establish grassroots football programmes to increase the fun element in the sport Establishment of provincial, regional, local high performance centers Improvement of the National School of Excellence at Elandsfontein Become the center of Elite Football Development for the African continent Become No. 1 in Africa at all age group levels Qualify for FIFA and continental competitions at all levels Increase the coaching culture at all levels

Challenges

Transfer of land for School of Excellence to be accelerated Acquisition of Esselen Park as the National Center of Excellence for football Increased engagement with government at Provincial and local levels

4. Governance

Objectives

Become the model of good governance amongst sporting codes in the country Establish a strong regulatory environment to manage relations among the sports participants Build a culture of ethical behaviour that permeates all the way to the grassroots structures Use the 2010 FWC dividend to develop the game in the country

Challenges

Lack of respect for basic governance principles Not enough resources to widen the educational programme on good governance

5. Administrative Objectives

Build the most professional team to administer the sport Use the 2010 FWC experience to strengthen the administration of the sport Rebuild the culture of voluntarism in our football Establish a strong SAFA Academy to train coaches, referees, administrators and other professionals who service the sport Build culture of service and commitment among all staff throughout the country

Challenges

Lack of financial resources Entitlement Low skills base

6. National Priorities

Objectives

Compliance With the National Sports Plan

Challenges

Resources

THE LEGACY OF THE 2010 FIFA WORLD CUP

SAFA

The 2010 FIFA World Cup Legacy Trust

BOARD OF TRUSTEES

2010 Legacy Fund

There are 3 forms of 2010 FIFA World Cup Legacy

direct

payments from FIFA to SAFA transfers of surplus funds from LOC to SAFA 2010 FIFA World Cup Legacy Trust distributions to qualifying recipients

Direct payments from FIFA to SAFA

USD 20 million was provided to SAFA in the build-up to the 2010 FIFA World Cup event for preparations and for construction of SAFA House. The first project financed by FIFA was the purchase of 35 buses and a fleet of 53 cars which were handed over to SAFA for transport of their regional teams.

Transfer of surplus funds from LOC to SAFA

FIFA has also been consulted in respect of all grants made to SAFA by the LOC up to the current day. These matters have all been performed in compliance with the governance structures of the LOC.
FIFA letter dated 27 February 2013

Asset disposal strategy approved by the Board of Directors on 1 December 2009

2010 FIFA World Cup Legacy Trust

FIFA appointed Ernst & Young to perform financial control functions within the FIFA Legacy Trust and in particular to monitor that donations are appropriately authorised under the FIFA Legacy Trusts governance structure.

Background

President Zuma and FIFA President Blatter announced establishment of Trust in Dec 2010 Inaugural meeting of Board held on 18 April 2012 after approval & registration of Trust Deed and basic set up of the administration FIFA transferred R450m to the Trust Board expressed wish that funding should be primarily used to improve all facets of South African football

World Cup Profit Distribution Guaranteed Profit SAFA House USD100m USD10m

Bafana preparation
Cars and buses SAFA Development Programs

USD10m
USD10m USD5m USD35m

Total

Transferred to 2010 FWC Legacy Trust USD65m

Funds in the 2010 FIFA WC Legacy Trust

The USD65m (R450,8m) was invested as follows:

ABSA INVESTEC NEDBANK

R90m R190m R170m

The above investments have yielded interest of R31,848,614 by 28 February 2013

Procedures

Call for applications : End of May 2012 Application process opened : 1 June 2012 closed : 30 September 2012 All applications registered and placed on database Screened for compliance Preliminary assessments made by staff

Evaluation panel considered the applications

Evaluation Panel

Dr Molefi Oliphant (SAFA) Prof Lesole Gadinabokao (SAFA)

Dr Rendani Mulaudzi (University of Pretoria)

Mr Chris Fortuin (University of Johannesburg) Mr Hubert Tiger (FIFA Representative)

APPLICATIONS RECEIVED

Applications
Category Non-Football Specific Number

Development through Football projects

Bursaries Humanitarian Football Specific Funding below R10 000 Funding for projects above R10 000 Schools TOTAL # OF APPLICATIONS

74
27 48

3438 314 446 4,347

ALLOCATIONS MADE

Summary of Allocations

Number of Recipients 24 33 916 973

Category Bursaries to individuals serving football Development through football Football Development TOTAL AMOUNT

Amount R0.5 R6.5m R49m R56 m

Some of the Recipients

SAFA: R17.05m
For the delivery of Under-13 and Under-15 Leagues for Boys and Girls in 311 Local Football Associations and 52 Regions

Some of the Recipients

SAFA WOMENS FOOTBALL: R8.7 m

R5.7m for the delivery of the SAFA Womens Regional League R3.0m for the Long Term Womens Development Programme

Some of the Recipients

SAFA REGIONS: R7.950m

R150 000 to each of the 53 SAFA Region for Office Equipment, Training of Coaches, referees and Administrators and a grant for administration

Some of the Recipients

SAFA LOCAL FOOTBALL ASSOCIATIONS: R6.22m

R10 000 to each of 311 SAFA LFAs for Office Equipment R10 000 Grant for Administration

Some of the Recipients

WITS UNIVERSITY: R317 000

For the training of Emergency Medical Personnel to do duty at football matches

Some of the Recipients

20 CENTRES FOR 2010 R4 200 000

R210 000 to 20 Centres for Education and Health programmes as part Community/Youth Development that use football as the vehicle for development 5 Centres are in South Africa 15 Centres are in the rest of Africa

20 Centres for 2010

Some of the Recipients

800 LEGACY BAGS: R6.0m

SAFA Regions, LFAs, Clubs and schools to receive bags containing KIT, BAGS and training equipment to the value of R7,500 each.

Some of the Recipients

SA Indoor Football Association: Beach Football Students Football Bursaries

R2.350 m R750 000 R100 000 R500 000

The Next Steps

We are refining the application process based on the learnings of the first process The next window for applications will open in July 2013 for the year 2014