Robert Dillon: Future of the Newcastle Knights is in the hands of the Wests Group board of directors
CRUCIAL JUNCTURE: The NRL are eager for Wests to assume ownership of the Knights but need to convince the group’s seven board members.THE salvationof the Newcastle Knights could hinge on a show of hands, possibly within a matter of days.
After months of confidential negotiations –confirmed this week by Knights chairman Brian McGuigan –theNewcastle Heraldunderstands that the Wests Group board of directors remain undecided about the NRL’s bid to sell them Newcastle’s embattled rugby leaguefranchise.
It is believed the NRL will soon be sending a high-powered delegation to Newcastle to meet face-to-face with the seven directors –chairman Owen Kilpatrick, Wayne Hore, John McLaughlin, Geoff Coburn,Jack Ashman, BobDarcy and Scott Holmes, as well as chief executive Phil Gardner –in an attempt to clinch a deal.
Having funded the Knights for almost three years since the demise of former owner Nathan Tinkler, the NRL have reached the conclusion that a Wests takeover is the only feasibleoption.
If it cannot be agreed by the end of this season, there are genuine fears the governing body will turn its attentionto relocating the franchise andforming a second Brisbane team.
This might seem unthinkable to Knights fans, especially in light of last week’s21,412-strong crowd for the clash with Sydney Roosters at McDonald Jones Stadium.
But the governing body has always maintained that its ownership of the Newcastle franchise was an interim measure. Their budgetis not unlimited, nor is their patience.
The NRL put the Knights out to tender late last year, but despite expressions of interest, no suitable consortium or individual emerged.
Combine that with the club’s financially troubled history, dating back to its foundation season in 1988, and would it be any real surprise if the powers-that-be started to seriously question Newcastle’s viability?
Relocating the team, and using Newcastleto hostoccasional games, as clubs do with Central Coast Stadium, might be a last resort. But you can bet your bottom dollar it has been discussed.
All of which can be avoided if Wests agree to come to the party.
The licensed-club juggernaut was immediately identified after Tinkler’s demise as the NRL’s best option to replace him.
As then NRL chief executive Dave Smith said at the time: “As a leagues club they [Wests] have been incredibly successful …you could see how there would be a natural alignment.”
It is believed Wests were interested in taking over the Knights, but only on their terms.
They wanted the remainder of the bank guarantee ($5.1 million) Tinkler forfeited, and further NRL funding tosafeguard against incurring any costs.
The NRL decided they could do better. With the benefit of hindsight, it appears they were wrong.
With no viable alternatives, the NRL returned to the table with Wests early this year.
Unlike the other interested parties during last year’s tender process, Wests tick every box. They are a local organisation, founded by rugby league people, with a massive community presence.
And most of all, they have the necessary financial clout. According to the group’s last financial statement, for the year ended January 31, 2016, they enjoyed a record turnover of almost $137 millionand banked a net profit of$23.186 million.
That took the group’s net assets to$207.6million.
How much would it costto buy out the Knights?
TheHeraldunderstands the major outlaywould be $10 million towards a proposed rugby league centre of excellence, plus yet-to-be-determined running costs that the NRL maintains will be offset by increased club grants from 2018 onwards.
The NSW Government has committed to matching NRL clubs on a dollar-for-dollar basis to build centres of excellence, so Newcastle is in line to receive a state-of-the-art $20 million complex.
It would be situated at District Park, Broadmeadow, possibly replacingthe existing harness-racing track.
So by agreeing to the NRL’s offer, Wests could potentially not only save the Knights from the threat of extinction but contribute towards perhaps the most impressive sporting facility in Newcastle’s history.
That would be some legacy.
So what is stopping them?
Well, their track record would suggest the Wests board rarely make a bad business decision.
They buy struggling, run-down licensed premises, renovate, and turn them into thriving establishments.
As one source said: “They don’t waste one dollar.
“They treat it as if it’s their own money.’’
One of the fewregrettableinvestments they have made over the years was in 2005, when the Knights were verging on insolvency and Wests committed $1 million a year to underwrite the city’s NRL flagship.
It was a partnership that lasted barely twoacrimonious years, afterthe Knights posteda $1.3 million deficit in 2007 and Wests angrily rejected some of the liabilities.
The arrangement was eventually terminated, although Wests continued to support the Knights by providing a training and administration base.
Kilpatrick, who has been a board member for 45 years and president for 11,Hore (36 years), Coburn (24 years), McLaughlin (19 years) and Ashman (16 years) were all directors during that contretemps.
Once burned, twice shy.
It would also be understandable if Wests felt they have already been extremely generous to the Knights for 30 years and have no real need to acquire an “asset” that, history suggests, has been a money pit.
There certainly appears to be a degree of wariness.
TheHeraldhas been told that at a recent board meeting, three directors voted in favour of the NRL proposal, three opposed it, and one abstained, for reasons unknown.
Soon they are expected to vote again, after hearing the NRL’s sales pitch. A ballot, apparently, that they are constitutionally entitled to holdwith no input from the group’s members, who at last count talliedmore than 120,000.
Knights fans can only hope that when it comes time for the directors to raise their hands, those in favour holdthe majority.