Private ownership in Australian sport

Nick Hornby-Howell Roar Rookie

By Nick Hornby-Howell, Nick Hornby-Howell is a Roar Rookie

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    Russell Crowe and Peter Holmes a Court celebrate a Souths victory. AAP Image/Action Photographics/Grant Trouville

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    With Russell Crowe due to leave the Rabbitohs at the end of the 2013 season, fans are left wondering whether private ownership of sporting clubs really is a positive thing.

    After all, Nathan Tinkler and his Hunter Sports Group have given Knights and Jets fans cause for concern, with his very public cash flow troubles.

    Crowe and Holmes a Court took over what was a struggling football club in 2006 and in six years have turned the club into a powerhouse. However, what happens to the red and green after next season?

    While George Piggins is over-reacting when he rants the club will be taken to Perth or the Central Coast, the reality is there are very few people within Australia who have both the means and the passion for rugby league to own a club.

    Savvy business operators have the expectation that when they purchase a company, they will turn a profit. The reality is, ownership of a sporting club can be likened to piling up money and burning it. Just ask Tinkler.

    The public are often sceptical of how private owners will affect the club, think the Glazers and Manchester United, and often they are proven correct.

    Clive Palmer single-handedly ran Gold Coast United into the ground when he declared football to be a “hopeless game. Rugby league’s a much better game.”

    Crowe and Holmes a Court paid $3 million for their 75% share and it’s reasonable to suggest they wouldn’t sell for any less than that. Whether the members can afford it remains to be seen and it may be up to Souths Juniors, with their very wealthy leagues club, to pull the Rabbitohs out of this mess.

    While Crowe’s positive influence cannot be debated, the question must be asked: Was the Rabbitohs’ short term success worth the future doubts?

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    The Crowd Says (60)

    • November 20th 2012 @ 8:37am
      oikee said | November 20th 2012 @ 8:37am | ! Report

      I think the real problem is becoming complacent. The knights seem to be fine. The fans are not relying on Tinkler to pay for things. They know he is shakey.
      Palmer wanted to do things his way, he is a little bit,,,,how would you put this, Queensland nutty. Maybe this is a good thing for the A-league, you only have to look at how good the Wanderers have been, so maybe the Coast team was never going to work real well.
      You cant blame Palmer for the FFA mistake, along with north Queensland, dots on a map. ]

      Crowe, again, the fans sat back and thought he would pay for everything, until he told them he cant pay for everything on his own.

      Most clubs struggle, and the fans have to really put in to keep things going sometimes, this can be a good thing. But you cant blame billionaires or millionaires. The Warriors are looking pretty good, strong support, good business practise now.
      I think you have to demand best practise, that is the problem with alot of clubs with millionaire owners.
      The knights have safety triggers built into their ownership by Tinkler. Seems like someone knew something.

      • November 20th 2012 @ 8:54am
        Nick Hornby-Howell said | November 20th 2012 @ 8:54am | ! Report

        Tinkler is definitely bank rolling the Knights. Do you think they would have signed Bennett without his funds? Or got Kade Snowden to perform his backflip on the Sharks?

        Sure, the Palmer example may be completely different, but the reality is he is another example of a private owner who didn’t do it for the club. The Western Sydney Wanderers model shouldn’t be used as a basis for other clubs/sports as they’re still majority owned by the FFA.

        The Warriors have an owner though who is passionate about New Zealand Rugby League. Whilst I realise the need for private owners (in some cases), I just wonder whether it is a positive thing for the clubs themselves.

    • November 20th 2012 @ 8:44am
      TC said | November 20th 2012 @ 8:44am | ! Report

      The AFL learned the hard way, over 20 years ago, that private ownership of clubs does not sit well within an ethos of fans having a strong sense of ownership of the game. You attract more financial members where those members actually own the club.

      I suspect the same ethos would exist in rugby league – the people’s game.

      TC

      • November 20th 2012 @ 8:56am
        Nick Hornby-Howell said | November 20th 2012 @ 8:56am | ! Report

        Rugby League has always tried to hold onto its traditional grounding as the “blue-collar” game. As a fan I would feel so much more for my team if ownership was kept within. I guess it’s a feeling of being closer to the heart of the operation.

      • November 20th 2012 @ 9:26am
        Crosscoder said | November 20th 2012 @ 9:26am | ! Report

        Souths achived their higest membership,unde the private ownership model.The members still hold 25% of the club’s ownership.
        the Knights have also recorded their highest membership levels under the same sort of regime.

        It has not altered one iota the fact,it is still the people’s game.

        • November 20th 2012 @ 9:36am
          TC said | November 20th 2012 @ 9:36am | ! Report

          And the Swans achieved record attendances under Edelsteen’s ownership.

          You don’t judge after a handful of seasons.

          Private ownership gives paying supporters the perfect excuse to bail whenever they want.

          Being a member of a football club is an irrational decision, and if that club is privately owned, it’s pretty good encouragement to not follow through with an irrational, financial decision.

          People are more likely to commit financially (for life) in a club that is NOT privately owned (at least that’s the Australian experience).

          We can see already in the subtext of this story, people are quick to become complacent if they think Rusty is keeping his millions in the club – making the club all the more vulnerable.

          TC

          • November 20th 2012 @ 10:05am
            Crosscoder said | November 20th 2012 @ 10:05am | ! Report

            The difference and it should be fairly obvious.,the Edelsten model operated in a city which cared little ,and the SL war had not started from memory.Both the Knights (in a league mad stronghold) and Souths one of the tradiionally strongly followed clubs in a city where rl is still dominant,have a far better chance of long term success,because of the rl base
            The warriors privately owned have had record membership purchases to date for 2013…

            How long has the private ownership model been in vogue for Souths? Since 2006.Hardly a brief moment in time.
            Have a look at the build of fanbase,sponsorship,merchandising.

            An irrational decision? to support a club you may have been following since you were knee high? there must be many irrational supporters of the Rabbits and Knights,as their membership numbers continue to grow.Your notion fans are more likely to commit re these clubs has been proved incorrect.The Broncos is another classic example.
            BTW theSouths club memmebr have 25% of the club.

            It was explicitly stated at the Press conference,and I have to mention it again.It is up to Rusty and HAC if they so choose, to sell off their share.If they dont find a buyer ,then that is their problem.
            They don’t have to chip in any more money,in anycase.
            The club with the grants and the other income is self reliant .No need for poker machine money.

            Members in toto may well choose to buy out the shares held by him and/or HAC.Either way the club is in the best situation it has been in for 90 years ,profitable.Yet you look for negatives.Would the code prefer all clubs be community owned,of course.

            The only way the club would be vulnerable if the ARLC decided to drastically reduce the grants,and it wont happen.
            There are quite a few clubs within your own code,not privately owned (naturally)losing money and being supported by head office.Therefore it is not the panacea of all club ills.

            • November 20th 2012 @ 10:18am
              Australian Rules said | November 20th 2012 @ 10:18am | ! Report

              “Both the Knights (in a league mad stronghold) and Souths one of the tradiionally strongly followed clubs in a city where rl is still dominant”

              – wouldn’t this then mean that private ownership is NOT required as much for these 2 big clubs? Wouldn’t it be great if Newcastle (the town, the people) actually owned the Knights?

              “Irrational decision”

              – I assume TC was referring to the fact that members pay for what is effectively a share in the club, yet receive no dividend or benefit, other than to attend each game (and have voting rights)…and they’d do this anyway. Further, they pay for it every year! I assume “irrational decision” in this context means “blind stubborn loyalty”..(!)

              • November 20th 2012 @ 12:16pm
                Crosscoder said | November 20th 2012 @ 12:16pm | ! Report

                Not necessarily AR .If you look at the USA.The American football is dominant ,and they have the private ownership model,which works exceptionally well.
                Broncos privately owned in a fanatical rl city,has not diminished the membership,nor the fanaticism of their fans.Wheteher it be in community or private hands.

                Anycase there is more chance of business people wanting to get involved in an area where a code is strong ,than if it were not so.

                As I have stated even in your code,some clubs are losing money under the communtiy model,in a city where your code is absolutely king and daylight second.

                Crowe & HAC have taken nothing out of the club.They get repaid in 2024 and receive interest from 2014.

                One can aslo suggest having in some cases Private owners,brings big business intiaitives into fields such as marketing,and the membership base grows.Meaning when the club is up for saler,there is a decent base of members ,as potential owners.

                The members who have 25% of the Rabbitohs,have the final say on who buys,what the colours should beand decide on any relocation.

                AFAS the knights go,they have a bank guarantee in place,that guarantees the long term future of the club ,should Tinkler pull up anchors.Plus now a decent membership base.
                The Rebels have a private ownership model in Melbourne

                Blind stubborn loyalty,is the type of fan all codes want,and all code have.The word is parochialism.

                Please show me where the private model is not working with Souths,Knights,Warriors,Manly and Broncos.Personality clashes happen in community clubs.Just ask a Shark’s fan.

                There a re huge sums of money being spent on development at grassroots level, by the private owners of the Warriors.That takes the pressure off the head body and adds to the mix.

              • November 20th 2012 @ 12:27pm
                Nathan of Perth said | November 20th 2012 @ 12:27pm | ! Report

                “Not necessarily AR .If you look at the USA.The American football is dominant ,and they have the private ownership model,which works exceptionally well.”

                As someone with blood ties to the city of Cleveland (O Land of the Burning Rivers) please do allow me to snort derisively here.

              • November 20th 2012 @ 12:36pm
                Crosscoder said | November 20th 2012 @ 12:36pm | ! Report

                You can snort as much as you like Nathan,but the NFL is held up generally as an example as being the ideal sport from a private ownership/business perspective.
                There are exceptions to any rule ,as the Clive Palmer situation example has shown.

              • November 20th 2012 @ 12:57pm
                Nathan of Perth said | November 20th 2012 @ 12:57pm | ! Report

                Ideal right until they sell your team to Baltimore.

              • November 20th 2012 @ 1:23pm
                Horatio said | November 20th 2012 @ 1:23pm | ! Report

                Did the Yankees fans (baseball) enjoy it when Steinbrenner snr owned the team and fired a manager nearly every year…

              • November 20th 2012 @ 2:24pm
                Crosscoder said | November 20th 2012 @ 2:24pm | ! Report

                Well as Souths 25% ownership have a say where the team plays,the owners have not the control one would imagine.
                So the NFL money is a bad example of private ownership.I don’t know whether to laugh or cry.

              • November 20th 2012 @ 2:58pm
                TC said | November 20th 2012 @ 2:58pm | ! Report

                Following sport is an irrational decision, as in committing financially to a club for life, is quite irrational.

                To follow a club, pay money every season, for the privilege of not winning a premiership for many decades is quite irrational.

                I would have thought all sports fans would agree with that?

                Unlike food, clothing and shelter, which are necessities of life, or investing money so that it grows for your future retirement, following sport, one club in particular, is about as irrational as things can get.

                Just as love can be an irrational thing, so too being a committed sports fan.

                Of course we wouldn’t have it any other way.

                Often people on the Roar are guilty of trying to rationalise that which is completely irrational.

                TC

              • November 20th 2012 @ 5:23pm
                mushi said | November 20th 2012 @ 5:23pm | ! Report

                The NFL is a terrible example. The reason why other sports “investors” hold it up as the ideal is because it operates like a Russian oligarchy with an AK47. It is essentially a perversion of the economic fundamentals of the entire western world.

              • November 21st 2012 @ 12:08pm
                Crosscoder said | November 21st 2012 @ 12:08pm | ! Report

                Entertainment is irrational? And that is what following a code is all about ???.
                It is rational to expect only one team can win a premiership.
                It is rational to believe your team is a one in 16 chance.
                Likewise as the NRL has a close competiton,it is more rational to believe so.
                Most rl fans I know pay their money for the season,expecting their team to firstly get into the 8 and have a chance of winning it.
                There are many unknowns during the season.injury,loss of form,SOO and Tests and their affect.

                Yes there are fans who get a season ticket just because it’s a habit.But the average Joe in the street
                ,is a lot smarter than that.

                It is irrational to load a team with kids and expect them to perform and expect fans to be rational about their winning chances.
                it is irrational to apparently ignore tanking for many years,and expect fans to rationally follow a club

                I have followed a team for decades ,made just two grand finals ,lost both.At the beginning of every season I rationally look at the playing strength,the club’s financial position,my committment to a team where I have seen kids become stars,the friends I go with,the entertainment I mostly get.

                There has been two occasions I have not purchased a season ticket,one when the club was being coached by C Anderson and a star by the name of D Peachey was given the flick.

                I do not bet on games,to me that is irrational.I do not vote for the same poltical party,just because my parents did,that is irrational.

                If my attitudes as to why, I and my friends spend our hard earned are considered irrational, then begorrah I am incapable of rational thought.Now that is dare I suggest is irrational.

                In summary ,yes there is irrationality, but it is not the norm.Love of a club with its traditions,players past present and future should not be considered such.

              • November 21st 2012 @ 12:13pm
                Crosscoder said | November 21st 2012 @ 12:13pm | ! Report

                It is financially successful on a huge basis.Coaches and admin from the NRL,AFl visit NFL clubs for pointers.
                The home of capitalism, expect oligarchies and monopolies.Still draws the fans and buyers in ever increasing numbers.
                The AK47 BTW Mushi is considered one of the most reliable,enduring piece of weaponry ever invented.Acknowledged by Nato armed foces as such.

              • November 21st 2012 @ 12:57pm
                mushi said | November 21st 2012 @ 12:57pm | ! Report

                Thanks’ for the trivia titbit, yes the AK47 is reliable which was the point (well that combined with the ruthlessness of the oligarchs) because economics 101 tells us that monopolies and cartels are, all else being equal, the most reliable money making structure for the producer.

                So of course it is financially successful. This is why western countries that are based on freer economic policies tend to have laws disavowing the abuse of market power to control labour forces or eradicate competition. It’s the ACCC, it’s antitrust laws, it’s Nash’s Nobel memorial prize.

                In fact the NFL has been found to be in violation of antitrust laws in the past but unfortunately there is little punishment that can be meted out because no one is willing to sink the funds in to sustain the loss to be compensated for (particularly after the famous Trump cheque) or they reach an agreement that effectively maintains the NFL’s rights (players and referees).

                The NFL has effectively become an allowed cartel, I think essentially because the only real alternative for the US now is to tear it down, which also isn’t in the public’s interest.

                This is where we get to the crux as consumers of sport the worst possible outcome for us is to be faced with a cartel. The NFL has had back to back labour stoppages, tacitly encourages performance enhancing drugs, and the concussion saga. Not a single one of their actions is motivated by increasing the value of the product for the consumer (US) only the margin to the owners. This is why free market economics believes that open competition drives the best outcome for the consumer – which is us.

                And yet here, as consumers, you want to openly champion the adoption of a process which erodes your power in the market place and more than likely the value of the product. Such a gross disregard for self interest fits the text book definition of irrational behaviour in economics.

                The NRL operates outside of a typical market, it gets a torrent of support from legal protection of the salary cap to the funding of its production line and grass roots marketing through schools, stadiums and community groups. I’m all for capitalism but just like socialism, facism or any other ism you want to throw out there in it’s 100% unbridled form it tends to be highly damaging. The wholesale privatisation of the game would lead to a severe break in the alignment of what the rugby league communities want and what teams do.

              • November 21st 2012 @ 1:22pm
                Australian Rules said | November 21st 2012 @ 1:22pm | ! Report

                Umm…I think CC has missed the point on the last couple…

              • November 21st 2012 @ 1:25pm
                Crosscoder said | November 21st 2012 @ 1:25pm | ! Report

                I am not going to respond to that Mushi.Although I did not introduce the AK BTW.
                Had too much of the economics rammed into me(eg Samuelson) to make my head spin (where you line them(economists_) up and never get more than a couple to agree),and are left so bleeding confused,you end up making your own decisions.

      • November 20th 2012 @ 3:11pm
        Chino said | November 20th 2012 @ 3:11pm | ! Report

        Sorry I thought the problem that the AFL showed was that the private ownership depends a whole lot on who your owner is and if they happen to be a Geoffrey Edelsten or Christopher Skase (A Clive Palmer in the A-League’s case) you are in for a world of hurt. These two guys are about the dodgiest businessmen that australia has ever produced

        • November 20th 2012 @ 10:23pm
          Ian Whitchurch said | November 20th 2012 @ 10:23pm | ! Report

          “Not necessarily AR .If you look at the USA.The American football is dominant ,and they have the private ownership model,which works exceptionally well.”

          Absolute rubbish, and I quote the Oakland Raiders, the Cincinatti Bengals and the Detroit Lions as the poster children for what inept private owners do to a club.

          And, unlike clubs based around members, theres nothing the owners can do about it.

          • November 21st 2012 @ 12:26pm
            Crosscoder said | November 21st 2012 @ 12:26pm | ! Report

            I stated there are exceptions Ian.I am visiting the whole NFL model.Why do you think admin people from the NRL,AFL visit these NFL clubs to study ineptness?
            Are they making money?
            Do they have packed houses?
            What income does the NFL derive from TV?
            If the total model is rubbish,then I will be content to forage in that tip any time.

            It’s the same to suggest all community clubs are the be all and end all in this country,.Whilst ideal if they are all profitable,they all are simply not so.To suggest otherwise is pure and utter hogwash.Ask the Sharks,Nth Melbourne,Port Adelaide,even Manly and indeed Souths.A couple very close to relocation.

            • November 21st 2012 @ 1:00pm
              mushi said | November 21st 2012 @ 1:00pm | ! Report

              Community clubs being profitable is like when people bleat on about wanting a perpetual surplus from the government. If a community group is making a profit it means they are taking too much out of the community.

              • November 21st 2012 @ 1:21pm
                Crosscoder said | November 21st 2012 @ 1:21pm | ! Report

                If community clubs make a profit,the money is used for the club and juniors and charities.Some held for a rainy day.
                The alternative is to continually make a loss ,and have creditors bear the brunt.

                What do people want continual loss makers ,where the juniors and other associated organisations suffer,or a profitable one where long term security is guarnateed also for local businesses.

                If people suggest the former,then they are living in a strange world.

    • November 20th 2012 @ 8:58am
      james said | November 20th 2012 @ 8:58am | ! Report

      well Rusty invested a tonne of money into bunnies/RL, so I think it’s a good thing.

      if the bunnies still can’t stand on it’s own two feet with the additional money from the TV rights, 20k+ members and with all the assistance that Rusty provided maybe they shouldn’t be around.

      • November 20th 2012 @ 9:17am
        Nick Hornby-Howell said | November 20th 2012 @ 9:17am | ! Report

        What happens when that money runs out?

        • November 20th 2012 @ 9:30am
          Crosscoder said | November 20th 2012 @ 9:30am | ! Report

          What money runs out ?
          Funds coming from ARLC grants now $7m to cover salary cap and admin ,membership slaes(highest in Sydney)gate income,sponsorship income,merchandising income.
          The club has been profitable since 2008,and Crowe and PAH have not had to chip in further since.

          The money they put in (as a loan) does not involve interest until 2014,and does not have to be repaid til 2024.

    • November 20th 2012 @ 9:00am
      Ken said | November 20th 2012 @ 9:00am | ! Report

      Actually I think the Souths experience would only encourage this type of deal. The owners came in and became the steady backbone of the club, overseeing a rise in playing strength, club engagement and financial security (not suggesting they did it all themselves but they were obviously supportive of initiatives). On hearing that one of the partners wants out, it is shown that the deal was very solid and that there are safeguards galore to ensure that the club isn’t left high and dry.

      Yeah, they now need to find a new owner but they are now actually a profitable enterprise – which would have been unthinkable when Crowe/Holmes a Court took over.

      TC: Not sure that it’s ever really been considered an issue in RL. We have private clubs and public clubs but it doesn’t seem to be a factor in fan involvement. Sure, other supporters come up with conspiracy theories about the Broncos (and more recently, Melbourne) due to their News Limited ownerships but ownership structure isn’t a big concern to most people.

      It’s probably because we haven’t had many real failures of the model, Manly’s constant bickering aside. Tinkler doesn’t seem totally solid but Newcastle were pretty careful on their conditions so I don’t think they’ll come out that badly if it falls over. It’s fair to say that Crowe has been involved in hugely increasing the fan involvement in Souths so there are positives too.

      • November 20th 2012 @ 9:16am
        Nick Hornby-Howell said | November 20th 2012 @ 9:16am | ! Report

        The hope is that the Members will take back over the club, almost like how Maximus wanted to leave Rome to the people in Gladiator. But would they have the combined capital to continue running a club? It is a VERY expensive exercise and one which is unlikely to turn them a profit.

        Crowe has definitely been a positive for the club but I am just concerned about the future direction of the club. Although, he almost turned fans away when he swapped cheerleaders for a drumming band!

    • November 20th 2012 @ 9:19am
      Steve said | November 20th 2012 @ 9:19am | ! Report

      There seems to be two problems here. The first is that, like the writer says, there just aren’t people in Australia with a vat of money to keep tipping into a sporting club. The second is that in the English example, you can start to see interference like Abramovich at Chelsea. He went about buying players like Shevchenko and Ballack unilaterally without consulting the manager, and for that they lost Mourinho. Since then he’s been on a sacking rampage. Locally I suspect the big boss might have some influence in the Knights’ purchases too. The way they’ve paid massive overs for locally-produced players like Snowden suggests to me that they’re buying back the farm to try and bring some of the ‘our town, our team’ ethos back for marketing purposes. When marketing starts influencing the football department you’re going to have a problem.

    • Roar Guru

      November 20th 2012 @ 9:52am
      Dogs Of War said | November 20th 2012 @ 9:52am | ! Report

      As far as I am concern, Souths have a great opportunity to now build a Green Bay packers style ownership model. I am sure there are enough people with a bit of cash who would love to buy shares in the club, and if Souths don’t go overboard with share releases, or limit them by saying that only say 5K new shares are offered each year, with people bidding on how many they want to buy, and nominate the price they want to pay for them, it could really assist as a new income source for the club.

      Who knows, even Russell Crowe may requests some shares in the club as part of the payment process.

      • November 21st 2012 @ 7:44am
        mushi said | November 21st 2012 @ 7:44am | ! Report

        Dogs not sure this would do much as it isn’t very different in practice to the member owned clubs already prevalent across the Australian sporting landscape. the reason it stands out in the US is because they don’t have those types of clubs.

        If for some reason someone wants the prestige then simply offer different tiers of membership with the same voting rights

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