Review of the Registered Clubs Industry in NSW - Clubs NSW

6 Strengthening the financial viability of the registered
clubs industry
IPART considers that clubs which do not produce adequate, detailed financial
information and benchmark their own performance are ‘flying blind’ in terms of
understanding their own financial performance and ongoing viability. Adequate
financial and benchmarking information allows a club to monitor its financial
performance, and identify early signs of declining financial performance. In turn,
this allows it to introduce timely measures to improve its financial performance and
maintain financial viability (ie, before it reaches Stage D of the financial distress
timeline, discussed above).
However, IPART recognises that a club’s management reporting framework will
vary according to the size and scope of the clubs. For example, a framework that is
suitable for a large club like Panthers Entertainment Group may not be suitable for a
small club such as Cowra Bowling Club.
A club’s consideration of its long-term sustainability and/or retention of community assets
Financially distressed clubs often sell assets to provide a short-term cash injection so
they can pay debts when they fall due. However, this is unlikely to assist their longterm
financial viability.
IPART considers that this lack of consideration for the long-term financial viability of
the club when facing financial pressure is a major reason why some clubs are
declining. By selling assets, these clubs can effectively defer necessary reforms. This
reduces their ability to rectify the problems causing their decline, and thus places
their community assets and services at risk. For example, some clubs sell their
gaming machines and gaming machine entitlements, which then reduces their
income and thus their ability to turn their financial performance around.
While IPART does not believe further restrictions should be placed on clubs in
relation to the sale of assets, clubs should be provided with greater assistance to
ensure that any sale is the best option available to them.
Level of competition
IPART found that most stakeholders considered that increasing competition from
other providers of hospitality and recreation services and products is a major reason
why the financial viability of some clubs is declining. In particular, stakeholders
considered that hotels are in direct competition with clubs because they offer a
similar package of food, beverage and gaming machine options. To a lesser extent,
clubs also compete with other recreational and entertainment options, such as cafes,
gyms and cinema, for the consumer’s discretionary income or ‘entertainment dollar’.
At the first Sydney roundtable, ClubsNSW noted that since the introduction of
gaming machines to hotels in 1996/97, there had been 250 closures or amalgamations
of clubs. 106 While ClubsNSW did not attribute all those closures or amalgamations to
106 ClubsNSW, Sydney roundtable, 27 August 2007, p 23.
100 IPART Review of the Registered Clubs Industry in NSW