Review of the Registered Clubs Industry in NSW - Clubs NSW

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6 Strengthening the financial viability of the registered clubs industry IPART’s considerations and recommendations on improving corporate governance, training and development are discussed in detail in Chapter 9. 6.2.4 Helping clubs better understand the risks and benefits of diversifying their operations IPART believes clubs should consider diversifying their sources of revenue, not as a means of reducing their reliance on gaming machine revenue but as a means of expanding their revenue base and maintaining relevance in their communities. As outlined in section 6.1.1, most clubs rely on gaming machine revenue to remain financially viable. This, coupled with the impact of increasing competition and concern about how regulatory change could affect gaming margins, has meant that diversification is becoming a common element of clubs’ business strategies. However, IPART found that, despite the common belief that diversification is an effective means of reducing reliance on gaming revenue, there is no other business line that can feasibly replace gaming in a club’s business model. This is largely due to gaming operations’ inherently high margins. In addition, clubs’ ability to diversify may be limited by their managements’ capacity to handle diversified businesses. Despite these issues, IPART considers that diversification can be an effective means of expanding a club’s revenue base, broadening its market appeal, and maintaining its relevance by providing additional services to its members and local community. IPART’s considerations and recommendations on diversifying clubs’ sources of revenue are discussed in detail in Chapter 10. 6.2.5 Making it easier for clubs to amalgamate There are some clubs for which no amount of improved financial management will ensure their individual survival. In some cases, the impact of demographic changes has reduced the demand for the goods and services that clubs provide to the point where the number of clubs servicing a particular community may not be sustainable. In addition, some clubs may be in a limited position to deal with increased levels of competition from other providers of hospitality and recreation services, so consolidating the number of clubs in the area will improve their financial viability. IPART believes that amalgamations can assist clubs in areas where there may be an excess number of clubs and where clubs may be struggling to achieve financial viability. For example, some areas may be serviced by three or more clubs that may all be experiencing financial difficulty and may face considerable challenges to become financially viable. In this case, IPART’s view is that the needs of this community would be better served through the existence of one strong club, that consolidates the activities and membership of each club, leverages the assets of all clubs and achieves cost efficiencies through the pooling of resources and greater purchasing power with suppliers. 106 IPART Review of the Registered Clubs Industry in NSW
6 Strengthening the financial viability of the registered clubs industry IPART examined the amalgamation process, and considered stakeholder concerns about the complexity and cost of the process. It concluded that measures are needed to provide more information to individual clubs about the requirements of the process. Improving clubs’ financial reporting and performance benchmarking (as discussed in Chapter 7) will also better equip clubs to identify the optimum time to amalgamate. IPART’s considerations and recommendations on making it easier for clubs to amalgamate are discussed in detail in Chapter 11. 6.2.6 Making it easier for clubs to be established As outlined in 6.1.5, it is important to ensure that there are no undue barriers preventing the establishment of new clubs in areas where they are needed. IPART examined how clubs are established. It found that the changing operating environment and maturity of the industry make it unlikely that there will be another 1950s style boom in the number of registered clubs. However, initiatives in three key areas will help make it easier for clubs to be set up in areas that need them: Providing greater guidance to groups wishing to establish a registered club. IPART considers that OLGR and peak bodies should produce a guide to registration, and a pro-forma club constitution to assist in this area. Including an allowance for land that is suitable for establishing a registered club when planning for new developments. Continuing to provide new clubs with access to 10 free gaming machine entitlements until alternative measures to help new clubs are in place. IPART’s considerations and recommendations on making it easier for new clubs to be established are discussed in detail in Chapter 12. 6.2.7 Removing unnecessary regulatory restrictions on clubs While IPART did not find that regulatory ‘red tape’ is a significant factor in clubs’ financial viability, it did examine several specific regulatory requirements that ClubsNSW submitted create an unnecessary burden on clubs, and found that some of them should be amended or removed. IPART’s considerations and recommendations on these regulatory issues are discussed in detail in Chapter 13. Review of the Registered Clubs Industry in NSW IPART 107
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Independent Pricing and Regulatory
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Contents 6 Strengthening the financ
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Executive Summary Executive Summary
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Executive Summary estimated the val
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Executive Summary Therefore, IPART
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Executive Summary However, IPART al
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Executive Summary List of Recommend
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Executive Summary 15 Once the stand
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Executive Summary 29 That ClubsNSW
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Executive Summary 46 That ClubsNSW
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Executive Summary 60 That OLGR deve
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1 Introduction 1 Introduction Over
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1 Introduction 1.1.2 Review’s foc
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1 Introduction 1.2 Other reviews an
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1 Introduction 1.3 The structure of
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2 The registered clubs industry in
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3 Understanding the social contribu
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10 Helping clubs better understand
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11 Making it easier for clubs to am
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12 Making it easier for new clubs t
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13 Removing unnecessary regulatory
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14 A framework for a management pla
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A Terms of reference A Terms of ref
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A Terms of reference The proc
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B Terms of reference checklist Term
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C List of submitters, roundtable pa
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D Gambling expenditure and problem
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E IPART’s methodology for recordi
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F ACG’s approach to measuring the
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G ClubsNSW - steps to establishing
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G ClubsNSW - steps to establishing
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Glossary and Abbreviations Glossary
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Review of the Registered Clubs Industry in NSW - Clubs NSW

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