Review of the Registered Clubs Industry in NSW - Clubs NSW

8 Establishing a Club Viability Panel
8.4.3 Identifying and advising clubs at risk of financial distress, and offering to
further investigate their financial position and advise them of their options
As section 7.4 discussed, IPART recommends that the Panel collect data from all
clubs on a single measure of financial viability (EBITDARD as a percentage of
revenue) and identify those at risk of being in financial distress (based on
EBITDARD% of less than 15 per cent) on an annual basis (Recommendations 24 and
25).
In addition, IPART considers that when the Panel identifies a club as being at risk of
being in financial distress, it should formally advise the club’s board. The Panel will
need to ensure that this communication is sensitively worded, and clearly indicates
that the intention of the Panel’s advice is to help support the long-term viability of
the club.
Furthermore, IPART considers that a club identified by the Panel as being at risk of
financial distress should automatically be eligible for a more detailed and
comprehensive analysis of its financial position, to determine whether its financial
viability is threatened, and if so, to identify the options for improving its position.
The Panel should formally advise the club of this eligibility at the same time as it
communicates its finding that the club is at risk of being in financial distress.
IPART also considers that clubs should be able to seek assistance from the Panel
outside the above process. For example, if a club received no formal correspondence
from the Panel yet believed it was in financial distress, it should still have the
opportunity to approach the Panel and be considered for assessment and advice.
Recommendation
30 When the Panel identifies that a club is at risk of being in financial distress, that the
Panel formally advise the club’s board of this finding, and that the club is eligible for a
more detailed, comprehensive review of its financial position to determine whether its
viability is threatened and, if so, to identify the options for improving its financial
position.
As discussed above, IPART considers that the Panel’s role should be advisory, and
that a club’s board and management should have sole responsibility for deciding
how to respond to the Panel’s advice. Nevertheless, IPART also considers there
should be some provision for a club’s members to be informed of this advice in
instances where the club’s board is not taking action.
In IPART’s view, the best way to encourage clubs to heed the advice of the Panel is
by requiring those that receive formal advice from the Panel that they are at risk of
being in financial distress and are eligible for a more detailed review of their financial
position to inform the Panel and their members if they choose not to respond to the
Panel’s offer of further assessment and advice, and the reason for this decision. (In
some instances, this reason may be that the club has already considered its financial
position by analysing its performance against the complete suite of business
134 IPART Review of the Registered Clubs Industry in NSW