Review of the Registered Clubs Industry in NSW - Clubs NSW

11 Making it easier for clubs to amalgamate
11 Making it easier for clubs to amalgamate
IPART found that there are some clubs for which no amount of improved financial
management can ensure their individual survival. In some cases, closure of a club
might be the only appropriate outcome. However, given that clubs are custodians of
community assets, amalgamation with another club may be a positive alternative to
closure that protects and preserves those assets and their benefits to the community.
IPART reviewed the procedure for amalgamations and movement of assets between
registered clubs, and found that some areas of the current process create barriers to
amalgamation, whether intentionally or not. For example:
The complexity of the amalgamation process and the involvement of various
government bodies and professionals make it quite a daunting undertaking,
especially for smaller clubs with fewer resources.
The cost associated with amalgamation is also a burden for the clubs involved,
particularly the legal costs, due diligence costs, associated fees and the need for
the parent club to invest in the other club. Legislated restrictions related to
gaming machine entitlements and dealing with the major assets of the dissolved
club in an amalgamation also create a financial disincentive to amalgamation for
the parent club.
The timing of an amalgamation is critical to its success. Experience indicates that
it is better for struggling clubs to consider amalgamation earlier rather than later.
However, there are two main obstacles to timely amalgamation:
– As Chapter 6 discussed, many clubs do not understand their own financial
position, which can result in them failing to consider amalgamation until it is
too late. The recommendations made in Chapters 7 and 8 should help to
address this barrier.
– The inability of club members and/or directors to consider amalgamation as a
’first choice‘ strategy to improve a club’s viability, which can delay the
important decision to pursue amalgamation.
IPART also found that management agreements can provide clubs (that are
considering amalgamating) with a better understanding of what an amalgamation
may bring to both entities.
The sections below explain the process and role of amalgamation, and discuss
IPART’s findings and recommendations on overcoming the barriers to amalgamation
and using management agreements as a first step towards amalgamation.
174 IPART Review of the Registered Clubs Industry in NSW