Review of the Registered Clubs Industry in NSW - Clubs NSW

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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
11 Making it easier for clubs to amalgamate 11.1 The amalgamation process Provisions allowing clubs to amalgamate were included in the Registered Clubs Act in 1985. Since 1998, there have been over 100 amalgamations. Indeed, over the course of this review, 10 amalgamations have been completed. Amalgamations are usually effected by one club taking over the membership and assets of another club. The amalgamated club keeps the registration number of the first club and the second club is dissolved. The Registered Clubs Act refers to the first club as the parent club and the second club as the dissolved club. However, because the second club is not dissolved until the end of the amalgamation process, to avoid confusion this report uses the terms ‘parent club’ and ‘other club’ when discussing clubs contemplating or engaged in the amalgamation process, and ‘dissolved club’ only once the other club has been dissolved. There are no provisions in the Registered Clubs Act that prevent two clubs from entering into a merger by dissolving both clubs and forming a new club. However, to date, this model has rarely been used. 11.1.1 The current amalgamation process The current amalgamation process involves several pieces of legislation including the Registered Clubs Act, Registered Clubs Regulation, Licensing Court Practice Directions and the Corporations Act. This process includes the following six steps: 1. Seeking amalgamation: a club’s board of directors decides to seek an amalgamation. 2. Calling for an expression of interest (EOI): a club must call for an EOI in amalgamating with it from registered clubs within a 50km radius of its location, regardless of whether it is in a metropolitan or non-metropolitan area. If a club is unable to find an acceptable amalgamation partner from the EOI, it may seek partners outside of the 50km radius. 3. Notifying members: clubs party to the proposed amalgamation need to inform their members. The form of the notice is to be determined by each club and displayed on the noticeboard at the main club premises and on the clubs’ websites (if they have one). 4. Undertaking due diligence and negotiation: once an amalgamating partner is found, due diligence investigations begin as well as negotiations on how the clubs will operate as a result of the amalgamation. 5. Entering into a memorandum of understanding (MOU): clubs party to the amalgamation need to enter into a MOU which needs to be lodged with the Licensing Court when submitting the application for amalgamation. The MOU has to be publicly available for inspection at the premises of the clubs that are party to the amalgamation. Review of the Registered Clubs Industry in NSW IPART 175
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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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4 Measuring and reporting on club c
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5 Refining the Community Developmen
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6 Strengthening the financial viabi
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7 Improving clubs’ financial repo
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Page 229 and 230: A Terms of reference A Terms of ref
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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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