Review of the Registered Clubs Industry in NSW - Clubs NSW

11 Making it easier for clubs to amalgamate
ClubsNSW also identified the costs to the parent club of providing financial
assistance to the other club as a barrier to amalgamation, and that it would like to
see: 210
…some guidance by regulation as to the extent a continuing club can assist a struggling
dissolving club at the early stages of the amalgamation and prior to member approval and
to what extent this can increase after member approval.
IPART considers that this is an area for negotiation between the clubs involved in the
amalgamation. The club providing assistance needs to bear in mind how such
assistance will affect its own financial viability, but ultimately it is up to the club and
its members to decide how much risk it wants to take on. However, given that some
clubs in the past have gone into an amalgamation as a ‘rescue mission’, it is
envisaged that the guide to amalgamation (see section 11.3.1 and
Recommendation 54) should raise this as an important financial issue for clubs to
consider and address in amalgamation negotiations. In addition, clubs should be
encouraged to look at the option of amalgamation earlier rather than later.
11.3.4 Challenges associated with clubs considering amalgamation in a timely
fashion
For amalgamations to be a feasible option for preserving and protecting a struggling
club’s assets for community benefit, these clubs need to consider the option of
amalgamation earlier rather than later. If they leave it too late, they are likely to run
down their assets to the point where they are debt-laden, and are no longer an
attractive proposition as an amalgamation partner. Potential parent clubs
considering taking on an amalgamation partner also need to take into account the
timing of the amalgamation, given that they will need to take on the other club’s
business, including its debts.
It can be argued that a club with more to offer could have more bargaining power in
an amalgamation negotiation. If amalgamations are approached from a strategic
point of view, rather than as the last resort for saving the club, the structure of the
amalgamation is more likely to resemble a partnership rather than parent-other
model. This may allow the other club to retain more of its identity while accessing
the cost savings and other resources offered by being part of an amalgamated club
entity.
However, it can be difficult for clubs to identify when they should start considering
amalgamation, especially for clubs lacking strong financial acumen. The inability of
some club managers and/or boards to identify amalgamation as a first choice option
for improving their club’s viability can be a barrier to timely amalgamations.
ClubsNSW, roundtable participants and some case study clubs 211 suggested a
standardised reporting format for financial management accounts, benchmarking
210 ClubsNSW submission, 31 July 2007, p 132.
211 For example, ClubsNSW submission, 31 July 2007, pp 112-113; Club Old Bar and Nowra Bowling &
Recreation Club.
188 IPART Review of the Registered Clubs Industry in NSW