Knights knock back $10m Tinkler offer

[RABK]

Knights knock back $10m Tinkler offer


BY JAMES GARDINER
10 Nov, 2010 04:00 AM


THE Newcastle Knights have rejected a $10million offer from mining magnate Nathan Tinkler to buy the financially embattled club on behalf of ‘‘the Hunter Region, its communities and its families’’.

Mr Tinkler submitted the offer to Knights chairman Rob Tew on Monday.
Under the proposal, the club would be based on the same community model as the Newcastle Jets, who Mr Tinkler saved from oblivion two months ago.


Mr Tinkler would invest up to $10million to buy and operate the club’s NRL licence over the next 10 years. The club would be a not-for-profit organisation and all outstanding debts would be cleared.


Mr Tinkler also guaranteed that Knights members would have control over the name, colours and location of the club, and members would have first right to buy the club from the Tinkler Group if it was offered for sale.


Mr Tew said last night that he had rejected the offer without taking it to the Knights board because he did not think that it was a very good deal.


‘‘My response was that to consider that offer we would need the existing levels of revenue, as a minimum, guaranteed each year,’’ Mr Tew said.


‘‘That is all the sponsorships and the existing ticketing, because that is what it takes to run the club.


‘‘If that was guaranteed, that is something substantial that I could take to the board and then to the members.’’


Ken Edwards, the executive chairman of the Tinkler Sports Group, said Mr Tinkler had chosen to make his offer public because he wanted it debated by the community.


‘‘Nathan has been in discussions with the Knights board for 12 months,’’ Mr Edwards said.


‘‘It is fair to say that he is now frustrated with the process and the responses he is getting.


‘‘The reason we have gone public is really to make this a community issue and let the community have a say on what they think the right model is going forward.


‘‘In no way are we critical of the current directors or program, but we think there is a better way to do this.


‘‘I think we have demonstrated in other ways that there is a better way. We want to push the Knights back in to the community and make it more family friendly.’’


The Knights have battled financial hardship throughout their 22-year history and carry an accumulated debt of more than $2.5million.


Mr Tinkler, whose personal fortune has been put at more than $600million, bailed the Knights out of a cash-flow shortfall two years ago when he secretly lent the club $500,000.


He is also a sponsor of the club through his thoroughbred empire, Patinack Farm.


The current Knights board has been investigating models of full or part privatisation for several years.


Mr Tew said if members wanted the Tinkler offer debated they could do so.


‘‘If it needs to be pressed and taken to the members by any of our members, our individual members, they can generate 100 signatures and call a special meeting,’’ Mr Tew said. ‘‘That is available to them now.’’
The Tinkler offer will expire on December 31.


‘‘We put the deadline in there because we think it is possible for the board to call a meeting of members to vote on this if they desire before the end of December,’’ Mr Edwards said.


‘‘Part of wanting to make this a healthy community discussion is obviously everyone is going to listen to what feedback we get from the public, particularly the members.’’


Any change to the Knights constitution would require the approval of 75per cent of the Knights 8000 members who chose to vote.


Mr Edwards said Mr Tinkler was confident of getting that approval.


‘‘He is confident that people will see that he is fair dinkum, that this is a not-for-profit organisation in the same way as the Jets are not for profit,’’ Mr Edwards said.


‘‘If there are profits they are churned back into junior development and rugby league.’’


When he took over the Jets licence from Con Constantine, Mr Tinkler’s aim was to return the club to the community and make attending soccer games more affordable.


The same theory would apply to the Knights.


‘‘We believe attending football is too expensive for families, and we believe attending rugby league is too expensive for families,’’ Mr Edwards said.


Mr Tinkler has doubled the Jets football budget and said he would also improve the resources at the Knights.


‘‘What we are offering is to institute best practice in rugby league, in the same way we are in the process of doing at the Jets,’’ Mr Edwards said.


‘‘We think there are probably additional resources and funding required to bring the Knights up to the standard of other cutting-edge clubs.’’


Asked why Mr Tinkler was doing this, Mr Edwards said: ‘‘He has done very well and is doing very well. He believes in this region. He has demonstrated that recently with what he has done.


‘‘Nathan also has a vision of including basketball and netball, a whole range of sports for the Hunter Region and northern NSW, as cutting edge sports.


‘‘There is more to come. He is not going to stop at this.’’

http://www.theherald.com.au/news/local/news/general/knights-knock-back-10m-tinkler-offer/1992598.aspx?storypage=0

 

[RABK]

I suppose this is what Macavity knew.

 

[Newie is God's Country]

This has all the makings of a classic board level brawl. Money talks and bulls### walks. Tinkler knows that the public will want this in the wake of the Jets takeover. Tew had some good points to make in his statement but he unfortunately will come off as an agenda driven board member whether true or not. I can see ex players and local power brokers putting major pressure on the club's board in the media.

 

[Frederick]

I can't wait to hear Jodi McKays opinion of all this

 

[Whats Doing]

How one man can make a decision without broader consultation is beyond me.

 

[Alex28]

I think the board has a fair point in that they need to ensure that existing revenues are maintained for this deal to be feasible - if he drops ticket prices and sponsors leave (remembering our main sponsor which kicks in close to a million per year is a competitor of his and has said on the public record that they sponsor the Knights because they are owned by the people) there needs to be a guarantee that he's not going to get sick of funding the club. I know he is saying he will now, however 10 years is a long time and things change. We don't want to become a Con/Jets situation.

The "$2.5 Million" figure is rubbish too - they don't physically owe that right now and shouldn't even be mentioned...

 

[roopy]

A million a year would be a good sponsership deal, but it isn't enough to sell the whole farm and give control from the members to one man.

The club should be looking for a big injection of cash to expand the business.

They should only privatise if the deal would make it the best club in the NRL - not just keep doing the same as now but without members having control.

 

[macavity]

It can be done very well - this is not done very well.

No one else sees the irony in trying to justify the club being sold to one man by "wanting to return it to the community"?

 

[Alex28]

He can effectively do the same thing by merging the Jets with the Knights. He doesn't need to physically buy the Knights first to achieve the same thing.

 

[Stagger eel]

why wouldn't Tew atleast take it the board?? that's f**king ludicrious..

 

[roopy]

why wouldn't Tew atleast take it the board?? that's f**king ludicrious..

They've been discussing for a few years what they need in a privatisation deal. Tew would know if it wasn't in the ballpark.

 

[macavity]

why wouldn't Tew atleast take it the board?? that's f**king ludicrious..

There is a board meeting scheduled for tonight - of course they will bloody well be discussing it.

The deal as it stands has some problems - the adult thing to do would be keep negotiating - lets hope we are all adults.

 

[Alex28]

Lets face it - it is a low ball offer that Tinkler knows the club wont accept and is going to the public in order to guilt the club in to accepting it. He is using the public and the press in order to pay less for the club than he needs to.

Barry Toohey's point of view about it all:

MINING magnate Nathan Tinkler has launched an audacious bid to take over the Newcastle Knights and is prepared to take his offer to the community in a bid to get it across the line.
But Knights officials were last night reluctant, claiming the deal is not lucrative enough.

Tinkler, who already owns Newcastle's A-League club the Jets, has offered to settle the Knights' $2.75 million debt and provide up to $10 million in investment over the next 10 years.

But Knights chairman Robbie Tew says the offer does not go far enough.

"With no guarantee Nathan will at least cover our existing revenues, I don't see how it puts us in a superior financial position to the one we are in now," he said.

"I've conveyed to him that we don't think the offer goes far enough but I'm not sure if that is the end of it or not. The offer only arrived last night and I've had further correspondence today but that is as far as it has got."

Asked would he be prepared to take Tinkler's offer to the Knights members for a privatisation vote, Tew said: "Not in its current form, no."

The Knights turn over $20 million a year with $7.5 million coming directly through sponsorship. It is understood some sponsors have indicated they may bail out if the club is privatised.

But Tinkler's right-hand man at the Jets, executive chairman Ken Edwards, said last night the offer was genuine and believes it is the way forward for the Knights.

"Nathan's been in negotiations with the Knights now for more than 12 months and the offer is a fair and genuine one," he said.

"It pays down the debt which is close to $3 million and just as he has demonstrated with the Jets since he took over the club, it is all about the community with Nathan and he is genuine about that."

I think the bolded points suggest that it isn't that good a deal. Yet.

 

[macavity]

I don't really have the time to write a treatise, but I just point out the following:

The Knights constitution provides (in part) that the company's objective is:

"to establish, maintain, and conduct a Rugby League Club and to secure, establish and maintain affiliation with the New South Wales Rugby League Limited and to field teams in the Sydney Premiership Competition"

A company limited by guarantee is wound up when it cannot pursue its objects. If the Newcastle Knights Limited sell their NRL license, they cannot reasonably pursue their objects - so are wound up.

Tinkler says Knights members will have certain controls - name, colours, first right of refusal on sale.

How can the members have any controls when the company of which they are members should be wound up?

This would require some pretty massive changes to the constitution - and TBH I reckon he has buckleys of getting 75% of members to agree without board support. And before people start rabbiting on about some "jobs for the boys" BS - board members aren't paid, they are simply people who love our club. If they don't support the offer, shouldn't that be some sort of red flag?

Also, ask yourself, where does this $10mil go? Sure, the debt is cleared, but after that Tinkler is effectively investing in his own asset. "returning the club to the community" by buying it from the community... is this upside-down day?

 

[Alex28]

The way I would see it, the debt would be repaid and the $10 Million would be retained within the club, so he is funding the club with the same funds that he is buying it with. It isn't as though the $10 Million will be divided up and distributed to the members...

 

[macavity]

The $10mil would be retained within HIS company - not OUR club.

OUR club would probably have to be wound up.

It is "investing" money in an appreciating asset that he owns.

 

[Stagger eel]

There is a board meeting scheduled for tonight - of course they will bloody well be discussing it.

The deal as it stands has some problems - the adult thing to do would be keep negotiating - lets hope we are all adults.

sorry mate, just responding to what's reported..

Mr Tew said last night that he had rejected the offer without taking it to the Knights board because he did not think that it was a very good deal.

geez you'd be crazy not atleast consider it and invite him in for a chat...no doubt they may well do that in anycase.

 

[Alex28]

To be fair they have been chatting for the last 12 months...

 

[Timmah]

What's interesting about this is how soon after the Jets buyout it is.

Tinkler's trading on the goodwill of the community after a reasonably successful takeover of the Jets.

If the Knights have the financial strength to continue another 12 months without requiring a buyout by someone like Tinkler, they should wait it out. Tinkler's buyout of the Jets is yet to playout in full and it all might not be roses.

 

[shane87]

I dunno..I hope they keep negotiating.
Seems to me this dude couldn't do a worse job than what they've been doing so far, we're always in the poo as far as I can make out. Something has to give if it keeps going the way it is.

I was under the impression the $10mil would be spend on improving facilites for the players, like health, equipment etc. that sort of thing.

Mind you, Crowe buying the bunnies hasn't done a great deal.