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Pokies tax will destroy joint ventures: club bosses
By Roy Masters
July 30 2003
Rugby league's joint ventures will break apart and most Sydney clubs will vacate the national competition if proposed increases in poker machine taxes are introduced, according to top officials.
St George has confirmed it may sever ties with Illawarra, and most licensed clubs admit they will not be able to fund their football clubs.
The threat to the future viability of century-old clubs comes through an announcement by the NSW Treasurer, Michael Egan, that gaming revenue tax on licensed clubs will increase from 26.5 per cent to 40 per cent over the next seven years.
The Dragons' licensed club at Carlton has tipped $8 million into the Steelers' licensed club at Wollongong since the St George Illawarra joint venture was formed in 1999. St George currently funds the partnership with $3.25m a year, while Illawarra contributes $500,000.
The general manager of St George Leagues Club, Danny Robinson, said: "If this tax scale stays in place, it will put rugby league in Wollongong in jeopardy.
"The Steelers Leagues Club will be unable to pay its share, which would allow St George to reconsider the way in which home games are shared between Oki Jubilee Oval and WIN Stadium."
The joint venture club now plays seven games at Wollongong and five at Kogarah. Recent expensive renovations at Kogarah, together with soccer matches planned for next summer, mean the stadium is now a multi-purpose venue, with lighting inevitable. It then could carry a full winter program.
Robinson insisted the proposed increase in taxes was not an excuse to sever ties with Illawarra, because the Dragons need Wollongong juniors.
St George demographics had changed, Robinson said, with some traditional rugby league nurseries, such as James Cook High School, no longer playing rugby league.
"Wollongong is a great development area for us," he said.
Robinson also claimed the tax would mean that St George, despite being free of debt and trading well, would not be able to fund its own football club past 2010.
A spokesman for the NSW Treasurer said: "The club industry can afford these tax scales.
"They knew there was going to be a change in scale and we've given them a year's notice and a seven-year phasing-in period."
Wests and Balmain currently contribute $1.5m each to the NRL's other joint venture, the Wests Tigers.
Wests Leagues Club at Ashfield has recently completed a $32m extension, with a condition of a bank loan being a limit on grants made to rugby league.
Peter Hardgrove, chairman of both Wests Tigers football club and the club at Ashfield, said: "This is going to cripple rugby league right from the bottom.
"It's not just the $1.5m we give the joint venture, it's the money we give the kids as well."
Balmain Leagues club, with Star City casino nearby, operates on a narrow profit margin and will be unlikely to find the additional $1.5m in tax expected after July 1 next year.
The tax is likely to have an immediate impact on stand-alone clubs such as Manly and Cronulla.
The Sea Eagles' recent decision to effectively combine the boards of the football and leagues clubs in exchange for $3m funding over three years was made prior to Egan's announcement.
Manly Leagues club chairman Ken Arthurson said: "Other than a review of funding, the salary cap will have to come down."
Penrith general manager Roger Cowan said the tax was effectively higher than 40 per cent.
"It's clearly impossible to pay that much extra tax and still support rugby league," Cowan said. "We made a profit of $2m last year after paying $23m poker machine tax. Now they want to increase tax by $17m."
Cowan said Panthers' $90m debt was largely irrelevant to the debate, saying: "If we had no debt we'd save $6m.
"If we gave no money to rugby league, we'd save $5m. If we gave our top five senior executives nothing, all these savings would mean we still couldn't afford the tax."
Even future clubs are seen as being under threat.
The chief executive of North Sydney Leagues club, Jim Henry, said: "It affects John Singleton's chances of getting a club at Gosford. I can't see Sydney clubs forsaking some of their $2.5m annual grant from the NRL to cut a 16th team into the competition."
Club bosses are incensed the tax is on revenue, not profit, and is being sold to the public as funding for health.
They argue this will prove counterproductive, because community groups that offer healthy activities, such as Little Athletics, depend on donations from licensed clubs.
By Roy Masters
July 30 2003
Rugby league's joint ventures will break apart and most Sydney clubs will vacate the national competition if proposed increases in poker machine taxes are introduced, according to top officials.
St George has confirmed it may sever ties with Illawarra, and most licensed clubs admit they will not be able to fund their football clubs.
The threat to the future viability of century-old clubs comes through an announcement by the NSW Treasurer, Michael Egan, that gaming revenue tax on licensed clubs will increase from 26.5 per cent to 40 per cent over the next seven years.
The Dragons' licensed club at Carlton has tipped $8 million into the Steelers' licensed club at Wollongong since the St George Illawarra joint venture was formed in 1999. St George currently funds the partnership with $3.25m a year, while Illawarra contributes $500,000.
The general manager of St George Leagues Club, Danny Robinson, said: "If this tax scale stays in place, it will put rugby league in Wollongong in jeopardy.
"The Steelers Leagues Club will be unable to pay its share, which would allow St George to reconsider the way in which home games are shared between Oki Jubilee Oval and WIN Stadium."
The joint venture club now plays seven games at Wollongong and five at Kogarah. Recent expensive renovations at Kogarah, together with soccer matches planned for next summer, mean the stadium is now a multi-purpose venue, with lighting inevitable. It then could carry a full winter program.
Robinson insisted the proposed increase in taxes was not an excuse to sever ties with Illawarra, because the Dragons need Wollongong juniors.
St George demographics had changed, Robinson said, with some traditional rugby league nurseries, such as James Cook High School, no longer playing rugby league.
"Wollongong is a great development area for us," he said.
Robinson also claimed the tax would mean that St George, despite being free of debt and trading well, would not be able to fund its own football club past 2010.
A spokesman for the NSW Treasurer said: "The club industry can afford these tax scales.
"They knew there was going to be a change in scale and we've given them a year's notice and a seven-year phasing-in period."
Wests and Balmain currently contribute $1.5m each to the NRL's other joint venture, the Wests Tigers.
Wests Leagues Club at Ashfield has recently completed a $32m extension, with a condition of a bank loan being a limit on grants made to rugby league.
Peter Hardgrove, chairman of both Wests Tigers football club and the club at Ashfield, said: "This is going to cripple rugby league right from the bottom.
"It's not just the $1.5m we give the joint venture, it's the money we give the kids as well."
Balmain Leagues club, with Star City casino nearby, operates on a narrow profit margin and will be unlikely to find the additional $1.5m in tax expected after July 1 next year.
The tax is likely to have an immediate impact on stand-alone clubs such as Manly and Cronulla.
The Sea Eagles' recent decision to effectively combine the boards of the football and leagues clubs in exchange for $3m funding over three years was made prior to Egan's announcement.
Manly Leagues club chairman Ken Arthurson said: "Other than a review of funding, the salary cap will have to come down."
Penrith general manager Roger Cowan said the tax was effectively higher than 40 per cent.
"It's clearly impossible to pay that much extra tax and still support rugby league," Cowan said. "We made a profit of $2m last year after paying $23m poker machine tax. Now they want to increase tax by $17m."
Cowan said Panthers' $90m debt was largely irrelevant to the debate, saying: "If we had no debt we'd save $6m.
"If we gave no money to rugby league, we'd save $5m. If we gave our top five senior executives nothing, all these savings would mean we still couldn't afford the tax."
Even future clubs are seen as being under threat.
The chief executive of North Sydney Leagues club, Jim Henry, said: "It affects John Singleton's chances of getting a club at Gosford. I can't see Sydney clubs forsaking some of their $2.5m annual grant from the NRL to cut a 16th team into the competition."
Club bosses are incensed the tax is on revenue, not profit, and is being sold to the public as funding for health.
They argue this will prove counterproductive, because community groups that offer healthy activities, such as Little Athletics, depend on donations from licensed clubs.
