Just trust me: Burraston patrons model plug requires leap of faith from members
BY KEVIN CRANSON
05 Mar, 2011 04:00 AM
IT is interesting that Knights chief executive officer Steve Burraston continues to spruik his patrons trust as an alternative to the Tinkler deal. Burraston was at it again at the season launch on Thursday night, as the board was signing off on the Tinkler deal.
It was up to the members whether they chose to privatise the club, Burraston said, but if they decide not to, we have a patrons trust, which kicks in as well and puts a minimum $6million cash into our business over the next four years.
The patrons trust is Burrastons baby. While the negotiations between the Tinkler Sports Group and the Knights were playing out, Burraston was busy behind the scenes trying to cobble the patrons trust together.
The trust involves Hunter businessman Andrew Poole and two anonymous patrons agreeing to give $2million each to the Knights in the next four years. It was unveiled hastily last week after Tinkler withdrew his second, revised offer to buy the club.
Burraston says he has been working on the patrons trust model for more than a year as the struggling club has looked at alternative sources of revenue.
Yet embarrassingly for the club, the fundamental detail of the model whether it was a gift or a loan was the cause of confusion.
Speaking on radio the morning the patrons trust was revealed, chairman Rob Tew declared it was a loan.
Revered board member Leigh Maughan was firmly of that opinion when he declared in the Newcastle Herald: Its a prick of a deal because you wind up with a debt that has to be repaid with interest.
Later that day, Burraston said there were two versions of the patrons trust, one in which the proceeds were a loan and the other in which they were a gift.
Poole and his anonymous colleagues have insisted that it be the latter and they are to be congratulated for their generosity. But, with the greatest respect to them, the trust promises more of the same.
The Knights have been kept alive by a long list of benefactors as they get deeper into debt and pay last years bills with next years money from sponsors, members and ticket sales.
Before the patrons there was Tinkler, whom the Herald revealed last year had secretly lent the Knights $500,000 in 2008.
It was the continued requests for money that prompted Tinkler to seek to buy the club outright.
Before Tinkler, there was the Newcastle Jockey Club, flush with funds from the sale of the Beaumont Park greyhound club site and bizarrely, the now defunct Gold Coast Chargers.
You can add multimillionaires Jeff McCloy and Con Constantine to that list.
No doubt there have been others.
And, of course, there was the Wests Group, which agreed in December 2005 to underwrite the Knights losses for up to $1million a year in a deal that was to guarantee the financial future of the club.
But the marriage collapsed just over two years later when Wests pointed out to the Knights that it wasnt a blank cheque and asked for some financial accountability.
Trust is the operative word in the patrons trust.
Members have to trust, for a start, that the two anonymous benefactors exist.
The Herald has no reason to think that they do not but in the absence of any proof it is a leap of faith that the members must make.
The members must trust, too, that Poole and the two anonymous benefactors will remain in a position to make good on their promises.
And members have to trust that Poole and co wont become fed up, like their predecessors, of pouring their money into a black hole.
That level of trust has not been shown by the Knights board in Tinkler.
Nor should it, given that it is endorsing to members a deal in which they will hand over the keys to the castle. But nor should Tinkler be subject to distrust.
His motives appear every bit as honourable as the clubs would-be patrons and he undoubtedly has the money to make good on his promises.
Regardless, the beauty of the Tinkler deal is that you dont have to trust him.
Thanks to the thoroughness, dedication and sheer bloody-mindedness of Tew, the Knights have secured an unbelievable offer to put to their members.
And if Tinkler defaults in any way, the deal is secured by a $20million bank guarantee in favour of the club for the first two years and $10million for the remaining eight years.
Should members vote to accept the deal, the first cheque Tinkler writes will be upwards of $6million to pay out the clubs debts and top up this years sponsorship from the Knights estimate of $7million to the $10million he has promised.
After that, there will be a minimum of $10million a year in sponsorship revenue.
Guaranteed.
The patrons trust is not an alternative to this and for Burraston to keep muddying the waters as club members prepare to vote on the Tinkler deal leaves him open to accusations of self-interest, given that a no vote would allow him to keep his position. The only thing the patrons trust guarantees is that the Knights will continue in the same manner they have since their inception in 1988, an under-resourced club living from hand to mouth, one bad season away from financial ruin and looking for the next multimillionaire to sidle up to and whisper: Hey mate, any chance of a few hundred grand to get us out of a tight spot?
http://www.theherald.com.au/news/lo...f-faith-from-members/2094371.aspx?storypage=0
Pretty fair article IMO, questions have to be asked why u'd even suggest a patrons model with Tinklers revised deal.
