Eels Blogs

Can you seriously tell me, any business that would knock back a stream of never-ending, almost unlimited, financing.

Nobody would. Because it would just be plain stupid.

From a financial perspective, the Parramatta Eels are lucky enough to have a benefactor like no other in the NRL, and perhaps in Australian sport. I can’t think of a club that has tipped in more money to their sporting organisation than the Eels. Last year that generosity totalled up to $9 million, according to the latest Annual report.

$9 million.

Show me an Australian private owner, that is going to be prepared to tip that kind of money into a football club every year and then I’ll begin to have a dialogue about privatisation. It just won’t happen. Wealthy people don’t get wealthy by investing endless money into loss-making operations.

Those who are proponents of privatisation, would argue that under private ownership, the Eels financial results could be turned around. That under private ownership, not only would the Eels not need $9 million per year, but they could become profitable.

However, I would argue vehemently that any of the benefits derived from privatisation, could be achieved, just as effectively - in fact, more effectively - by structural separation. That means operating the NRL operation as a wholly-owned independent subsidiary of Parramatta Leagues Club.

Let’s go through the possible advantages of privation.

1) Better executives running the club. We have had under-qualified executives running the club, because Leagues Clubs boards have been reluctant to bring in strong executives who might sideline them from the business. As an independent subsidiary, a Leagues Club board would not be directly involved with the running of the Eels, and therefore it would be in their interests to have effective management in charge. Due to its greater capacity to fund the football business, an independent subsidiary would be better able to fund a higher standard of management.

2) Better quality directors on the board. As a wholly-owned subsidiary with an independent board, the Eels would no longer be left with the burden of having to select directors from a shallow pool of three-year qualified Leagues Club members. What’s more, the constitution of the subsidiary could be established to mandate a specific set of skills and requirements. In a privatised business, there are no such safeguards. As has been seen at organisations like the Sydney Kings and the Newcastle Knights, private owners are far from immune from financial woes. Who you get into bed with at night, is not necessarily who you wake up with in the morning, either, as clubs are traded back and forth.

3) The end of factionalism. Tell that to Manly, who endured years of fighting between their private owners. If you think you have problems when board members don’t get on, try it on, when controlling owners go to war. It is messier, uglier, and more harmful and any consortium bid runs the risk of having its various owners fall out with each other. There are any manner of measures that can be introduced to stop the ridiculous factionalism currently inherent to our club via structural separation.

On the flipside, there are many benefits to the wholly-owned subsidiary model over privatisation.

1) Members have recourse. Ultimately, directors or boards who do the wrong thing will get ejected. History has demonstrated that. When you give up private ownership, there is no fall-back when things go wrong.

2) Members aren’t treated as customers to be wrung dry. Under the ownership of the Leagues Club, the NRL club still has a responsibility to the members to provide fair and reasonable access to games and membership. Under private ownership, there is no consideration for member’s ability to pay, simply there is a bottom line that aims to be met.

3) Even if we are to assume the Eels could become profitable, the Leagues Club has the ability to keep investing. In sport, there is a clear correlation between the money you spend and the outcomes achieved. Would we prefer any potential profits to get reinvested into infrastructure like even better facilities at Salesyards, or for those profits to go back into private owners pockets.

4) You avoid all of the complications that are going to be inherent to taking ownership away from Parramatta Leagues, like who runs the juniors, how are the pathways managed, what impact with it have on the upcoming Eels precinct, and many others.

Businesses bring in investors when they need the money. The Parramatta Eels don’t need money, so privatisation should not even be on the drawing board. It is a solution to the wrong problem. The problem is how to get the current ownership model  operating efficiently. We all know how to do that. We all know that structural separation with independent boards will solve the majority of the problems that have plagued the club. Until the club has gone down that course of action, which it hasn’t to date, then talk of privatisation is absolutely madness.

Privatisation is an easy concept for people to understand. Constitutional reform and structural separation is not. However, I urge every one of you to keep spreading the message, and not let the dialogue as to how we make our club get better, degenerate into simplistic debates about simplistic models, when the clear and obvious road forward has not yet been travelled.

Because if you’re a wealthy businessman who thinks you can help make our club better, boy, do I a have a deal for you. Take out a Leagues club membership - it costs $10, and in a short-three years you can stand at one of the upcoming triennial elections.