This morning, Tuesday 25 October, Parramatta Leagues Club (PLC) Members received a letter from CEO, Parramatta Leagues Club - Bevan Paul around the financial position of the PLC and Club

A LETTER FROM THE CEO 

Dear Members of Parramatta Leagues Club (PLC) and Parramatta Eels Fans.

With the conclusion of the NRL season it is time to take stock of a tumultuous year for the company.

The news that dominated the year was the salary cap and governance issues that ultimately led to the loss of twelve competition points and the removal of the board of directors by the Independent Liquor and Gaming Authority (ILGA).

There is also an investigation currently being conducted by the NSW Fraud Squad into invoices to the Eels that were allegedly inflated.

I would like to make clear that the intervention of the NSW Police is in relation to possible offences committed against PLC members by individuals associated with the Football Club.  This is an ongoing investigation and the Club intends to keep members updated as much as possible.

2016 Financial Impact

The Parramatta Leagues Club has experienced record profits in 2014 and 2015 and in 2016 the Leagues club profit continued to grow. However in 2016 the overall cost of Football to Leagues Club members will be in excess of $11m. These costs include:

- $1.12m fines and penalties

- $1.24m consultants and legal advisers

- $952k player terminations

- $700k in lost sponsorship revenue

- $742k provision for sponsorship bad debt

The impact on the Club and members funds is unacceptable and unsustainable and urgent action was needed to mitigate these issues.  Following the removal of the Board and with the support of Max Donnelly and Jim Sarantinos of Ferriers, I have been acting as the Interim Eels CEO and during the last few months, the following initiatives have been implemented: -

- Salary cap management overhaul – After years of uncertainty the Club now has 100% confidence in its cap and has confirmed this status with the NRL. The recent round of signings and re-signings for the Eels has been actioned with complete certainty of compliance with the salary cap.

- Eels Restructure delivering $1m in savings per annum – Recent benchmarking indicates that the Eels substantially underperforms in several core areas and has the highest cost base in the NRL. This is unacceptable and a restructure of the Eels administration has been undertaken.

- Cessation of legal action against the NRL – This action had little merit and has enabled the Eels to re-establish a relationship with the NRL without legal antagonism.

- Review of supplier arrangements based on evidence supplied by the NRL – persons involved in third-party agreements have been advised that contracts will be re-tendered or cancelled.

- Head coach contract negotiations resolved – Brad Arthur’s contract extension for an additional three years has delivered certainty to players and facilitated the recent player contract activity.

- Closure of the Premiership Club – This loss-making entity delivered no return on investment and contributed to the Eels salary cap problems.

- Extension of license for Eels training grounds – The lease for these grounds was scheduled to expire in October 2016 and action was needed to ensure tenure and continuity for Eels training facilities. This has now been secured.

- Football connection – The Eels coaching staff delivered fantastic results in 2016 in extraordinarily difficult circumstances and the intra-company dealings needed to be re-established. Proper and thorough salary cap management was the priority and this was delivered with a number of other items.

- Welfare and discipline – Separate to governance issues, individual players went through distressing personal experiences which impacted Club and the welfare of our players. Although in its early stages, a new welfare structure has been created with a view to improving the services for our players.

There is more work to do on the Eels and a premiership to pursue however the biggest bushfires are out or under control.

I look forward to the commencement of incoming Eels CEO Bernie Gurr and all Eels members and fans can look forward to a better year in 2017 under his guidance.

Development

As stated previously, the cost of the Eels to Leagues Club members will exceed $11m for 2016 as a result of the items outlined in this message. These costs are clearly unacceptable and with Leagues Club re-development scheduled to begin in early 2017 it is critical that Eels costs are constrained within the benchmarks of comparable NRL franchises.

That said, the underlying performance of the Leagues Club remains solid and whilst the Leagues Club profitability will be impacted this year the company will still report a consolidated annual profit result in the neighbourhood of $4m.

As the development of the Leagues Club is fundamental to the profitability of the company and therefore the Eels, it is vital that this proceeds and I am pleased to confirm that approval has been provided by the Administrator to commence the Car Park construction to begin in early 2017.

Members should be re-assured that despite the challenges faced by the Eels, and the costs absorbed as a result, the company remains in a sound position to fund the car park development. It is also worth noting that an administrator would be unlikely to commence development if the financials were anything other than sound.

Constitutional reform

The Administrator is currently working on reforms that will improve the governance of the company and we are seeking feedback from Leagues Club members. I encourage members to participate in this' once in a generation' opportunity for reform.

 

Yours Sincerely

Bevan Paul

CEO, Parramatta Leagues Club