The Political Attention

The NSW Government’s attention to Panthers’ amalgamation strategy sharpened as the program gathered momentum. There was growing concern within government about the expansion of large clubs. It was never clear whether Mulock directly influenced those concerns about Panthers’ growth, although his publicly expressed opposition to the expansion broadly coincided with views emerging within government.

Pat Rogan was chairman of Clubs NSW during the amalgamation years and had also spent 25 years as a NSW Labor politician. His background gave him a perspective from both sides of the debate.He says that the then Minister for Gaming and Racing, Richard Face, saw the club’s amalgamation process as Panthers gobbling up the rest of the industry. Rogan says that Face did not accept that, in most cases, Panthers was saving clubs from closing down completely.

I told him [Face] that his view was wrong. Panthers was not going out head-hunting. The reverse was happening. There was a regular stream of clubs coming to Panthers. I also told him that the members of the clubs had to vote on any amalgamation, and that Cowan himself had insisted on a 70 per cent majority of members, rather than 50 per cent – otherwise no amalgamation could go through.

Michael Egan was NSW Treasurer at the time. Rogan says the Treasurer held similar views to the Minister, believing that the club industry had “lost its way”. In 2003, Egan introduced substantially increased taxes on poker machine revenue, adding another dimension to the growing conflict between the Government and the club industry.

Clubs NSW CEO David Costello says there was a misguided perception in the Labor government at the time that big was not good.

It’s paradoxical. Michael Egan knew that 97 per cent of all their gaming tax comes from the largest of clubs – that part he was happy with, because it’s an enormous amount of revenue. He didn’t like clubs getting big, but he was happy to take the money.

Clubs have closed in the past few years, and he expects to see more

The effects of the new taxes are starting to be felt, and now there are new smoking regulations that will force clubs to spend large amounts of money on renovations. Some will just not be able to afford it.

In the aftermath of Penrith’s amalgamation push, the government changed the law to implement a ceiling of four on amalgamations. David Costello has dubbed it the ‘Penrith Bill’. He says that Panthers’ vision caused the government to change the law to control its growth.¹

The government was uncomfortable with the rate that Panthers was growing. They didn’t bother to try to understand that particular phenomenon, and over-reacted.

The chief executive of Easts Leagues Club, Rob Riddle, says that he never saw Panthers’ 14 clubs as a negative for the industry,

But it scared the life out of the government, so they then turned around and put a cap on it. In my view, their perception was, if a club is weak, it should be allowed to fall by the wayside, and the strong ones should grow. Well, that may be the case, but there’s a lot of sporting fields, bowling greens and other facilities that are no longer going to be available to the community if that’s allowed to happen.

The problem with a limit is that now everyone has to choose. You’re only allowed four, and you think, that poor club down the road is about to fold. So what do I do? Do I save that poor bowling club, or wait for something bigger that seems more attractive – and that can provide me with more growth potential? I would certainly do more [amalgamations] if I could.

Early in 2007, with a state election imminent, the four club ceiling was raised to ten.²

Since the Carr government came to power in 1995, 100 clubs have closed, with another 142 being forced to amalgamate to avoid closure. At the same time, corporate ownership of hotels and their gaming machine entitlements was becoming increasingly concentrated, placing a large proportion of poker machines in the hands of business corporations.³  A single poker machine returns $120,000 to its corporate owner, with none of the regulations that require clubs to return part of poker machine revenues to the community.

Industry leaders argued that the limit had consequences beyond restricting the growth of organisations such as Panthers. As clubs across the state struggled, it also reduced the options available to those seeking an amalgamation partner.

Costello says many more clubs would have amalgamated with Panthers given half a chance.

And the fact of the matter is, that if Penrith hadn’t come to the rescue of those clubs, the majority would be closed today, and those communities would have lost the facilities.

Anyway, it’s a global trend, consolidation of companies is a fact of life. You have to be able to grow your business, and Roger had a vision that nobody else had –twenty years ago, maybe more. He said, I’ve got to have a business on a certain scale, and I have to identify the growing areas, identify the range of products and services and community support that would make a successful club.

Panthers’ amalgamation program did everything expected of it and more. It delivered valuable assets and added to the brand. There were some unexpected bonuses.

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1. The four-club ceiling was introduced as part of the Gaming Machines Bill 2001. In the Legislative Council second-reading debate on 6 December 2001, the Government stated: “Amalgamations are to be limited to no more than 4 per club”, subject to geographical and transitional exceptions. During the debate, John Tingle specifically referred to the need to curb the expansion of large registered clubs “such as Penrith Panthers”. David Costello’s description of the legislation as the “Penrith Bill” is his own characterisation, but the contemporary parliamentary debate confirms that Panthers’ expansion was expressly raised in support of restricting club amalgamations. Source: NSW Legislative Council Hansard, Gaming Machines Bill, Second Reading, 6 December 2001.
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2. The Registered Clubs Amendment Bill 2006 increased the maximum number of amalgamations a club could enter into from four to ten. In introducing the Bill, the Government acknowledged that some club groups already at the four-club limit were operating successfully and were capable of assisting additional clubs. It also noted that profitable clubs were frequently approached by smaller clubs seeking amalgamation, but those already at the limit sometimes had no choice but to refuse. Source: NSW Legislative Council Hansard, Registered Clubs Amendment Bill, Second Reading, 16 November 2006.
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3. For example Woolworths through ALH Group (Australian Leisure and Hospitality Group) became one of the state’s largest operators of gaming machines. It is now Endeavour Group which is the largest hotel operator in Australia with over 350 licensed venues nationwide. ↩︎

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