Category: The Series

Offering A Fresh Start

Part 53 of 70 — Original Chapter: Chapter 15: Confidentiality — Dysfunction — Conflict

This article forms part of the serialised republication of Panthers, Passion & Politics – The Roger Cowan Years.

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In the early nineties, when the Club had restructured and flattened its management structure, some employees had difficulty coping with the changes. Cowan engaged a change management consultant, Robert McLellan, to work within the club, and help the staff through the process. He conducted regular training sessions with managers and staff covering all aspects of change management.1 The experience provided a contrast with the problems that later developed between Board and management. Lynch says there did not seem to be the same recognition that this had become a major organisational problem requiring intervention.

Cowan says that there were attempts made to find a solution.

Kilmister was one attempt, but we know how that blew up. And after almost every board meeting, I would get together with managers and try to come up with ideas for improving things. We changed the board reporting system a few times to see if it would help. But there was no trust of motives, and you can’t negotiate with people if they have secret agendas. You just don’t know what has to be negotiated.

Sometimes we would have a board and management joint planning session spread over a few days, and we would live and work together in a convivial environment, and it all seemed positive. But afterwards it would be on again as usual.

Cowan was not alone in his concerns about the Board. One of the managers who was close to the action, Tony Lackey,2 recalls the change in atmosphere in the boardroom and the frustration it was causing. From Lackey’s perspective Craig Terry was an instigator of much of the disharmony and he says it seemed that Evans and Terry had quite opposite requirements of management reports.

After most board meetings the managers who attended would get together to discuss what was happening. We could not understand the dysfunction that was creeping in.

By that time there was a confusing attitude towards management reports. The management team believed it should share as much information as was practical with the Board.

Suddenly the attitude seemed to change. Every report became the subject of intense discussion and questioning. Board meetings were going way past midnight with most of the time being spent on petty detail that had nothing to do with policy.

Roger raised this issue with the Board and was told that anything in the report had to be discussed. Somebody suggested that a lot of the information was unnecessary. The managers complied by limiting the information to only support agenda items. 

Later there was criticism that the Board was not getting enough information. It was fast becoming impossible to know what they wanted.

We could see the frustration building in Roger.  Several times he would get home very late, so angry he could not sleep, and be back in his office at 5 am writing a hard-hitting letter to the Board about the lack of rational decision making and the disregard for longer term thinking.

He would ask for our opinions about his letters and most of the time we talked him out of sending them. We were all conscious of the need to keep trying for a more harmonious solution and when he had cooled down, he agreed.

The attempts to address the problem had begun even before the Kilmister workshop described in Part 52. In 1999, Cowan recommended the holding of a seminar involving the full Board and all the senior managers. It was his hope that this would help to achieve unity between board and management.

His recommendation included a list of desirable outcomes of such a seminar. Two of the items on his list were to have agreement about the roles of Board and management; and to compile a list of all weaknesses within the organisation. He believed that these might shake out the issues causing conflict and get all the problems out on the table.

The proposed seminar would have provided an opportunity for directors and managers to identify concerns about their respective roles, management accountability and other sources of tension within the organisation.

Later, in another attempt to achieve unity of purpose and more productive decision making, Cowan recommended a workshop, to be facilitated by an external consultant specialising in Corporate Governance and Board/Management relationships.3

A short summary of his written recommendation to the board again hinted at his frustrations. It included:

The board has to establish policies, delegate responsibility to a CEO who is trusted, and ensure accountability by monitoring results.

Board meetings should be for the purpose of reviewing policies, reviewing outcomes, considering reports on achievement of outcomes, and evaluating the CEO’s performance against the achievement of outcomes.

Cowan hoped this would finally bring into the open whatever was causing the dysfunction in the boardroom. Those interviewed about the period describe an atmosphere increasingly marked by suspicion, animosity, conflict and a lack of teamwork, trust and co-operation.

None of those attempts produced a lasting resolution. Eventually, as the relationship between Board and management deteriorated still further, Cowan proposed the most drastic solution available: he would step aside and give the Board a completely fresh start.

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  1. A key focus of McLellan’s work was establishing better communication between individuals and teams, including an understanding of concepts such as “twin citizenship” — the responsibility people have both to their own team and to the wider organisation.
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  2. Tony Lackey was a long-serving senior manager who, for a period, attended Board meetings to take the minutes. His presence gave him direct exposure to the changing atmosphere in the boardroom.
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  3. The Kilmister process produced a substantial body of governance work. Temby records that on 6 June 2000 the Board accepted 21 of 24 policies arising from it. The three policies deferred for further consideration concerned monitoring the CEO’s performance, financial performance benchmarks and assessment of the CEO’s contract against the position, industry benchmarks and comparable companies.
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Commentary and Contributions

Somebody, Hose it Down!

Part 52 of 70 — Original Chapter: Chapter 15: Confidentiality — Dysfunction — Conflict

This article forms part of the serialised republication of Panthers, Passion & Politics – The Roger Cowan Years.

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For two years Cowan had been agonising about how to improve the decision-making process. His recommendation to the Board in 2000 to employ an external consultant was intended to improve those relationships. Instead, the workshop would expose an issue that took the conflict to a new level.

In 1996, Cowan had negotiated a new contract with the Board Executive, which would take him to his planned retirement date of 2006. The same confidentiality over his remuneration arrangements that he had insisted on since 1965 was written into the contract. In 2000, that confidentiality would become another catalyst for conflict.

We help you clearly define your board’s role and distinguish board from executive accountabilities.

Cowan contacted the company, and board and management agreed to hold an evening workshop, in May 2000, facilitated by John Kilmister. Cowan held high hopes that an independent consultant might help board and management work together more productively and harmoniously.

Kilmister made a number of recommendations that were designed to improve board/management relationships.

In the course of the workshop, somebody asked the consultant if he thought it was appropriate for senior management remuneration packages to be disclosed only to the executive of the board and the club’s auditors. The consultant’s opinion was that it would be preferable for the full board to have that information, but he added that there was nothing illegal about that sort of confidentiality.

Despite Bateman’s later evidence that he had been curious about Cowan’s remuneration since joining the Board, the issue had not previously been raised with Cowan in the boardroom.

In his first day of evidence at the inquiry, John Bateman told Ian Temby that he had been curious about the remuneration of the CEO from the time he first became a director, in December 1995. He cited his experience as a Penrith councillor as the reason for his interest. What is notable is that, despite that longstanding interest, he had apparently not previously raised the issue in the Panthers boardroom.

At the next board meeting1, John Bateman asked Roger Cowan a seemingly simple question. The answer was straightforward. Its significance would not become fully apparent until some four years later.The question?

Does any manager employed by Panthers hold an interest in any company doing business with Panthers?

Although John Bateman maintains that he never asked such a question, Cowan says he has a vivid recollection. It seemed rather confrontational and was quite unexpected, which is why it stands out in his memory. He recalls the question very well because of his reaction to it.

My immediate thought was that he was asking a question when he knew the answer. I sensed that he was trying to lay a silly trap, thinking that I would try to fudge an answer. To me, this was crazy because there was no secret about Phyro Holdings. Everybody in the office knew about it, all the managers knew about it, and then there were all the external companies where we booked our advertising, etc – all through Phyro. I had no reason to think anyone would not know about it.2

I didn’t know that in the week leading up to the meeting, someone in Bateman’s office had carried out ASIC searches on Phyro Holdings. But I still believed he was up to something, and, given my immediate suspicions, can anybody imagine that I would have failed to answer the question?

I replied that the only one that I was aware of was Phyro Holdings.

The discussion became more and more heated as some directors demanded that the confidentiality clause in the contract be ignored in favour of full disclosure to the Board. But confidentiality was a condition of his contract, Cowan told them, and that same confidentiality covered all senior managers. It was quite legal, he told the meeting, and everything was subject to audit at any time by the board executive and the club auditors.

He also told them that his experiences over the previous two years made it clear that once the full board learned the details of his contract, Ron Mulock would have them by the next morning. And the whole of Penrith would be reading it by the end of the week in the Western Weekender.  From Cowan’s perspective, his experiences over the previous two years demonstrated that confidentiality could no longer be relied upon once information reached the full Board.

The friction in the meeting increased. Some directors were insisting that the confidentiality provisions be waived, and Cowan was telling them an agreement was binding and they had no right to change it.  After a final outburst, Cowan walked out, declaring he would not work for such dishonorable people.

In hindsight, Cowan says the words he used at the time were only slightly less stupid than his decision to walk out:

The day this board finds out the details of my remuneration I will leave the club

But in that moment, he says, he had decided enough was enough. How could he have respect for a Board dominated by directors demanding that a long standing contract be broken? He told Ian Temby that in doing what he did, he knew he was resigning.

When I nearly got back home, I thought this is a stupid thing I am doing, I’ve let a lot of people down, I am acting selfishly.  I drove back and went into the room, and nobody said anything.  When I walked back in, I fully expected them to say, “No way, you resigned.”3

Terrence Lynch is a barrister who has acted for Panthers on several occasions4. He says that Cowan’s rigid stance on the whole confidentiality issue was out of character.

It always surprised me that Roger wasn’t prepared to open up his salary and remuneration arrangements to the full board, particularly when it became such a contentious issue.

I was also surprised that he let it continue. Given my understanding of how he had run the place, I am amazed that he allowed it to become an issue. Why didn’t he just step aside and shut it down? I went to many meetings with various groups at the club, and my impression was that it was a very open and relaxed place, and there was no factionalism or camps. I never ever sensed any party lines there at any time.

This was the environment he’d created, so it’s even more surprising that he dug in. It is the one time that I have ever seen him let ego get in the way, though maybe ego’s not the right word.  But he was definitely acting more undisciplined than you would ever expect. It was a concentration on self rather than seeing the big picture – which he had always done for nearly forty years – and what he is known for.

Viewed dispassionately, the dispute was not simply about whether Cowan’s remuneration was excessive. Cowan maintained that his package was commensurate with the responsibilities of running a business approaching $300 million in annual turnover.

The argument had become one about disclosure, confidentiality and trust.

So, why didn’t somebody ever move to hose it down?

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  1. This refers to the next Board meeting after the May 2000 session with John Kilmister.
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  2. Temby’s later findings drew a distinction between knowledge that Phyro Holdings existed and was the Cowan family company, and knowledge of the extent of its financial dealings with Panthers. Evidence before the Inquiry indicated that some directors knew of Phyro but said they did not know the extent or nature of the transactions passing through it.
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  3. Temby later summarised the outcome starkly: “In the result nothing was achieved.” The existing arrangement remained: Cowan’s remuneration was known to him and the Board Executive, as was Phyro’s involvement.
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  4. Lynch, a prominent Sydney barrister, was junior counsel representating Panthers during the Temby Inquiry. It should be noted that in that role he was not representing Cowan, he was representing the Panthers Board and ex-members of the Board including the group that had been labelled “The Footy Five”. ↩︎

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Commentary and Contributions

A Simple Change, Made So Difficult

Part 51 of 70 — Original Chapter: Chapter 15: Confidentiality — Dysfunction — Conflict

This article forms part of the serialised republication of Panthers, Passion & Politics – The Roger Cowan Years.

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2000 and 2001 should have been years of high optimism for Panthers. The Club had emerged from the tumultuous 1998-99 years without its rugby league team being eliminated from the competition or being forced to merge with Parramatta.

The new NRL competition was underway, and the club was about to complete its first two amalgamations.

But the situation in the boardroom was still tense.

In 1996, Cowan had negotiated a new contract with the Board Executive, which would take him to his planned retirement date of 2006. The same confidentiality over his remuneration arrangements that he had insisted on since 1965 was written into the contract. In 2000, that confidentiality would become another catalyst for conflict.

It would ultimately become one of the major criticisms levelled at Cowan, and a significant issue at the Temby Inquiry. But it was only one element in a Board-management relationship that was becoming increasingly dysfunctional.

During the amalgamation program, there were many important decisions to be made, and a lot of business to be dealt with at Board meetings.

On many occasions decisions were held over to the next meeting, and then another, and another, over what were just petty points. When it takes 12 months to make a relatively straightforward decision that is of ‘real time’ importance to the business, there was evidence of dysfunction. It took that long for the Board to agree on a policy governing amalgamations with other clubs. 

I can’t remember any important decision that we needed to make in that period that we didn’t make eventually. But time – and more importantly – opportunities, can be lost.

A push by management to decrease membership fees was an example.

In 2001, Panthers membership was set at $22 a year, but many of the club’s competitors were advertising their fees at around $5.50. There was great concern in the management team that membership numbers at the Penrith site were decreasing.1

There was also confusion over trying to implement a system that would allow the members of amalgamating clubs to continue to pay the lower fees they were paying before amalgamating, but without breaching the 50% regulation.2

Having one lower membership fee right across the group was felt to be a good solution. It could also be used to push a more aggressive membership drive. It took well over a year – and some drastic measures – for the Board to agree to a reduction in fees.

Beyond the Book: The membership issue was considerably more complicated than the fee reduction alone suggests. Amalgamation had created questions about membership categories, voting rights and representation within the expanding Panthers Group. Read: Why Cutting the Membership Fee Wasn’t So Simple.

We eventually did get the fee down to $8.80, but it was a very complicated process.

In the meantime, our market was diminishing, and everyone knows that lost market share is not easy to recover. Once it was done, I think we increased the membership at Penrith by about 15,000.  There were obvious benefits to our business, and the reasons they came up with for the delays were just not logical.

At one stage one of the Five came out and said that management wanted to lower the fees to get more members so we could get rid of those directors.

The membership fee deadlock was broken using tactics that would never have been considered in the open environment of the old Panthers. It demonstrated how confrontational life in the boardroom had become by July 2002. In the week leading up to a home game, Cowan asked Rob Weaver, the club’s media manager, to prepare a press release. A Board meeting was scheduled for the morning before the game3.

The release was very strongly worded, and it spelt out the situation in detail. In part, it read:

“Five out of the nine directors have shown that they care more about their seats on the Board than they do about our members and the focus of our organisation. It brings a new meaning to the phrase ‘bums on seats’, Mr Cowan said. “I will not stand by and watch them destroy what previous boards and managers have built, which is why I am going public to let members know what is going on.”

Cowan took the document to the meeting, held it up and told the Board part of what it said. He told them that Rob Weaver was already at the football ground. He had 30 copies of the release in his briefcase, and it would be handed out to every journalist at the game unless they agreed to the new fee. They demanded that Cowan show them the release, but he refused.

Rob Weaver recalls that day:

I was sitting in the media box in the western grandstand with a briefcase full of press releases, watching the board box on the other side of the ground through binoculars. As soon as I saw Roger arrive, I was to call him for instructions.

But he called and said they had agreed to reduce the fees.

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  1. There was also concern about members in regional areas being resistant to any increases. This was expressed strongly at regular meetings of venue General Managers.
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  2. Section 30(9)(a) of the Registered Clubs Act required a “majority” of the clubs full members must be eligible to vote for the Board. Social Members were legally classed as a subclass of Ordinary Members and therefor were included as “full members”. In 2006 the ratio was reduced to 25% provided this was approved by a majority of full members.
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  3. The game was Penrith v Melbourne which Penrith won 36-16. ↩︎

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Commentary and Contributions

The Changing Face — and Culture — of the Panthers Board

Part 50 of 70 — Original Chapter: Chapter 14: Board Frustrations on the Rise

This article forms part of the serialised republication of Panthers, Passion & Politics – The Roger Cowan Years.

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John Bateman, a Penrith solicitor, joined the board in 1995. He had previously stood unsuccessfully for the Board and his patience was rewarded when a vacancy occurred between elections. He was a local councillor. The Board considered he would be a valuable addition to the expertise available on the Board.

Around three years later, another seat became available on the Board, and Greg Evans was also invited to join. He owns a local newspaper, the Western Weekender. He had also served on council. He had stood for the Board two years in a row and had been unsuccessful. He confided in Barry Walsh, then a member of the Board Executive, that he could not afford to fail a third time. Walsh advised him that there was a vacancy coming up and that the Board would probably invite him to fill that. 

So, a solicitor and a local businessman had been invited to fill vacancies on the Board – both experienced in local government – should have strengthened the board. Both were also sponsors of the rugby league team, and so were well known to the club management.

Four of the directors who became the Footy Five were actually invited to join, rather than securing their seats through a members’ vote.  Craig Terry and Dennis Coffey joined In the latter part of 1998 and early 1998. Terry’s credentials were in accountancy and it was thought he would be a suitable replacement for the retiring Leigh Mawhood, also an accountant. Terry, too, had also stood unsuccessfully for the Board a couple of times.

The 90s saw Merv Cartwright back on the board after a hiatus of many years. Some of Cartwright’s history with the club is already documented, including the cancellation of his membership. When his sons began playing for the Panthers, he wrote letters to the Board asking that his membership be reinstated. He gave a written undertaking that he had no interest in becoming a director, and would not take any part in club politics. 

The Board relented, and Cartwright was a member again. Soon after readmission he stood for the Board on a platform that criticised Cowan. When he eventually decided to stand down, he pushed for his son-in-law, Dennis Coffey, as his replacement.

Coffey is an ex-rugby league player for Penrith, and founder of Coffey Engineering, a successful Penrith-based industrial engineering company. He was a popular choice with all board members to fill the vacancy. Cartwright’s son John, one of the players in the 1991 premiership winning team, had married Dennis Coffey’s daughter.

Geoff James had been a director for several years as part of what had been a reasonably cohesive and productive board. James had a friendly relationship with chairman Leo Armstrong. They had been next door neighbours for many years and used to look after each other’s homes if one was away.

When Craig Terry arrived, he and James quickly established a good rapport.  Cowan and the other managers came to believe an alliance was forming between them and Bateman, Coffey, and Evans. From that time, the dynamic on the board totally changed.

The situation in the boardroom began to deteriorate to become what has been described as ‘horrific’.

There is a lot of evidence of Cowan’s efforts – through Board management seminars, recommendations to Board meetings, and the employment of consultants to get the Board to clarify what it wanted from him and the management team.

Greg Evans says that members of the alliance of five were trying to get Cowan to ‘come under the direction of the board, and to work within the parameters that they set’.

He denies there was a hidden agenda, but says,

He’d been the boss for so many years, and things were going OK. Boards got used to going along with him. He always felt that his way was the right way; he just wanted to get things done. Any questioning by the board was just a nuisance, so he used to get impatient.

But Evans does not identify any of the ‘parameters’ that the Board wished to impose. The real problem was that the main protagonists in this drama saw their role – and the others’ – very differently.

It was a clash in values that caused me to walk out of a meeting in June 2000. I was angry that people saw nothing wrong with breaking a contract when it suited them.

I could not understand how they could even consider reneging on the amalgamation deal with Newcastle. It took more than a year to get the Board to make a decision about amalgamations. It is true that I used to get impatient. How can it take 12 months to make a simple decision about amalgamating with another small club? I could see great advantages for Panthers and I wanted to get started.

While we were talking around in circles we failed to take advantage of an opportunity to amalgamate with Kingswood Bowling Club and Eastern Suburbs snapped it up. Panthers’ management could see some big potential for that club but it was almost impossible to get the Board to look at proposals rationally and objectively.

Management and Board both have an important job to do. If I do a bad job, then the Board has to step in, but there has to be a line between Board and management, and that applies in any business.

 I always insisted from the moment I started on that three month trial in 1965 that I would be totally in charge of all staff matters, all the hiring, firing, and all the discipline. It would be my responsibility. The Board was not to interfere in any of it. And they agreed with that.

It ultimately evolved into a strong part of the Panthers culture.  As long as staff matters were my responsibility, I was able to oversee the day-to-day running of the place. I do know of some other clubs where board members interview and employ staff. They are even able to fire them.

In that kind of environment, the sailors are not taking their orders from the captain of the ship. They’re being told what to do by the owners of the shipping line.

Roger Cowan says the culture of an organisation is what sets it apart, and to be effective, it must be strong at all levels – from the chairman, all the way through to casual employees.

People have to know where they stand and feel good about the contribution they are making. He and most of the other managers were disappointed that the strong culture that had been built over many years was being eroded.

The problems in Panthers’ boardroom were exacerbated by the rugby league merger issue. Rumour had abounded about Cowan’s alleged plan to merge with Parramatta. Claims in Ray Hadley’s radio show that it was a ‘done deal’ added to the tension. Alliances that were initially tenuous now became solid.

The time was now right, says Cowan, and the group – Bateman, Coffey, Evans and Terry – made their move to unseat the chairman, Leo Armstrong.

Leo had been chairman for 14 years and was generally acknowledged as a fine figurehead for Panthers. He was respected and admired by the other directors and by management and staff. He was popular with the members and the general public, who recognised him from public appearances, and as the person who often presented cheques to community organisations on behalf of the club.

Leo often became quite angry with Bateman in Board meetings. But removing Leo was a problem for the Bateman camp. He had the support of four directors, and with his own vote could hold his position. They would need to shift the balance. 

When Geoff James accepted the dangled carrot of the deputy chairman’s job, the die was cast. 

Somehow the group managed to convince Geoff James to move against the chairman. Once Armstrong was removed from the chair, James moved into the position of Junior Deputy Chairman.1

Becoming a deputy chairman would automatically elevate him to the Board Executive. More importantly, even though many executive matters were supposed to be confidential, his appointment could open new doors for the alliance, and thus give it an added measure of power.

James would later admit faxing confidential executive material to John Bateman –an action questioned by Ian Temby in the Inquiry.

Once they knew that the alliance was solid, Bateman made his move. He first approached Keith Rhind, a deputy chairman at the time, telling him the Leo Armstrong was to be removed as chairman, and asking Rhind to take over the chair.  Rhind refused the offer.

Bateman then went to deputy chairman Barry Walsh, making the same offer. Armstrong was going whatever happened, Bateman said. If Walsh also refused the chairman’s job, Bateman would take it himself.

Walsh, like Rhind, was a loyal Armstrong supporter. It was a terrible decision to have to make. Walsh opted for the lesser of the two evils and agreed to stand.

Preferring to avoid the ignominy of being voted out, Armstrong stood down. Cowan says he was bitterly disappointed to learn that his trusted neighbour had turned against him.

Cowan has some theories as to the motives of the group in putting Walsh in the chair instead of Bateman, who would be the logical choice.

They may have wanted to avoid the impression of a coup if both Armstrong and Walsh were deposed in one hit. Both were well known in the community, and popular with members, supporters, staff and management.

Also, there was the friendship between Barry and Bateman. Barry was godfather to one of Bateman’s children. Maybe Bateman hoped that that friendship would give his faction another supporter. I suspected it was just an interim measure.

Walsh stepped into the chair, but in many ways, he lacked the power of the position. In a very telling comment in the 41X inquiry, he told Department of Gaming & Racing (DGR) counsel Vickie Hartstein, ‘I never had control of the Board’.

The five had the numbers, and they used them.

Panthers’ group CEO Glenn Matthews described the board meetings as dysfunctional.

It often seemed that some of the Footy Five were being deliberately obstructive. They’d ask you for the same information again and again. Meetings usually went on till after midnight. I used to cop personal abuse all the time. Many times, I was called names, frequently a liar, in Board meetings. Often, we had the most trivial things to be approved by the Board, and they questioned every single item. Yet I can remember one night when they voted to spend over $100,000 on a player in some deal. There was no rhyme or reason. It was a nightmare.’

One night Craig Terry’s usual barrage of illogical, petty comments and accusations got the better of me. I became totally frustrated and in anger I hurled the papers I was holding in his direction. Later I was with John Wilson as we waited for the meeting to finish. I was regretful about losing my cool and I said to John, “I’m in for trouble when the boss gets out of the meeting. He is not going to like what I just did.”

One night Craig Terry’s usual barrage of illogical, petty comments and accusations got the better of me. I became totally frustrated and in anger I hurled the papers I was holding in his direction. Later I was with John Wilson as we waited for the meeting to finish. I was regretful about losing my cool and I said to John, “I’m in for trouble when the boss gets out of the meeting. He is not going to like what I just did.”

The meeting broke up and Roger came over to us. He said,

“Glenn, next time you throw something at Craig Terry make sure it is heavier than paper and make sure you aim better.”

We all laughed, and I was off the hook.

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  1. The Temby Inquiry records that in 1999 Leo Armstrong was replaced as Chairman by Barry Walsh and Geoff James became a member of the Board Executive. Temby noted that, according to Roger Cowan, these changes had been engineered by the group Cowan saw as opposed to him and had caused Armstrong “bitter disappointment”. See Ian Temby QC, Penrith Rugby League Club Inquiry: The Report, Chapter 2, “A Power Struggle”, p. 8. ↩︎

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Commentary and Contributions

What Makes a Good Club Director

Part 49 of 70 — Original Chapter: Chapter 14: Board Frustrations on the Rise

This article forms part of the serialised republication of Panthers, Passion & Politics – The Roger Cowan Years.

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The club industry in NSW occupies a unique position — strongly regulated by the state government, but still very much a part of its individual communities. Most clubs are heavily involved in sport and recreational groups in their areas, and provide donations, facilities, and other benefits. Many also support local charities and organisations. By 2003, the total cash donations from NSW clubs amounted to around $102 million. The main recipients were health and social services programs, education (cash, scholarships, library support), emergency services and disaster relief, and of course local sport, at both professional and non-professional levels.

The situation of club directors is also unique. The shareholders who elect boards of major corporations have a ‘hip pocket’ interest in who is overseeing the running of the company. The directors are usually there because they bring some skill or expertise that qualifies them to do a good job.

In most club elections, a 1% turnout of members would be classed as good. This changes only slightly where there is a major issue being played out, as at Panthers in 2002. Even then, the 3000 people who voted still only represented a small percentage of the club’s 130,000 members at the time.1

People pay to become shareholders in a company, whereas people become members of a club to enjoy the facilities it offers and the geographical convenience. Few of them have any interest in the politics unless they become aware of major problems that are likely to impact on the amenities they enjoy.2

Craig Fantom3 is now the CEO of a well-known Irish pub on the western outskirts of Sydney. Before moving into hotels a couple of years ago, he had spent 25 years in the club industry, 20 of them dealing with boards. It was the three years he spent as CEO of the Rooty Hill RSL Club that became the catalyst for a change in his career direction.

 ‘Club directors have the same fiduciary duties as any other director, and often have control of a multi million dollar organisation’, says Fantom, who believes that one of the industry’s major weaknesses is the quality of the directors it attracts. 

Roger Cowan says he was aware of the difficulties at Rooty Hill, but his experience at Panthers has been quite different and he doesn’t share Fantom’s view on club directors. Cowan says that some of the directors that have caused the most problems for Panthers over the years appeared to be the best qualified.

Look at the group that set themselves up as the Footy Five.4 There was a solicitor, an accountant, two successful businessmen and a private investigator. They should have been the best directors we ever had but the reader of this tale might have some doubts about that.

There are a lot of directors in the club industry who are volunteering their time because of a genuine interest in their club. If they lack formal qualifications they make up for it with common sense, loyalty to the cause and the willingness to listen to expert opinions when they are needed. 

One [Panthers] director who stands out in my memory was Lou Brown, a truck driver and a rough diamond if you ever saw one. Another was Poker Ausburn. He was a boilermaker and was chairman of the club for several of our most successful years. I could name a lot more very good directors and they all had one thing in common – a genuine unselfish desire to see the Club succeed. An uneducated director with a genuine sense of ownership and sound common sense will be an infinitely better director than a Rhodes scholar whose heart isn’t in it.

To the allegation that he worked with boards of ‘yes-men’, Cowan says,

It really is quite ridiculous to think that directors would volunteer their time to represent the members who elected them and then turn up to meetings to be told what to do. Human nature does not work like that.

Keith Rhind remembers one amusing example of the myth.

Before Vern Mychael was elected to the board, he would be at every general meeting asking the most probing questions. He made it well known that if he ever got onto the Board, he “was going to put Cowan in his place”.  He was elected and became one of Cowan’s strongest supporters and friends.

Rhind recalls that years later Mychael related how different was the reality of the board from the myth.

Nobody in their wildest dreams could imagine Vern as a yes-man. He was a very strong character.

Rhind also points out that nobody could say Barry Walsh was a yes-man, and yet on most issues, he supported Cowan to the hilt.

The fact is that they shared the same vision for Panthers and they agreed on most things. They were both passionate about succeeding. Barry’s greatest passion is rugby league, but he knows the future of rugby league depends on the success of the club in every other way. When they did disagree, they were able to discuss it rationally and with respect for each other. The “yes-men” theory is really quite ludicrous when you think about it.

Another claim was that Cowan could choose who he wanted on the board. Boards are elected – as October 2002 proved. All the campaigning and the tickets made no difference. The members decide who they want.

It was the vagaries of directors that had seen Cowan in court facing charges in 1986.5 It had also taken him ten years to convince a board to implement a change to the way the rugby league club was administered.6

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  1. A total of 3273 ballot papers were retruned in the March 2002 election. 110 of these were informal. See: Temby Report page 39. ↩︎
  2. Rugby League Clubs may be slightly different. If the team is performing badly, members appear to take great interest. The 1971 Extraordinary General meeting that saw Merv Cartwright and Ron Partridge resign had an attendance of 1000, when there was only 6000 members. See: Part 8 — Divided Control: The Club and Football ↩︎
  3. Craig Fantom held this role at the time of publication. ↩︎
  4. The origins and later use of the term “Footy Five” are examined in Beyond the Book — The Footy Five — A Name that Rewrote the Story. ↩︎
  5. This story begins at Part 22 — An Investigation Starts . Also relevant is Beyond the Book — The End of Season Drinks That Weren’t So Cordial ↩︎
  6. See Part 21 — The Right Structure. Finally! ↩︎

← Part 48 · All Parts · Part 50→

Commentary and Contributions

Unexpected Bonuses

Part 48 of 70 — Original Chapter: Chapter 13: Amalgamations Not Takeovers

This article forms part of the serialised republication of Panthers, Passion & Politics – The Roger Cowan Years.

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An example of the unexpected bonuses emerging from Panthers’ amalgamations comes from Port Macquarie. When Panthers amalgamated with Port Macquarie RSL1, it also picked up a small bowling club out of town that had already amalgamated with the RSL Club. This little club may end up being one of the jewels in the Panthers crown.2 The Hibbard Bowling Club is on 12 acres of land, with its own sports complex in a residential area. In 2005 council approved a new development of 3000 homes. The new estate backs onto the club’s playing fields, and the area is not far from the Port Macquarie airport. Locals believe Hibbard will become a major satellite suburb of the city, and its Panthers club will be an important part of that new community.

Amalgamations have helped to pump life back into communities that might otherwise have lost their club — along with its sporting amenities, inexpensive meeting rooms and the donations that are part of the club ethos.

Even where amalgamation offered a struggling club a way forward, change was not always readily accepted. Newcastle Panthers former CEO, Bob Adamson, spoke of the way that Panthers’ systems were implemented into each amalgamated club. There were manuals and documented procedures covering every facet of the business, designed to make the operational transition as seamless as possible. But bringing in the Panthers culture was not always so straightforward.

Thomas Paynter had spent some time at Bathurst Panthers before he took on the job of CEO at Port Panthers. He says that the amalgamation in Port was not as smooth as it had been in Bathurst.

There are still some people – members, and a few staff – that do not accept it. They don’t realise that without other clubs coming in, they will fold. There are still people here that believe that clubs should be the same as they were 20 years ago. It’s not just us – another local club is in the process of an amalgamation at the moment, and it’s copping the same sort of flack. People are leaving the club, saying they will never come back. They’re very set in their ways around here.

Growth from one site to 14 was inevitably going to be punctuated by mistakes. Making mistakes is not as bad as being too slow to correct them.

The first general manager appointed by Panthers to the Port Macquarie club proved unpopular with local staff, and his management style appeared at odds with the Panthers culture they had been promised.To staff, he was the antithesis of everything they had been told of Panthers’ philosophy.

Janette Hyde, marketing manager of the Port Macquarie club, had been there many years. She immediately clashed with the new CEO.

He could be very charming, but he had this other side. We were pretty confused. This wasn’t what we expected at all. But we all thought, “Well, this must be what Panthers wants”, so we weren’t saying anything.

We’d heard so much about the Panthers culture …we really cared about the club. And we cared about Panthers. We wanted to be loyal to the new Panthers brand.

When she approached the manager about the way he was treating staff, she was given a formal warning.

Hyde, who said she has seldom taken sick leave, was placed on stress leave. Word soon got out in the community.

Port Macquarie News editor Janine Graham said it was a major topic of conversation.

Janette was the face of the club. She was involved in the community to an enormous extent. The town was very protective of her. You’ve got all these old guys that have been coming in, sitting on their same stools for the past ten years, and they hear that Janette’s off on stress leave!

The whole Panthers culture thing sounded great but this guy was certainly not what we’d been told about the way Panthers does things.

“To give them credit’, says Graham, ‘as soon as they found out about him, they reacted”.

Hyde says that word got through to Penrith that she was on stress leave.

Glenn [Matthews] rang me and asked what was wrong. I said, “I’m going to tell you, even if it costs me my job”.

She says Panthers investigated, talked to others in the club, and found out what was going on. The general manager left, and long-time Panthers manager Don Ellks was appointed as caretaker until Thomas Paynter was able to step into the role.

Hyde said much of the good work that had been done to convince Port Macquarie that Panthers was the best option had been undone.

Another incident was to help overcome these early negative impressions.

Before the Panthers amalgamation, the club had found that its food operation was not financially viable and had contracted a chef to run that side of the business. All the catering staff were transferred to the contractor’s books. Hyde says that while he turned the club’s food operation around, he ultimately went under himself.

He’d kept all the staff, and some of them were not what you’d call good workers. In the two years he was here, he only sacked one person – and he should’ve sacked about 12.

Hyde says that the contractor was in danger of losing everything, including his house. Panthers management heard of his predicament and guaranteed some of the debt. It gave him time to sort things out, and he was able to hang on to his house. When the business folded, all employees were transferred back to Panthers with their entitlements intact, although she adds that some of the more unproductive ones were paid out.

This particular episode would also stand Panthers in good stead with another potential amalgamating club. Gary Kennedy was a board member of ClubNova in Newcastle when discussions came up about a merger with Panthers. Kennedy was also secretary of the Newcastle Trades Hall,3 the seat of union power in that city.

The experience at Port Macquarie suggests that a takeover-style amalgamation would have faced formidable opposition. The evidence from Newcastle also suggests that ClubNova may not have come on board under such a model. Without those two important additions to the group, the attraction of a property trust4 would have been considerably reduced in the marketplace.

For Panthers it had proved an extraordinarily successful strategy — one that was embarked upon with consensus between Board and management. Why then was it the basis of some of the most costly and bitter disagreements?

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  1. The Port Macquarie amalgamation became one of the most controversial undertaken by Panthers. The fuller story, removed from the original narrative for this edition, is available in Beyond the Book: Not Your Everyday Amalgamations — Shenanigans in Port.
    ↩︎
  2. This assessment reflects expectations at the time the original manuscript was written in 2007. In 2014, Hibbard Sports Club de-amalgamated from the Panthers Group, with the club and property returning to local control. The club subsequently experienced financial difficulties and entered liquidation in 2024. It is now permanently closed, with the 12-acre (4.8-hectare) property offered for sale.
    ↩︎
  3. Gary Kennedy resigned his position as Secretary of Newcastle Trades Hall in July 2014.
    ↩︎
  4. The idea of a property trust had been introduced by Panthers’ then Financial Controller, Glenn Matthews, as Panthers began its amalgamation strategy. See Part 28 — The System is the Solution. ↩︎

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Commentary and Contributions

The Political Attention

Part 47 of 70 — Original Chapter: Chapter 13: Amalgamations Not Takeovers

This article forms part of the serialised republication of Panthers, Passion & Politics – The Roger Cowan Years.

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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.
    ↩︎
  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.
    ↩︎
  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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Commentary and Contributions

The Governance Model

Part 46 of 70 — Original Chapter: Chapter 13: Amalgamations Not Takeovers

This article forms part of the serialised republication of Panthers, Passion & Politics – The Roger Cowan Years.

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As the number of amalgamated clubs grew, a question that had been largely theoretical at the beginning of the strategy became increasingly important: how should a club spread across so many communities ultimately be governed?

In October 2001, when the Penrith Board asked management to suggest a structure of governance for the entire group, Cowan approached it from the point of view that Panthers had evolved into one club – one business – spread over many sites. On 23 October, he presented a paper to the Board setting out his views, and his recommendations.

I believed that any nine people – normal, reasonable, dedicated people – who could be elected to govern such a club would act in its best interest.  I did not see any reason to believe that a director appointed from Bathurst would be of any lesser quality than one appointed from Penrith.  My approach, therefore, was to have as much representation as possible from outside Penrith in the governing body, without making a Board that was cumbersome by its size. 

Having a spread of representation from all sites would display a commitment to the principle of amalgamation rather than takeover. In addition, it would ensure that every decision was argued from the point of view of benefiting the entire group rather than one of its sites.  My recommendation was therefore to have a nine-person board, to include three representatives from the Penrith club and a maximum of two from any other club. That would have ensured input to group policy by at least four out of the 14 sites, and possibly as many as seven.

All sites including Penrith would elect their own governing bodies to handle the local issues.

To my way of thinking Panthers was no longer a Penrith club. It was a NSW club with its largest branch and most of its administration at a Penrith headquarters, and other important branches in other areas of the state.

When Cowan put his group board model to the Board, it was met by hostility. He was accused of trying to ‘sell off’ Panthers to outside interests. John Bateman told the Inquiry the paper ‘set alarm bells ringing’. He said,

It was something that I didn’t agree with. We made it clear to management if we were going to go into amalgamation with other clubs, it was essential that the Penrith entity maintain control of the whole organisation.

But was that consistent with the Board’s earlier decisions?

This was moving the goalposts in the middle of the game.

Bateman was legally trained, and he had been party to all the discussions about the parameters within which management could pursue amalgamations.1 The Board had approved parameters that did not discriminate between members, no matter where they lived. The memoranda of understanding offered full membership rights to members of amalgamating clubs.

Evidence to the Inquiry revealed the viewpoint of some members of the Board. Asked what he saw as the threats in the amalgamation with ClubNova in Newcastle, Bateman admitted that some directors feared losing control of the organisation. When asked if that included the possibility that he could be voted off, he said yes, that that was the case.

Throughout the Inquiry, the Footy Five directors spoke of their desire to look after the interests of Club members.

On further questioning, however, they admit that the members they refer to were Penrith members. Evans even said that he did not believe that it was right that members of the amalgamating clubs should have the same rights as the Penrith members.2

But the Board set the policies, and all amalgamations were completed within those policies.3

Cowan saw the notion that he was ‘selling off’ Panthers as just another red herring. In his model, Penrith would still have had its own advisory board. It would retain its identity and its importance as the headquarters of the group.

Management had pursued the concept of amalgamations with great success. But it was such a success that those directors opposed to Cowan’s governance model came to a different view of what the amalgamation structure should be.

What they wanted was takeovers.

But by then the Club had agreed to amalgamations on terms agreed by the Board.

After the Board rejected Cowan’s group board model, he put a modified version to a subsequent meeting.

I still believed that the Board would be more productive if it had less Penrith people and more representation from the entire group. I thought the modified version might be seen as a suitable compromise although the principle was the same. 

Craig Terry became quite agitated and said something to the effect, “How dare you keep raising a suggestion that you know the board does not want to hear”. 

Imagine if the Board of Telstra or Microsoft decided to opt for a situation in which their CEO was restricted from telling them anything they didn’t want to hear.

We were back on the diving tower again.4

As the Club continued along the amalgamation path, the divide between management and some directors grew.

In Macquarie St in Sydney, Panthers’ amalgamation strategy was attracting attention.

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  1. Moreover, , as noted earlier, the Board required management to submit each individual amalgamation to the Board for approval.
    ↩︎
  2. The Temby Report subsequently found that concerns about the growing membership of amalgamated clubs included concerns among at least some existing directors about protecting their own positions. Temby also found that Cowan had been authorised by the Board to represent to members of amalgamating clubs that they would have the same entitlement as existing Penrith members, but that subsequent Board actions resulted in those promises being broken. See Inquiry In Relation To Penrith Rugby League Club Ltd — conducted by Ian Temby QC —Report, Chapter 4, Amalgamations, and Chapter 7, Voting Rights — Promises Made, Then Broken?.
    ↩︎
  3. The original manuscript continued here with a broader reflection on the different perspectives Cowan believed business people and politicians brought to decision-making. That section has been removed from the main narrative and is available in Beyond the Book: Politics, Business and Two Different Visions of Panthers.
    ↩︎
  4. The “diving tower” was introduce in Part 37 — The Myth of the Footy Five. ↩︎

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Commentary and Contributions

A Shaky Start, Then — On a Roll!

Part 45 of 70 — Original Chapter: Chapter 13: Amalgamations Not Takeovers

This article forms part of the serialised republication of Panthers, Passion & Politics – The Roger Cowan Years.

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‘We are one club, with 14 sites.’

With the framework finally agreed, management could begin putting the strategy into practice. What followed would test not only the amalgamation model itself, but some of the assumptions on which that agreement had been reached.

Once word got out that Panthers was in the market, there were approaches from a number of clubs. Panthers’ management considered about 80 possibilities. Clubs that had good potential, worthwhile assets and the potential to become a strong club in their community were put on a short list and measured against the criteria.

Before Panthers embarked on the amalgamation process, there had already been numerous amalgamations approved by the licensing court apparently without murmur of dissent or opposition from the Department of Gaming and Racing (DGR). 

This smooth process seemed to change when Panthers began submitting applications.

A thorough investigation into the first two amalgamations was carried out by the DGR, with Cowan recalling the Hawkesbury application going back to the court ten times. It took close to a year for them to be approved. It seemed as if Panthers was suddenly being singled out. Was this a portent of things to come?

All this close attention added credibility to John Ralston’s advice that Panthers would not be allowed to amalgamate with any club unless the court was absolutely convinced that it had done everything to protect the members of both clubs.

Cowan discovered that the amalgamation process unearthed a problem that they hadn’t foreseen.

Every amalgamation brought about the transfer of that club’s members to Panthers. The Memoranda of Understanding (MOU) promised the members of the amalgamating clubs that they would become members of Panthers from the time of amalgamation without having to pay any additional fee. But when their membership became due for renewal, they would have to pay the current Panthers membership fee. 

At that time, Panthers’ members were paying $22 a year – probably the highest membership fee in the state, while members of Hawkesbury were paying just $7. We realised that we would lose a lot of them if we insisted on charging them the full $22 to renew.

We decided that when renewals fell due, we should allow them a choice that would include continuing to pay the lower fee.  A new class of social membership was created for a fee of $7 but without the right to vote for the Panthers Board and without the right to stand as a director. 

At first this gave some comfort to those directors who may have felt their positions on the Board were in jeopardy.  Only the members of the new club who opted to pay the full fee could stand for the Board. It was considered that very few would do that. Even if they did, the majority of existing full members would not know them, and so would not vote for them. 

But there was one significant factor in all this.

The MOUs clearly promised that all members of clubs amalgamating with Panthers would be brought across as full members as soon as the amalgamation was approved by the court. They would not lose their rights as full members unless, and until, they made the choice to become social members.

The first amalgamation, with the Bathurst Leagues Club, was approved in early 2000. On the last day of the Bathurst hearing, Cowan received a phone call from Steve Bowers, the club’s legal counsel. He recalls Bowers telling him that the DGR solicitors had advised that the amalgamation would only be approved if Panthers agreed to new conditions regarding the poker machine installation at Bathurst. These conditions which differed from provisions stipulated by current law. Suddenly the legal team was put in the position of trying to negotiate agreement on new provisions.

This was moving the goalposts in the middle of the game.

Cowan recalls his response to the demand was that it was up to the government to make laws, and Panthers would abide by them. However, he said he was not willing to negotiate conditions that would be used as a precedent for restrictive legislation that would affect the whole industry. If the amalgamation could not be approved under the current laws, Panthers would pull out and Bathurst
would probably not survive.

Cowan says it came down to a stand-off..

I refused to do what they wanted and they backed off. They were wrong to ask in the first place and it would have been pretty embarrassing for them if Bathurst had to close over the issue.

Hawkesbury Panthers came into existence a few months later in April.

Even in these early days of amalgamations, one thing became very obvious to the management of Panthers. There was, within the Boards of Directors of amalgamating clubs, discernible appreciation of what Panthers was offering, accompanied by a great degree of respect for Panthers. Most had pursued other options, including amalgamation with other clubs. It was a revelation to them that the Panthers model left them largely in control of their clubs and let them retain a degree of autonomy and ownership. Like many of the other clubs that approached Panthers, Hawkesbury had been in financial trouble. It had tried to pull itself out of the situation by selling some land adjacent to the club, but there were still problems.

Bob Anderson was a director at Hawkesbury Panthers. He says what was most important to the club at the time of amalgamation was to retain its ‘small club’ atmosphere.

‘The first approaches by Panthers were very low key. There was no pressure’, says Anderson.

It was all pretty casual. But it was always made clear that the amalgamation would be for the betterment of the club. We had looked at other offers at the time. One local club came in and we had a meeting, and they virtually said, “Once we take you over, we’ll just close you down”.

Anderson says that Panthers came to them with a memorandum of understanding which made them feel much more confident about the arrangement. There was collaboration all along the way.

We didn’t feel like we were being taken over. Never at any time did it seem that Panthers was dictating what was to happen.

As part of the amalgamation process, Cowan or one of the assistant managers visited each club and had meetings with their Board. Cowan also addressed special meetings of the members, explaining the memorandum. He assured them that they would have equal rights with all other Panther members and be better off as a Panthers club. He also spoke to the staff and encouraged questions and full discussion. The management team at Penrith believed that a culture of openness, trust and honesty was essential for success.

The memorandum of understanding was an integral part of each amalgamation. It was negotiated between the partners and set out in detail the responsibilities of each club. It stressed the benefits for the members of the amalgamating club, especially in relation to Panthers membership.

On 30 January 2001, less than a year after the amalgamation was finalised, the Hawkesbury region was declared a natural disaster area after violent winds ripped through the area. The Club was a scene of devastation after the seven-minute storm ripped through Richmond. Staff put their own safety at risk to rescue a man trapped under a collapsed wall. The club was closed for a short period while the damage was assessed.1

Anderson says that there was insurance, but that everyone had appreciated the full-on way that Panthers stepped in to get it back on its feet again.

Cowan was impressed by people he dealt with in amalgamating clubs.

I doubt if I have ever been more impressed than when I first met the staff of the Mekong club to discuss the prospect of an amalgamation with Panthers.  It was difficult to believe that a club with such enthusiastic and dedicated staff could be in receivership. The fact is, they should never have been in that position.

The process also brought us into contact with the boards from the various clubs.  Club Nova’s directors, for example, were impressive for their sincerity and ability to discuss all the issues rationally, calmly and in depth.  I even had a moment after leaving my first meeting, when I imagined swapping some of their directors for a select few at Penrith. Harmony and logic might become the order of the day.

Most of the boards had experienced great financial stress within their clubs but this had never stopped a committed effort to serve their clubs. They were all impressive, genuine people looking for the best solution.

Another important consideration was the potential to spread many of the fixed overhead costs over a number of sites, without extra cost. Financial management, poker machine management and purchasing were just some of these.

From 2000 to 2003, conditional approval was granted for amalgamation with 13 NSW clubs, all later confirmed.

Amalgamating ClubApproval Date
Bathurst Rugby League ClubFebruary 2000
Bathurst City Bowling Club February 2000
Hawkesbury Sport Club, North Richmond March 2000
The Mekong Club, Cabramatta June 2001
Lavington Sports ClubJune 2001
St Johns Park Community ClubOctober 2001
West Epping Bowling and Recreation ClubOctober 2001
Club Nova Co-operative, Newcastle WestNovember 2001
Cardiff Workers ClubNovember 2001
Port Macquarie RSL ClubDecember 2001
Hibbard Sports Centre, Port MacquarieDecember 2001
Glenbrook Bowling and Recreation ClubApril 2003
Wallacia Golf Club2003

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  1. This extreme weather event doesn’t appear on broad government disasters lists because it was a localised event. On 30 January 2001 violent, localized squall winds knocked down massive trees and blocked local roads around Beaumont Ave and Terrace Road, North Richmond (the location of Panthers North Richmond – as it is now known) There was also intense flash flooding and the Club experienced servere impact resulting in significant roof and property damage. ↩︎

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Commentary and Contributions

Building a Framework

Part 44 of 70 — Original Chapter: Chapter 13: Amalgamations Not Takeovers

This article forms part of the serialised republication of Panthers, Passion & Politics – The Roger Cowan Years.

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‘We are one club, with 14 sites.’

When Roger Cowan made that statement to Ian Temby, it reflected the philosophy that he had held since he first embraced the concept of amalgamations. It was another factor that helped to put him in that very courtroom on that day in June 2004.

The topic of amalgamations was first raised at Panthers in 1998 by John Wilson, who was then the Club’s gaming manager. The Registered Clubs Act had been amended to encourage the practice, and Wilson had come to believe there was a great opportunity there.1

For a number of reasons, the rate of club closures had been increasing, and the change to the law was aimed at slowing down the trend.

At management meetings Wilson continued to argue strongly for the concept. Eventually a model was developed that overcame most of the concerns and it was agreed that an amalgamation strategy should be recommended to the Board.

The board resolved to test the strategy with a small struggling club not far away from Penrith – the Hawkesbury Sporting Club in Richmond.  This first amalgamation would be a pilot for bigger things in the future.  It had some reasonable potential, although it would not deliver the level of benefits that we hoped to achieve in other amalgamations. 

It would help us learn more about what difficulties might lie ahead and to develop systems to overcome them.  We believed that we could easily turn the club around, by introducing our management systems and by taking advantage of our purchasing power.

We would support them in every way needed, but our model provided that they would always be able to retain their identity and a strong sense of ownership of the club. This would, in turn, encourage a strong commitment to service their local members

When a business is considering something as important as this, the focus has to be on the desired outcomes rather than what has to be done. Management decided on a set of outcomes for the future that show us our amalgamation strategy had been successful. We needed agreement between Board and management on that future picture, and it was extraordinarily difficult to achieve. The failure to reach agreement delayed the start of the strategy for nearly twelve months. 

On the one hand, we could look upon each amalgamation as the formation of a new entity in which all stakeholders would have equal rights.  In the alternative picture, one club is in the centre, having the power and control over all its subsidiaries.  The first model is a true amalgamation.  The second example is effectively a takeover. 

The management of Panthers always believed the first model would be the pathway to success, whereas the takeover path would eventually create limits and barriers.  We believed that we finally had an agreement with the Board on the vision when we submitted a detailed list of the criteria that would be used to qualify clubs under consideration. Everything seemed to be covered and it was discussed to death before the Board gave it the final approval.

The word ‘takeover’ does appear in some early documents, but from day one, Cowan’s original concept was of amalgamation.2 Later, some of the Five would claim that they thought they were agreeing to takeovers, not amalgamations, and that they had been misled by management.

Barry Walsh was chairman of the board when management first floated the amalgamation idea. He says they discussed the concept for more than a year, but there were problems convincing some directors. ‘I saw a number of benefits’, says Walsh.

The outcomes described by management sounded plausible, achievable and worthwhile. We were given a lot of information, and it was obvious to me that they had gone into an extensive research and analysis process. I could see the benefits of spreading our brand into other areas of the state, developing a larger rugby league following, and building assets and cash flow. Because of the financial situations of these clubs, we could get them at very good rates.

While documenting the benefits of amalgamation, the management recommendation put to the Board also highlighted one of the negatives. It would open the possibility that members of another club could nominate for the Board. At the time, this was not seen as an immediate problem, because it was thought they would have to be members for three years before they could stand.

Nevertheless, the prospect that members of an amalgamated club could stand for the Board, even after three years, raised the concerns of some board members to the extent that they simply could not reach agreement. The spectre of ‘reverse takeover’ had entered the picture.

The boardroom delays on the Hawkesbury proposal became very frustrating for management. They tried to explain that amalgamations could help the club to overcome some of the problems it was currently facing in a changing local market.

The threats it faced included over-capitalisation on one site, and the maturity of the local gaming market. Hotels and other clubs were continually improving. In previous years it had been commonplace for bus companies to bring tourists to Panthers from other areas such as Manly, Wollongong and country NSW. The improvement in club facilities in other areas had weakened that business.

Another threat was the attitude of the state government towards clubs, and the associated rumours of higher taxes and restrictive legislation.

There was also the danger of being dependent on one business, in one location, which was already suffering under the strains of its size.

At one Board meeting called specifically to consider whether to adopt an amalgamation strategy, the discussion circled laboriously for nearly four hours. Cowan says the final hour could have been completely eliminated had there been a recording of the first hour. After all that time, the only resolution was that management should prepare further documentation to prove that the threats actually existed. 

A frustrated management team came to the conclusion that the entire exercise had been a deliberate waste of time, and that the request for more information was just an excuse to put off making a decision. Deferring a decision was easier than raising logical argument.

To the management team, the threats were very real – and very obvious. They also should have been obvious to the Board. But how could it be proven that the government attitude, for example, was a threat? Today every club in the state would agree that it was the greatest threat of all.3

A major benefit of amalgamation would be the spreading of support for the rugby league team. That, in turn, would boost opportunities in sponsorship, merchandising and television. With the advent of Pay TV, management considered television exposure as a crucial part of its future success, particularly with the possibility of clubs being rewarded through their popularity on that medium. 

Another important consideration was the potential to spread many of the fixed overhead costs over a number of sites, without extra cost. Financial management, poker machine management and purchasing were just some of these.

Many of the clubs seeking to amalgamate had assets far more valuable than their liabilities, which would have a positive effect on the Club’s balance sheet. This could lay the foundation for future expansion into other profitable areas, and most importantly, it could be a way for Panthers to begin to break its dependency on gaming.

Former director Bateman, one of the Five who often spoke out against the amalgamation strategy, told the Temby Inquiry in 2004,

My initial attitude in regards to amalgamations was that we needed to explore it. I accepted there were pressures on our main source of revenue being gaming, and we needed to spread our wings.

He told Ian Temby – that ‘amalgamations were an appropriate way in which to extend outside our current Penrith base’.

Part of the management recommendation was a set of criteria for clubs wishing to amalgamate with Panthers. After 12 months, the Board agreed that an amalgamation strategy should become high priority. At that time, management was given authority to identify and pursue amalgamation possibilities.

The Board stipulated that every amalgamation must meet the criteria. Even then, there was no authority granted for amalgamations to proceed automatically. Each one had to be recommended and approved separately by the Board. Generally, a board sets policy, defines parameters and leaves management to work towards success within those parameters. In this case the Board put each new proposal under the microscope.

Although there was a lot of discussion about members of amalgamating clubs being able to stand for the Board, nothing was built into the criteria to provide against it. John Ralston4, an acknowledged legal expert in the club industry, had advised that it would be highly unlikely that the licensing court would approve an amalgamation unless the members of both clubs were treated equitably. He also reminded the Club that the Registered Clubs Act requires that at least 50% of members had to have the right to vote for the Board.

Management breathed a sigh of relief when it appeared that the five directors had finally agreed to a strategy that ensured all members be treated equally after amalgamation. At long last, it seemed they understood that the amalgamation strategy could only be successful if Panthers protected the rights of the members of the amalgamating club. Such beliefs by management were to prove naïve.

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  1. The regulatory framework under the Registered Clubs Act increasingly recognised amalgamation as a means of dealing with clubs facing financial or operational difficulty. The Act provided for amalgamations subject to approval by club members and the licensing authority, with the Licensing Court supervising the amalgamation process and the transfer of the relevant club licence. The statutory framework governing amalgamations was subsequently expanded substantially in 2001.
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  2. The terminology used in some early documentation was not always consistent. The distinction being drawn here is between the use of the word takeover and the model advocated by Cowan, under which amalgamating clubs would retain identity and local involvement and their members would ultimately share rights within the wider Panthers organisation.
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  3. “Today” refers to the time of writing of the original manuscript in 2007.
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  4. John Ralston BA LLB (Sydney University) was admitted to legal practice in 1975 and is today a consultant with Pigott Stinson. For more than 30 years he has acted extensively for registered clubs and practised across the wide scope of law affecting clubs and the club industry. Pigott Stinson describes him as one of the leading legal practitioners in the club industry. ↩︎

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