Category: The Series

Preparing for the Worst

Part 31 of 70 — Original Chapter: Chapter 10: A Narrow Escape from Football Oblivion

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

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By this stage, Panthers’ management believed it had three realistic contingency options. Their aim was to have each sufficiently developed before the NRL announced which clubs would survive. 1

One option was to negotiate a favourable merger with another club — a merger that would be a true partnership with equal rights. Half the home games would have to be played in Penrith and the team would have to be called Panthers. Years of consistent marketing had established Panthers as one of the club’s strongest commercial assets, giving it value in any merger negotiations.

Another option was to buy the naming rights of another club. It would have been little consolation to Panther supporters to have a Melbourne Panthers or a St George Panthers, but from a purely commercial point of view it would have been better than having the Panther brand completely eliminated from the competition.

The other option was to prepare for a legal fight based on the fraudulent activities of some clubs in their claims under the criteria. How could the criteria be used for selection if it could be proved that several clubs had blatantly cheated? And Panthers had that proof2. There were difficulties with this strategy. Court proceedings are inherently uncertain and can take years to resolve. Panthers would almost certainly have been excluded from the competition during that period, making the option financially and operationally damaging.

Although very different in their execution, each option had the same objective.

Management was not searching for reasons to abandon Panthers’ identity. Quite the opposite. Every proposal was an attempt to preserve the Panthers brand and ensure the club remained part of the national competition if the selection criteria ultimately went against them.

If exclusion proved unavoidable, management believed an equal-rights merger offered the best opportunity to preserve both the Panthers identity and a continuing presence in the national competition. But it would be difficult.  A merger could be stalled as long as possible, but the negotiations should not be left so late that they had to be rushed and driven by the desperation of any final decision to cut Panthers. 

The combination of Penrith and Panthers had brought valuable publicity to the city and a strong word association. The loss of that association became one of the strongest objections by those who opposed a merger. From management point of view it was better to salvage the Panthers brand than to finish with nothing at all. To some people, though, nothing at all was better than linking Panthers with another locality.

For management, preserving some future for Panthers was preferable to risking no future at all. For many supporters, however, the very thought of compromise was unacceptable.

There was also an inconsistency in the arguments of some. In their early days with Super League, the Board and management had been discussing the marketing disadvantages of the name Penrith Panthers. 

Some surveys had indicated that having Penrith in the name was detracting from support in nearby population centres such as St Marys, Mt Druitt, and Blacktown. Geographically, these should have been areas of support. Penrith junior league extended as far as Blacktown. Many players were coming out of those areas, yet many people from those areas supported other teams. The Board decided that it might help build support if a name were chosen that allowed people to believe they were supporting a team representative of their own area.

The unanimous decision of the Board was to register the name, ‘Western Sydney Panthers’.

Early in 1998, Cowan and football club CEO Mark Levy began to look closely at the merger possibilities. Options included Western Suburbs, Parramatta, and Balmain. Geographical remoteness was against a merger with Balmain, and for Wests, Canterbury seemed a more suitable choice.  However, the club did have discussions with Western Suburbs.

If the club were forced to merge, Parramatta had to be the most logical choice. It was geographically perfect and the combined strengths of Parramatta and Penrith would have created the most powerful club in the competition. 

Penrith had twelve months to compete for points. Two clubs – the Hunter Mariners and the South Queensland
Crushers – had already dipped out, leaving 20 teams vying for 14 places. 

Denis Fitzgerald agrees. He says that the Parramatta club’s preferred choice for a merger was Balmain.

They were going to struggle to make the criteria, and their district boundary comes to the Clyde/Carlingford railway line here, so it’s quite close to us. A lot of people who live around the Ryde area might support both Parramatta and Balmain. But some of the old Balmain stalwarts felt that we were too strong. I was disappointed when it fell down. I thought maybe Penrith would be too strong themselves, but there could have been a great future in a joint venture with Penrith.

If it had happened, it was going to dominate the whole of western Sydney and all those growth areas. Although there’s some growth in the south-west, the biggest area stretches from Granville/Rydalmere to the lower Blue Mountains. It is a massive area. Commercially, it had great sense, but it was football, where so many positions are not based on logical, commercial reality, but on emotion and tradition — and that’s what ultimately happened.’

Parramatta was interested in a joint venture for a number of reasons but had not made any decision other than to investigate the various options.

The Parramatta Chairman, Alan Overton, sent a letter to his club’s members outlining his reasons for considering the move. In part, it said:

I think all keen, long term Eels fans, like myself, would love the club to continue as we have for the past 50 years, and continue to be the Parramatta Eels, playing at Parramatta Stadium. But … whether we like it or not, there will be only 14 teams in the NRL in 2000.

He went on to say that,

… boards cannot afford to adopt a narrow minded or blinkered approach to joint ventures but rather should attempt to be as objective and professional as possible.

Although their club was safely ensconced in the fourteen, the Parramatta board saw benefits in a merger. The new league administrators were offering major incentives for teams to merge, both on a financial level and in various guarantees. Increased supporter base, sponsorship and gate receipts would be additional benefits. At that time there was great uncertainty about the potential for stand-alone clubs to compete with the joint ventures for more than a few years. Even clubs certain of selection, such as Parramatta, had the nagging doubt that their survival might be for the short term only. Parramatta was taking the responsible course examining all options for its future.

Fitzgerald said the early talks with Cowan were very informal, just chatting more than real discussions.

Roger was concerned with their position — making the criteria. They were in the worst position of any of the Super League franchises. When the curtain went down after one year of Super League and the NRL was formed, Penrith was in a pretty weak position.

For us, it was certainly about the money, and the risk. We had all spent money, but the ARL clubs had never had the type of subsidies that Super League had given its franchises. That funding was now being chopped off with the NRL starting.

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Commentary and Contributions

The Criteria

Part 30 of 70 — Original Chapter: Chapter 10: A Narrow Escape from Football Oblivion

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

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The existence of two rival competitions created enormous upheaval throughout rugby league. Traditional club rivalries remained, but supporters were now divided between the Australian Rugby League and Super League. Both sides eventually recognised that the conflict was causing immeasurable damage to the game. While rugby league fought its civil war, AFL, rugby union and soccer continued strengthening their positions in New South Wales and Queensland.

Eventually, both organisations accepted that the conflict could not continue. A peace process began and, after lengthy negotiations, agreement was reached. Super League had lasted just one season.

In 1998 and 1999 twenty teams played in the competition, because newly created Super League teams were accommodated with longer established clubs. Everyone agreed that twenty teams were far too many.

Roger Cowan was directly involved in the peace process. For about 12 months before the parties came to terms, he attended meetings with News Limited’s Ian Frykberg, along with representatives of the other two Sydney Super League clubs, trying to come up with a solution.

It was a slow process. Each side knew what they wanted, but they were poles apart. The ARL wanted all its clubs to be included in any national competition. Super League was advocating a limit of twelve teams. Their position was that fewer teams would mean a much better standard of competition. On a financial level, they believed that too many Sydney teams would make it difficult for clubs to gain the necessary support from sponsors and fans to be successful.

In 1997, a compromise was reached. A set of criteria was established, which would be followed to cut teams down to 14 by 2000. According to Cowan, this path was set in concrete. His close involvement in Super League had given him an opportunity to get to know the people who had driven the concept. The fixity of the ceiling has been borne out by a number of people, including NRL CEO David Gallop.1

The criteria system was sold as the fairest way of deciding which clubs would survive. The clubs would be awarded points, based on things such as crowds at both their home and away games, competition points over the previous five years and actual gate receipt dollars from home games. They would also be judged on sponsorship and other income, and on their overall profitability. Longevity, tradition and emotion just did not come into it. Nor did junior league, which was one of Penrith’s strengths.

Despite repeated objections, Panthers was unable to secure any significant change to the criteria.They continued to fight against the system, believing it was biased on several levels. They sent submissions to the NRL claiming that because some of the criteria were retrospective, the figures were not auditable. It also became obvious that some clubs were fudging their crowd numbers to help boost their chances.

A criticism of Penrith by the chairman of the Easts club was aired in the media, and sparked a Panther strategy to photograph the crowds at other grounds. The first photographs were taken at Easts’ next home game after the criticism was published. The images allowed the crowd to be easily counted – there were less than 3,000 in the ground. Easts claimed a crowd of more than 5,000.

The clarity of the photographs convinced the club to expand the project and photograph the crowds at nearly every game at Sydney venues2 — but especially at the games played by clubs vying for the bottom few spots under the criteria. There was convincing evidence that most clubs were falsifying crowd numbers. Cowan says the figures may have been useful in mounting some kind of last ditch stand on the grounds that the selection criteria would not stand up in court. He says it was a rather negative strategy, with little chance of success, but they were desperate times.

The Panthers’ crowd-counting exercise became one of the more unusual episodes of the fight for survival. Read more Beyond the Book — Counting Crowds to Chase Survival.

In parallel with the photo campaign, the club spent around half a million dollars to market the game to boost its profile and its crowds.3

It was a surprise to Panthers’ management team that South Sydney never called on those photographs during their efforts to be readmitted to the competition. Their legal advisors could evidently see no value and perhaps indicating that it would have been an unsuccessful strategy for Panthers to pursue. No one knows for sure – it was never tested – but it is a fact that Souths eventually lost their case in court.

Penrith had twelve months to compete for points. Two clubs – the Hunter Mariners and the South Queensland
Crushers – had already dipped out, leaving 18 teams vying for 14 places. 

Management’s concern was not based on instinct or pessimism. Week after week, the numbers continued pointing in the same direction.

Tracking Panthers’ position against the selection criteria became the responsibility of marketing manager Max Cowan, whose background included a major in Mathematical Statistics.

Throughout the process, Panthers’ management was surprised by comments from some clubs suggesting they neither understood the criteria nor knew where they stood. It was an issue given high priority in management strategies at Panthers. Every week the club compared its situation with the relative positions of the clubs ranking lowest on the criteria.

Max Cowan remembers:

We were very aware of the commitment and determination to have a fourteen-team competition. Having been right there through the conciliation process, I knew there was absolutely no room for complacency.

Some Clubs had already announced mergers, but at Penrith it was not a word anyone wanted to mention. We also knew that any club considering a merger with us would start negotiation with an advantage because it was obvious where we stood in the criteria ladder. As a management team, we had to look for options. It would be a disaster if we sat on our hands until a decision to cut Panthers was announced. By that time it would be too late to look for a fall-back position.

Part of the reason for our low place in the criteria was the very low attendances at our home games. We had lost our major sponsor when we went into Super League and had been unable to find a replacement. So immediately we were in trouble in two of six categories.

It was obvious to management that we were running a very poor sixteenth in a race where only fourteen would be selected.  We had to move up two places or have no team in the competition for the following year.  We only had one year to do it. Realistically we knew we would need a miracle. It would be impossible to achieve.

At the very last minute, and in a most unexpected way, we would get our miracle!

Continue Reading: The Criteria — When Survival Became a Numbers Game examines the NRL Selection Criteria and the internal working papers Panthers developed to estimate the club’s position in the race for admission to the fourteen-team competition.

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  1. Inside Panthers there were always processes engaged to inform decision-making. While “gut-feel” was respected it could only ever be part of a more rational approach. Management submissions to the Board were always anchored by by evidence gathered and analysed — especially where decisions had to made in an environmentt of uncertainty. This was probably never more evident than when it came to determining what was happening, and what could or should happen in Rugby League.
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  2. “Nearly every game” is not quite right — perhaps nearly every game in Sydney would be more accurate. We did conduct this research at 2-3 games each round. It was a nightmare to “count the crowd”, if only we had good scanning capability back then. Anyway, we did enough to understand exactly how much Sydney clubs were inflating their attendances – and it may surprise that the Roosters were not the biggest offenders.
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  3. The spend mentioned here was not publicised — in fact, it was known only to a few people — and it is another strong piece of evidence that Roger Cowan was leading a team making every effort to maintain Penrith Panthers as a stand-alone team. This effort did not diminish the responsibility to keep examining all possible outcomes. ↩︎

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Commentary and Contributions

Joining Super League

Part 29 of 70 — Original Chapter: Chapter 10: A Narrow Escape from Football Oblivion

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

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In May 1995 Panthers had resolved to leave the Australian Rugby League to join Super League, the new competition being established by Rupert Murdoch’s multi-national corporation News Limited. It had been one of the most difficult decisions the Club had faced.1 Cowan had spent months analysing the situation with both Board and management before a consensus recommendation was finally put to the directors.

Not long before the decision was made, he was still hoping the problem would go away. Long-time Parramatta CEO, Denis Fitzgerald, remembers Cowan standing up at a CEO function at Souths Juniors, speaking passionately about ‘putting up the barriers to News Limited’.

Within a week he’d gone to Super League. I have to say I lost some degree of confidence in Roger after that particular situation.

There was no doubt that Cowan initially supported staying with the ARL and a short time later changed his position — he was nervous about the way things were shaping up and feared that Penrith might miss out completely.  

Coach Phil Gould had asked for a release from his contract with Panthers2 to go to Easts, citing the exciting things that Easts were proposing to do in rugby league. Kerry Packer was putting pressure on clubs to stay loyal to the ARL, but was not offering anything specific, and he had a contract with the ARL to protect.

There were rumours that Packer and a few clubs, including Easts and Manly, were involved in a plan to cull some clubs in order to make a stronger and more profitable competition.3 The rumours fitted with Gould’s statements when he asked for a release but there was never any real evidence to support the rumours.

But rumours often travelled faster than fact during this period — it was increasingly difficult for clubs to distinguish genuine intelligence from speculation.

Packer appeared to have the TV rights tied up for a ridiculously low price and something was in the wind. Fewer teams in the competition would give the remaining teams a bigger slice of the TV revenue. A higher standard of competition would increase the TV value.

First-hand experience had left Cowan with the suspicion that there would no hesitation in cutting clubs that were outside the clique and considered expendable. For him it was another case of risk management. The first step in risk management is to identify the risk. In this case there was a chance that both media organisations, headed by Packer and Murdoch, were both planning how to maximise the commercialisation of Rugby League.

What was the risk to Penrith?

It seemed highly likely that both organisations would want a 12-team competition. They would also want a National Competition including Perth, Adelaide, Melbourne, New Zealand, Newcastle, Brisbane, even North and South Queensland.   It followed that some Sydney clubs would be dropped.   Both groups would already know which teams they wanted in an elite competition.

Neither side had shown any interest in approaching Penrith.

Considering the connections, it was impossible to think Manly or Easts would lose out. Parramatta and St George would seem to be certainties and that might leave only one spot for another Sydney club.

As it turned out, fewer teams was exactly what the Murdoch side wanted. There was never any evidence of any plans by the other side to drop Sydney teams.4 The rumours were never substantiated, but the value of the TV rights was later proved to be more than twenty times what Packer had contracted to pay.

Cowan recalls it was a difficult time.

There was no way of knowing what was happening behind the scenes and the departure of Phil Gould had built a feeling of uncertainty in my mind about the future of the game. I felt that something was going on. I started to think about how we would handle worst case scenarios, and the worst-case possibility was that the two sides would get together and form an elite National Competition of 12 teams. All the other teams would then be relegated to a supporting competition. On all the evidence I could see, the risk of Penrith being one of those relegated teams was very high indeed.

When the two media giants started shaping up to each other it was obvious that Panthers was not a high priority for either of them. It was a worrying time and I started to feel that we had to consider our position carefully and urgently.

All the clubs that had so far joined Super League had been approached by News Limited. Penrith had not. Cowan went to News and put the case that the new competition needed Penrith.

David Gallop, CEO of the new National Rugby League [NRL] remembers that Panthers was the last Sydney club to join.

Roger looked pretty carefully at the ramifications of joining or not. It took him longer to decide.

Cowan became a prominent player in the world of Super League. He was on the board, and chaired its meetings during what became known as the Super League Wars.

He was also invited to be on the international Super League board. In that capacity he attended an international board meeting in Paris, along with representatives from Australia, New Zealand, France, England, South Africa, USA and Pacific Islands. Cowan says this experience gave him an excellent opportunity to get to know the people who were driving Super League, including News Limited executives. 

Super League was due to commence in 1996 with ten teams, but a Federal Court ruling delayed its launch. Instead, a traditional ARL competition was played while the legal battle continued. At the end of 1996 the Federal Court ruled in favour of Super League, allowing the rival competition to proceed in 1997 alongside the ARL. Australian rugby league was now heading into one of the most turbulent periods in its history.

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  1. For readers seeking historical background to the emergence of Super League and Panthers’ decision to join the new competition, see the three realted Historical Context articles The Panthers Move ; The Real Money Fight ; and When Panthers Faced the Community
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  2. This had happened in the middle of the 1994 ARL Season. I think the Souths v Penrith at the SFS on 17th June 1994 was Gould’s last as Penrith coach. We lost that game 26-18 after being well down at half-time. Several players remarked that Gould’s half-time address was uncharacteristically one of resignation – they were puzzled by it.
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  3. One of the catalysts for those rumours was a large offer being made to Canberra lock Brad Clyde, which would have torpedoed salary cap limits. Of course, these sorts of accusations fly through the rugby league world.
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  4. There weren’t rumours about an elite ARL competition after Murdoch made his strike – at that time they were intent on staving off the raid from Murdoch. Before Murdoch struck, there were rumours about clubs opening their chequebooks in anticipation of a big change to the competition. ↩︎

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Commentary and Contributions

The System is the Solution

Part 28 of 70 — Original Chapter: Chapter 9: An Urgent Need for Research and Change

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

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In 1991, Glenn Matthews decided that he wanted one day to be CEO of Panthers. He says that while he was never promised the job, he was always given enormous encouragement and support in his growth with the company. ‘There’s always been an atmosphere of “anything’s possible” at Panthers’, he says. ‘It’s an environment that nurtures self- belief.’

When Roger Cowan retired in 2005, Glenn Matthews was able to step comfortably into the position of CEO.

The flat structure replaced the ‘us and them’ culture that still existed in some sections of the Club, with an atmosphere of co-operation — both within each business unit and between team leaders. Glenn Matthews says,

‘Teamwork is important and you need to be comfortable with ambiguity. You need to be able to say to yourself, this is my role, but it might work better if someone else comes to assist me with this. Also, if you see something that needs to be done, and it’s not in your area, do it. But the people in that department also need to accept that and not feel threatened.

The leaders of the new small business groups had stepped into a whole new world, according to Bob Adamson.

We’d taken a bunch of young, enthusiastic, energetic supervisors who were now leading a team. We then had to start training those people, to give them some business acumen, and the skills to run a business. So we framed a scheme called Business Unit Development. We ran that for eight or nine months, took every group through it. There were regular sessions, and each of the team leaders brought along different members of their teams each time.

But it was much more complicated than that. There always seemed to be another step to take. We were never satisfied. The overall structure had to support what we were doing. We regularly held one or two day workshops to go over it all and do some fine tuning or make changes. If we brought another book into our management library we would discuss how it might add improvements. For example, The Empty Raincoat by Charles Handy inspired some change in our attitudes, so we looked at other books he had written.

Panthers was probably the first registered club to embrace official quality assurance, moving towards ISO 9000 accreditation with Standards Australia. The incentive increased when the NSW government’s purchasing arm let it be known that the Government would only deal with companies that had qualified through ISO 9000.

Since the move to Mulgoa Road, with its new space and improved facilities, the conference and banquet business had become a lucrative part of club activity. Panthers’ thinking was that there would be very few others in the conference business that would go to the trouble and expense involved in quality accreditation, so there would be significant commercial benefit in taking it forward. Eventually, after management compared the annual expense of Standards Australia re-auditing to the commercial return, it decided not to proceed with the accreditation. However, they elected to retain the stringent quality control measures and systems that were part of the process.

We removed a few items that were there to make it easy for Standards Australia to audit a company, but left the rest in place. We felt we were in a good position to take advantage of the valuable tools in such a system, but without spending the money.

People have asked, what’s the point of having all these systems when we’re a service industry? Much of what we sell is intangible — so how can we monitor the quality? Basically, the general idea of all that documentation is that we can look at our customer — whether it’s an internal or external customer — and ask ourselves, what does this customer want from us? Is it good entertainment? A comfortable environment? Good food? Or just excellent service? Having identified that, then in the preparation of that product, we have to ask “what does ‘good’ look like?” And if we can define what good looks like, we have to write it down so that everybody knows. When a keg of beer is delivered to the dock, how do we guarantee its quality from the time it arrives till the time it’s poured into a glass? There has to be a system in place to ensure the quality through all the stages. The same applies to a leg of lamb. Who ordered it, was it from the right supplier, what did we do with it when it got here, did we store it properly, did we cook it properly, serve it properly — slice it, put it on a plate, present it to the customer?

Adamson recalls that some people, particularly those who saw themselves in creative roles, found it hard to embrace the concept of systems written down to do everything. He gave an experience with a chef as an example.

I asked him, ‘What goes wrong most in the kitchen?’ ‘Well, we don’t get the right information from the people in the functions department.’

So, if we could fix that by putting a system in place that ensured that you did get the right information, that would give you more time, less stress, to get on with being creative in the kitchen? Once we identified the quality control that was most important to the chef, it was simple to get his commitment.

If you have all the basic mechanisms in place, that leaves the creative person free to be creative.

Peter Sheridan is Panthers’ Group Internal Auditor.1 He began work in the early 90s, and was very impressed with the systems that were in place when he arrived.

There was a quality system that documented all the policies and procedures for the majority of operational areas. This is very important from an auditor’s perspective, because you have something to audit against — that’s the standard. You can easily see how a department is performing against that standard. It was a very different environment, and a different culture from other places that I’d worked. Most of my experience had been with large corporations or government departments which were much more regimented. I hadn’t worked in a flattened organisation before, but there were still policies and procedures in place to temper that and make it easy to adapt to.

I came to the club soon after the structural changes, into what was now a decentralised organisation. When an organisation goes flat, a lot of the normal controls can get a bit wishy-washy. I believe that Roger foresaw this and decided to put something in place to temper any falling down in controls. It would give them a way of monitoring the functions to see that the business controls remained in place, allow them to keep an eye on things.

Cowan’s motives in appointing an internal auditor were exactly as Sheridan said.

I was concerned about the tendency for good systems to degenerate into chaos if not constantly checked. People look for short cuts and sometimes they even think they are making improvements, but they are not seeing the full picture.

A small change by one person, then another one by a different person, a bit later a slight improvement by someone else, and after a few months the system is nothing like what was intended.

We were still working to overcome some significant problems brought about through rapid growth and I could not afford to have systems deviating from the plan.

When I appointed Peter Sheridan, he was given authority to look into every nook and cranny.

Panthers was probably the first club to appoint an auditor as a permanent member of staff. The internal auditor had the authority to investigate any matter that came to his attention except one. There was an agreement that all management salaries would be confidential, known only to the executive of the Board and the external auditors.2 On Cowan’s recommendation, the Club also implemented a Board Audit Committee in 1997, although there is no regulation under corporate law requiring it.

It was also the first club to implement total quality management systems. The results are evident in the recognition it receives through awards and government subsidies in such areas as energy and risk management.

Over the ten years leading up to the interview with Glenn Matthews for this publication, the Club has been looking at the possibility of having its own property trust. Management had presented a number of papers to the Board advocating such a move, but a company needs to have substantial financial resources to pursue the concept.

The timing is now right for us. The experts tell us that the critical mass is a total property value of $200 million, so at more than $500 million, we’re now in a great position. Our assets grew as a result of strict governance policies over the years, and our very successful amalgamation strategy. Major companies like Woolworths and Bunnings all invest in property trusts.

In 2006, the Board and the members approved a proposal for the management to begin pursuing such a venture. Matthews says the Club will always retain at least 51 per cent interest in any trust, but it will open up enormous opportunities for the company and its 14 properties. It will enable Panthers to convert part of its equity in property into working capital.

It’s another transition for the small business that Roger Cowan took on in 1965, and left forty years later, which is now positioned to take its place as one of Australia’s leading property trusts.

It almost lost that chance. At one stage the Club was on the brink of losing half the potential of the property trust. The amalgamation story involves allegations of management lies, broken promises, back door takeover fears and preservation of power bases. The ensuing conflict could have put a very large part of that future value at risk.

In a way, the ailment began with the fiery difference of opinion discussed in the next chapter – the possibility of a rugby league merger between Parramatta and Penrith.

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  1. Peter Sheridan left Panthers in the early 2010s.
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  2. The exception that prevented the Internal Auditor from having access to management salaries was driven by the same respect for confidentiality that would become significant in later controversy. ↩︎

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Commentary and Contributions

From Left Field

Part 27 of 70 — Original Chapter: Chapter 9: An Urgent Need for Research and Change

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

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Norm Bowers1 had been a close friend of Cowan’s for twenty years. He ran a small but extremely successful coaching school in Sydney. The results he has achieved for students in the Higher School Certificate have been extraordinary. He also coached university students.

Cowan phoned him.

Norm, I need help to put some concepts together, research the latest information on management and communicate it to all the key staff so that I can implement change. Do you have two tutors you could lend me for six months? I think I can finish it in that time and you can have them back again. They don’t need to know anything at all about club management. In fact, it would be an advantage if they didn’t. I want fresh minds and fresh approaches. But they have to be quick learners and good, logical thinkers who can analyse concepts.

Norm’s reply was that he had two very good tutors he was prepared to lend. One of his suggestions was Max Cowan, Roger’s son, who was coaching university students in statistics. Cowan had no doubt about Max’s ability to do the job but was reluctant. He had always avoided employing family in the club. But the need was greater than the principle and Max started2 with Joel Dehe, another tutor with academic research experience and a creative bent.

Behind this seemingly straightforward appointment lay a series of private events that profoundly shaped 1991 for Roger Cowan and his family. See: Reflections — Shadows Behind the Story.

The collation of information, theories and ideas propagated by the gurus of the day was one part of the job. Testing the best parts of them against what Cowan believed would fit into the Panthers environment was the more difficult part.

In 1991, he came across The E-Myth by Michael E Gerber. It was primarily aimed at small business, but as it turned out, it was what was needed.

W Edwards Deming, the author of Out of the Crisis, was another big influence on the developing picture. His major focus was on quality, change and the ability to embrace a new philosophy.

Long-term commitment to new learning and new philosophy is required of any management that seeks transformation. The timid and the fainthearted, and the people that expect quick results, are doomed to disappointment.

He said that a business must ‘cease dependence on inspection to achieve quality’. It must be built into the product in the first place. The system of production and service needs to be constantly improved to ensure quality.

Both books talked about systems, but from a different perspective. And both became a part of the Panthers ethos in the early 90s.

The theories of Charles Handy who wrote The Empty Raincoat seemed to be an excellent fit for the next stage of evolution according to Greiner and had a significant influence on modifications to the cultural objectives.

When interviewed, Bob Adamson was the CEO of Panthers ClubNova in Newcastle. In 1991, he arrived at Panthers – newly out of the military – in the midst of a period of great change. The frenzy for seeking change was in full swing, and Adamson says it was a very stimulating environment.

Adamson began with the club in a middle management role as maintenance manager. But he had skills and experience that would be needed in the transformation of the business, and his role would soon grow.

We were doing a lot of work on the evolution, revolution thinking at the time, and what came out of that was that we were not one big business. We were a collection of small businesses, and we had a hierarchical structure that may not have been working for us. It had become too bureaucratic and had lost that fast moving dynamism of small businesses with just a few employees. Greiner talked about finding the solutions to each of those revolutions, and we began to start thinking about having someone to lead each of those sections. The emphasis was on leadership and the leaders would be responsible for their own small business – say, a bar or a restaurant. They would be like a number of little shops in one big shopping centre

Such a dramatic restructure meant the elimination of whole levels of middle management, including Adamson’s own position. He says that this group was largely redeployed into other areas.

Steve Van Zwieten is another Panthers CEO who came up through the ranks. He started in 1988 as what was then a ‘bouncer’, but he came with some innovative ideas about what the role of security personnel should be. Within the nurturing Panthers environment he was quickly able to move into the position of security manager. He is now the chief executive of the Penrith site.3 He recalls the restructuring period:

It was a shock to some people. We certainly had a hierarchy there, and there were too many layers of management. I think that one of Roger’s strengths is that he can see things before others see them. So he was always out in front, looking at the business and saying, “now’s the time for change“.

Panthers Group General Manager, Glenn Matthews, agrees.4 He started as an assistant accountant in 1984 and says that some people thrived under the new flattened structure, while others did not.

Matthews came to Penrith Rugby League Club with a personal belief that an employee shouldn’t stay in the one place for more than five years. ‘That belief hasn’t changed,’ he says. ‘But every time I thought about that, there was another opportunity.’

I’ve been really lucky over the years, seeing the organisation grow, and having the opportunity to venture anywhere that you wanted to have a go at. While I was financial controller, I also managed the ski park for a period. I spent a year in marketing at another time. All this gave me an opportunity to see all the facets of the business. So while I’ve been here a long time, it doesn’t seem that long because the role changed and evolved so much.

The period in marketing was typical of the entrepreneurial spirit in the club at that time. Roger wanted a strong focus on creativity and he selected a team to work together closely and do whatever they thought appropriate to come up with ideas and strategies to grow the business and to make recommendations to the full management team. The team had a good balance. I came from the financial side, Peter Morath had a catering background, and Tony Lackey was a creative thinker.  Max Cowan was a good mathematician and had been involved in all the research for restructure of the business and change implementation. We worked really well together.

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  1. Norm Bowers passed away in 2013, aged 84. He was a unique character – he and Roger were very close. Norm is the father of Steve Bowers who plays a critical role in this history. ↩︎
  2. This engagement was considerably more complex than appears here. One of the complexities came from Cowan’s principle about not employing relations. In an unusual step for an unusual circumstance he sought Board approval for Max’s appointment – approval was unanimous. For more on the events surrounding this move see Beyond the Book — Reflections — Shadows Behind the Story. ↩︎
  3. Steve Van Zwieten left Panthers in 2006. He is now Managing Director of Exact Security, a successful security services company started by him and Roger Cowan in 2009. ↩︎
  4. Glenn Matthews left Panthers in 2010. He is now CEO of the Australian Racing Drivers’ Club. ↩︎

← Part 26 · All Parts · Part 28→

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Evolution Then Revolution … And Repeat.

Part 26 of 70 — Original Chapter: Chapter 9: An Urgent Need for Research and Change

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

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Growth is not always smooth. There are so many roads that must be paved and most of them start as rough tracks. A good management team seeks improvements continually, every day. Some aspects of the business are given priority; others are set aside until there is time. It is never finished, and it is never perfect. 

One of the biggest milestones in the history of the Penrith Leagues Club was the relocation to its new site on Mulgoa Road in 1984. In the years immediately following the move, the club experienced phenomenal growth.

The growth rate had been consistent from the time that Cowan started as manager in 1965. There were some flat spots, and a few years of concern about lower-than-expected profit levels, but they had always been able to overcome them.

In the years after the purchase of the property in 1971, they had spent vast amounts of time planning the transfer from Station St to Mulgoa Rd. When they left the old Station Street premises in April 1984, Panthers had about 200 employees and annual sales income of around $12 million.

The success of the intensive preparation for the move was certainly reflected in the sales. In the first year, sales increased to $16 million, and staff numbers jumped to 300. Most of the systems that had been in place in Station Street
were easily transferred. Despite the issues raised due to Mulgoa Rd being a much bigger building, by and large, the transfer went smoothly.

What they had not anticipated in all the forward planning was the rate of growth.

Within four years, annual sales more than quadrupled, to $65 million. The Club now had 850 staff. Cowan remembers it was an exciting time.

Everyone was highly motivated. It was one of the most enjoyable periods I remember. The new location was successful beyond our hopes. For years we had listened to the knockers saying what a bad move it was, and that our Station Street customers would not follow us that far out of town. 1984 was also a year of significant personal satisfaction. It was the first year of a new administration system for rugby league.1 We narrowly missed the final series that year but made it in ‘85.

Amidst the euphoria there were problems behind the scenes. Apart from a split in the Board and the stress of the misguided police investigation, there was something the matter with the business.

The fact was that while sales were going up, profit was going down. So, something was wrong. It should have been basic maths. Increasing sales, if managed properly, should lead to more profit, but that was just not happening. For more than twenty years we had been managing growth successfully, so what was different now?

In 1990, a chance discussion, a painful back and the Panther’s first grand final combined in a way that would lead to a dramatic change in the management style at Panthers. It would also lay the foundations that have allowed the company to move well beyond what most people ever envisaged.

David O’Keeffe was CEO of the Penrith Lakes Development and a very experienced administrator. He and Cowan were attending a function and their conversation got around to the club. O’Keeffe talked about its growth and asked about the number of employees. When told the staff had grown to 850, he said to Cowan, ‘I’ll bet you are having trouble keeping your thumbs on all of that.’ ‘Unbelievable difficulty’, was Cowan’s response.

‘I’ll send you something that will explain why you are having difficulties’, O’Keeffe promised.

The next day Cowan received an article entitled Evolution and Revolution as Organisations Grow, published by Harvard University and written by Larry E Greiner in 1972.

1990 was our first year in a rugby league grand final. We were to play Canberra on the Sunday afternoon, and coach Phil Gould decided to take the players to Sydney on Saturday and stay overnight. It was one of the times when I was CEO of both organisations and Phil asked me to join them.

For several weeks I had been suffering from a back problem that was giving me pain right down one arm. I had been having physiotherapy, but nothing was working. On Saturday afternoon the pain was driving me crazy. Instead of joining the players for dinner, I decided to go to bed and see if rest would help. I had brought a copy of the Greiner article with me and it was a good chance to read it carefully.

The article explains five evolutionary phases in the growth of an organisation. Greiner says that moving from one phase into the next is never smooth. Each transition is a revolutionary stage with periods of crisis that must be managed and overcome.

Cowan realised that Panthers had already been through some of those evolutionary phases, and had been able to solve some of the revolution crises as they arose. He found himself remembering periods when growth seemed to stall, followed by a struggle to find solutions. Then the feeling that there was a sudden breaking of the chains that were holding the club down, followed by another period of smooth growth.

Somehow the management team had made the right cultural and structural adjustments to get over each hurdle.

Greiner advises that the critical task for management in each revolutionary period is to find a new set of practices. They must then become the basis for managing the next period of evolutionary growth. He warns that many companies fail during the periods of crisis. Companies that are unable to abandon past practices and effect major organisational changes will either level off in their growth rates, or fold.

Reading the article was one of those ‘Aha!’ experiences for Cowan. He was now understanding things that he had never even considered before.

Readers interested in the management theory that produced this moment of insight can explore it further in the accompanying Beyond the Book article, The Article That Changed Panthers’ Thinking.

I suddenly began to see that the Panthers business employing 850 people with sales of $65 million was not a bigger business than the Panthers with 300 employees and sales of $16 million. It was a different business. Systems and management styles that worked for one would not necessarily work for the other. We had to change. We were in one of Greiner’s periods of crisis. Methodologies that had achieved growth in the past had to be re-examined, to see if they would continue to be effective.

That article had more effect on my attitudes towards management than anything else I ever read. It made me realise that I did not know enough to get Panthers through its crisis. I had been operating on the false premise that what we had done in the past would be suitable for the future. It set me off on a discovery path. I read voraciously until I had a picture in my mind of the new direction.

Introducing change is difficult and takes a long time. It causes tension in the organisation. Some find it difficult, even impossible, to adapt. But from that point we were a different organisation, constantly looking for change. We became students of authors on management, and devoted students of a few of them.

It all started with a rugby league grand final and that casual conversation. Strange to say, there was a medical lesson in it for me, too.

We returned to Panthers as losers of our first grand final, but to a heroes’ welcome. The club was packed to the rafters.  The celebrations continued right through the night and I probably had a bit too much to drink. By the time I got to bed, the sun was way up and the pain in my arm and shoulder was gone. It did not return. It seems that I was tensing my back to compensate for the pain, which just made it worse. The total relaxation of that celebration let muscles, tendons, and everything else slip into their rightful places and I was cured. That’s my theory anyway! Had I listened to earlier advice to take painkillers, I might have been fixed much sooner.

The Greiner theory placed Panthers in the revolutionary stage he called “Red Tape”, when bureaucratic needs start to take precedence, dominating decision making and slowing down progress. The next evolutionary stage should be growth through collaboration requiring a high level of democratic management, combining teams across functions, flexibility of teams, frequent conferences of key personnel, educational programs, and more. Moving from one stage to the next was the challenge.

The Greiner article was just the tip of the iceberg for Cowan. Now he was on a mission of discovery.

He had always been a reader of books and articles on management theory, but it was done as an interest without any pressure other than to absorb any good ideas he found. Now he felt it was a matter of urgency. He was missing something, and he had to find it.

At that time, he was President of the Registered Clubs of NSW and Chairman of the Licensed Clubs of Australia. Once a month he had to attend meetings on the mornings of three consecutive days and stayed in a self-contained unit in Sydney. He remembers having books spread all over the floor of the living room, cross referencing notes on what might be applicable in a restructure of Panthers.

As the big picture started to take shape, Cowan saw another obstacle. The ideas had to be compiled into a coherent form, communicated to managers, and then filtered through the staff. Implementing change was no small order, even if the changes themselves had been simple. And the big picture in Cowan’s mind was far from simple. He needed help of an unusual kind.

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  1. The change to rugby league management structure is covered in Part 21 — The Right Structure. Finally! ↩︎

← Part 25 · All Parts · Part 27→

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Gotcha!

Part 25 of 70 — Original Chapter: Chapter 8: A Taste of Injustice

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

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Most of the police and government officers involved in the police raids on Panthers had walked away satisfied that Cowan, and the club, had nothing to answer on any of those original allegations. Mick Howe didn’t give up.

Four months later, newspaper headlines and TV bulletins revealed that Cowan had been charged with four counts of fraud. Howe had finally hit his mark. But the charges had nothing to do with the original investigation or the letter of complaint.

A chance remark to a staff member about a questionable tax deduction, and the discovery of some discrepancies in the accounts of the Panthers’ travel agency1 eventually rewarded the persistence of Detective Sergeant Mick Howe.

Early in 1986, before the investigation started, Cowan had taken a holiday in Thailand, which he booked through the Panthers travel agency. When booking the trip, he advised the manager of the agency that he was not going on club business, and that she should bill the travel expenses to his personal account. Part of the conversation touched on the tax deductibility of his trip.

It was suggested that if the trip was to Brisbane instead of Thailand, he might be able to claim the trip as a tax deduction. But it really was just a holiday, and Cowan did not claim any of the expense on tax. Unfortunately, though, on one of the travel agency records it was entered as a Brisbane trip.

In July 1986, Cowan was in his office when Mick Howe arrived.

He sounded casual and very friendly. “We’re almost finished”, he said. “I just need to look at some of the club’s trust companies. I understand there’s a travel trust? Maybe I could look at that first.

I told him “Not a problem”, with absolutely no inkling of what was happening. I picked up the phone and spoke to Irene Southern, the new travel agency manager. “Mick needs to have a look at the travel agency books. Can you give him whatever help he needs?”

When criminal barrister, Jack Birney, was called in later, his response was vigorous. “You must be crazy! You allowed a simple investigation to turn into a fishing expedition. This person has been doing everything he can to put handcuffs on you for months, and here you are doing your absolute best to help him!”’

A few days after Howe left the office, Cowan received a phone call from the Howe’s secretary.

Mick has asked me to call you to make an appointment. He would like you to come to the station. He needs a final discussion with you to clear up a few issues about minutes.’

Cowan replied, ‘Sure, when does he want me to come?’

She answered, ‘Next Tuesday and Wednesday’.

As I put the phone down, the penny dropped! All this time I had thought the best way to deal with Howe and his investigations was complete co-operation, and all I was doing was just getting myself deeper into some problem I didn’t understand. Eight months after Mick Howe first walked through Panthers’ door, I finally decided it was time to get legal advice.

Cowan’s first port of call was Steve Bowers, who was a solicitor and a personal friend. Bowers agreed urgent advice was needed before Howe’s ‘final interview’. He phoned barrister Jack Birney.2 Birney was tied up in a court case at Parramatta but agreed to see them during the court lunch break.

Cowan explained what had been happening, including the request for a two-day ‘interview’ with the detective.

‘There is no way you will be attending that interview’, Birney said, at the same time suggesting that Cowan had been holding out his wrists to allow the handcuffs to be slipped on.

Awaiting Cowan’s arrival on Tuesday morning, Mick Howe was instead surprised to be confronted by a solicitor and a leading criminal barrister.

Steve Bowers says it was a very long conversation.

Howe just kept asking questions about Roger. How many holidays he took, the renovations on his house, and so many obscure things. While he was pumping us, Birney was pumping him, to try to find exactly where he was coming from.

The discussion centred around the documents which Howe had obtained from the travel agency. At the end of the meeting, the detective told the lawyers that he intended to lay charges against Cowan. The basis of Howe’s case was that Cowan had tried to defraud the Commonwealth by claiming a tax deduction to which he was not entitled. The charges rested solely on Cowan’s trip to Thailand, and the manner in which it had been recorded by the agency.

‘The conversation went on for two and a half hours‘, says Bowers. ‘Howe eventually got sick of it, and stood up and said, ‘that’s it, get Cowan down here now, or we’re sending the paddy wagon and we’ll bring him back here in handcuffs.’‘

As the three men left the detective’s office, Bowers remembers Howe ‘ranting and raving’ as they moved towards the foyer. As they passed a conference room, a high-ranking senior policeman in a light blue dress uniform noticed Jack Birney. He greeted the barrister, and the two got into a chat about the old days at the criminal court in Sydney, as Howe hovered in the background.

Bowers says as the conversation between the two old mates was winding up, the policeman said, ‘Jack, you remember — if there’s ever anything I can do for you …’.  The barrister jumped in immediately, ‘Well as a matter of fact, there is one thing. If Detective Sergeant Howe were to issue a summons for Roger Cowan rather than coming down to the club to drag him away in handcuffs, I would be most appreciative?’

The senior police officer looked at Howe and said, ‘I think that can be arranged, can’t it, detective sergeant?’

Bowers says Howe could only growl, ‘Yes, sir!’

That evening, the lead story on the television news was that Cowan had been charged on four counts of fraud.

The likelihood that Mick Howe accidentally came across this evidence as he waded through thousands of travel agency documents is minimal. There was no money missing anywhere, and the travel agency had been paid in full by Cowan. Finding details of a particular journey, then discovering that it had been recorded incorrectly somewhere else would be an amazing stroke of luck. It would have been like finding a gold nugget in a haystack when you were actually looking for a needle.

Irene Southern remembers Howe’s visit clearly. ‘In actual fact, he had ‘waded through’ very few documents.’ She told Cowan later, ‘He spent a short time in the office, made a couple of casual requests, then went straight to your file and pulled out some documents. He knew exactly what he was looking for, and where to find it.’

Looking back, Roger Cowan supposes that a complainant from within the Club became aware of the discrepancy in the travel agency records, and tipped off Detective Sergeant Howe. It might have been mere coincidence that the old travel agency manager had been terminated a matter of days before Howe’s visit.

Jack Birney appeared for Cowan at the court hearing. Cowan’s main witness was the accountant who had prepared his tax returns for the previous year. He produced documents proving that Cowan had made no attempt to claim the Thailand trip as a tax deduction. Howe had not taken the simple and obvious step of obtaining a copy of the tax return, which would instantly have shown him there was no case to answer.

Cowan was found not guilty on all four charges.

During the hearing, Jack Birney was cross-examining Mick Howe. ‘Sergeant Howe, you have alleged that Mr Cowan committed fraud. Would you tell the court who he defrauded or attempted to defraud?’.

Howe’s answer: ‘I don’t have to say who it was.’

Former police gaming machine investigator, Steve Foote, tells what he knew of the history of the Poker Machine Task Force.

Howe, and the detectives he worked with, took a proposal to the Police Commissioner to set up the task force, probably around the late seventies or early eighties. They were asking for special resources to combat crime in clubs and were virtually a group of untouchables. The original brief was specifically to catch poker machine cheats, but the technology was progressing so fast in the early eighties, the opportunity for poker machine fraud all but vanished.

Foote says that when the task force’s main reason to exist all but disappeared, they had to find another focus to justify keeping the squad in operation, and they began to investigate club managers.

Says Foote: ‘Those guys in the task force always had a ‘holier than thou’ attitude, they were a pretty self-righteous group.’

Mick Howe resigned from the police force in 2005 at the level of Detective Inspector. He was contacted for his comments during the writing of this book but did not respond.

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  1. Panthers ran its own travel agency for may years. It operated under a separate trust company.
    ↩︎
  2. Jack Birney had been the Federal Member for Phillip from 1975 he was defeated by Jeanette McHugh in the 1983 election. Before his political career he’d been a barrister. ↩︎

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Negotiating a Good Deal Becomes the Act of a Criminal

Part 24 of 70 — Original Chapter: Chapter 8: A Taste of Injustice

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

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The second part of the police investigation was about the club’s purchase of 100 poker machines.

Bob Donaghy was one of the club’s two assistant managers, and his responsibilities included purchase of poker machines. Aristocrat was the largest manufacturer in the industry, but the Club had not bought any of its machines for quite a long period.  Donaghy believed the quality of their machine design and security had slipped. But when the club was ready to freshen up its gaming area with 100 new machines, Donaghy recommended the latest release by Aristocrat, telling Cowan he now had confidence in their products.

They began to talk about cost. The listed price of the machines was $7,000 each. Cowan suggested that they go to Aristocrat with an offer. It was a large purchase, maybe even unprecedented in Australia. As such, it should warrant a considerable discount. They decided to offer $5,000 per machine. conditional on Aristocrat arranging the finance for leasing and subsidising the interest rate.

Aristocrat mostly agreed with the proposal but set a total price of $530,000 for the 100 machines; still an extraordinarily large discount on the $700,000 they would have paid at list price. Cowan and Donaghy were celebrating. It was a straightforward transaction, and they had done a great deal. The complications arose for Panthers in the accounting offices of Aristocrat.

Aristocrat had obtained leasing finance for the total amount of $530,000, and that was correct. But they had listed only 90 machines on their sale documents. In effect, they had financed 90 machines for $530,000 and given Panthers ten machines at no charge. It made no difference to the club, and it was Aristocrat’s own choice to account for the machines the way they did, but the ramifications moved even beyond the police investigations at Panthers in 1985, to resound in the Queensland Criminal Justice Commission in 1990.1

The purchase was the subject of almost a full hour of questioning by Mick Howe after the fraud squad officer had left having no more interest. Cowan tried in vain to explain how the price of the machines and the interest rate had been discounted. He says the long conversation seemed to travel around in circles but it can be summarised easily in just a few paragraphs:2

Mick Howe: I have been to the Liquor Administration Board to examine the records of your poker machine purchases and I found that you had applied for the purchase of 100 machines. There were 100 serial numbers listed. I then did a survey of the machines in the club and found all 100 machines with those serial numbers. However, when I looked at the finance company records I found only 90 machines listed on their records.

Cowan: I don’t know what is listed in the finance company records, but I cannot understand what the problem is. We bought 100 machines at a heavily discounted price, and we correctly submitted licence numbers to the department. You know that all the machines have been installed, and you know that Aristocrat has been paid for them. I don’t understand what you think is wrong with the transaction?

Mick Howe: You know, that’s what I have been trying to figure out, and now I can see it. If the club goes broke, the finance company will only be able to repossess 90 machines, yet they have financed the payment for 100.

Reflecting on this exchange Cowan commented,

I was astounded at the detective’s logic: “Well so what!” I said. “We would hardly buy 100 machines if we thought we were likely to be going broke. In any event, if we had paid the list price for the machines, the borrowings would have been a lot more and the finance company’s security a lot less.”

Mick Howe remained unconvinced. He just did not get it.

The third matter for police investigation was the sale of the Station Street property. Rumours of something questionable in that transaction were investigated. Most of the police and government officers involved in the police raids on Panthers walked away satisfied that Cowan and the Club had nothing to answer on the original allegations.

Mick Howe stood out as the expectation.

The Station Street property transactions, discussed earlier in this series as part of the Club’s property strategy3, were also examined. Again, investigators found no evidence of criminal wrongdoing.

By now, most of the allegations that had prompted the raids had failed to produce the evidence investigators had hoped to find. For many involved, the matter appeared to be drawing to a close. Detective Sergeant Mick Howe saw things differently.

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  1. Read Beyond the Book — Queensland Criminal Justice Commission for more on this. ↩︎
  2. The following paragraphs are not a verbatim conversation but a paraphrasing of the conversation that eliminates the repetition and redundancy that characterises these types of discussion. ↩︎
  3. See Part 13 — Bulding the Future, a Block at a Time ↩︎

← Part 23 · All Parts · Part 25→

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The First Shot at Phyro

Part 23 of 70 — Original Chapter: Chapter 8: A Taste of Injustice

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

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The first few questions of the interview, led by Detective-sergeant Mick Howe, implied that Phyro Holdings1 was acting fraudulently, secretly, and without the knowledge of the Board. This complaint seemed of great interest to the fraud squad officer.

Cowan explained that Phyro was his family company, and it had a contract to provide certain services to the club. He reached into his desk drawer and handed over a contract. Some minutes passed as they went through the document. The fraud squad detective paused and drew Howe’s attention to one specific part on the last page of the contract. They both seemed surprised, and a quick look passed between them.

The fraud squad officer asked Cowan a few more questions, then made to leave. He said to Cowan,

I’ve heard enough. Mick might want to ask a few questions about some other matters, but I don’t need to be involved any further.

And he left the office.

Cowan says it took him a while to catch on to what had happened to cause the quick exit by the fraud squad officer.

That night I was lying in bed still trying to figure it out. What was in the contract that was such a surprise? They had not reacted until they reached the end of it. What was on the last page? Suddenly it hit me. The only thing on that page was the signatures of the parties to the agreement! Why would those signatures surprise them? Certainly, there was no surprise in mine being there, so it must have been one of the others.

It could only mean that the person who signed the letter of complaint to the Assistant Commissioner must have been the same person who had signed the Phyro contract. The person who wrote that the Board knew nothing of Phyro had actually signed the Phyro contract. No wonder the fraud squad detective signed himself off the case so quickly.2

The detectives had also told him that the informant was someone who was seen by the police as highly credible. A director who was a long-standing ex-chairman would certainly fill that description.

The letter of complaint has never been seen by any officer of the club, so its contents — and its signatory — can only be assumed. Whatever was in it, however, had brought large numbers of police and government officers on the Club. To prompt such strong action, the allegations must have led them to suspect dishonesty and breaches of the Registered Clubs Act.

What really bothers me about this affair is that the first part of the complaint had been discredited in the first half hour of the interview. The fraud squad officer acted accordingly. He was not wasting any more time once he saw that the complaint was flawed. 

But Mick Howe was not so easily satisfied.

Current group chairman Barry Walsh3 was a director in 1985. He says it was the big topic of conversation around Penrith that the detective was after Cowan, and he was a very determined man.

‘But Phyro was no secret anyway’, says Walsh. It just wasn’t a big deal for anybody.’

Phil Bennett agrees with Barry Walsh that Phyro’s role and ownership were no secret. He says the investigative accountants went through everything at the time of the investigations.

I think one of them stayed on after the rest of us left. At that time Phyro Holdings was common knowledge. You would always read in the annual report, stuff about Phyro owning certain property.

Bennett points out that the name is “obviously compounded from Phyllis and Roger”.

Cowan remembers the several months of continuous inquiry as one of the most stressful periods he has ever experienced. The investigation itself was not a problem, he says, it was the rumours of Howe’s determination to ‘get him’.

The rumours were strong that Mick Howe had stated that he did not like Panthers, did not like me, and was confident he would find incriminating evidence. At that stage we were already a big organisation, with 850 employees.  It is easy to make mistakes running a business that size. We had good systems in place, but there was always the fear that there might be something wrong that I knew nothing about, and it would be used against me.

I had that constant feeling of being in deadly competition with a well-armed predator and I was the defenceless prey. The hunter had all the time and resources he wanted, and he could attack from any angle. I had two choices, stand out in the open and let him see every side of the target, or go into defence mode by employing a good legal advisor.

I had chosen to stand out in the open. With the benefit of hindsight, it was a dumb move on my part.4

Barry Hubbard was also a director at the time of the police raid. He says everybody was feeling the pressures of Howe’s campaign.

Roger wondered if someone in the club was ‘talking’ to the police and giving them information. He went to each of the directors and asked us.

‘I told him “no”’, says Hubbard. But he was upset by the question.

I said, “Roger, if I knew of anything illegal that was going on in this club, I would first take it to the Board, and if nothing was done, only then would I go to the police”.

Hubbard says that around the time of the licensing raid, he was also questioned by a Penrith detective about a house he had bought from the club. The detective suggested that he had bought the house for nothing, or at a token fee. It was a ridiculous claim, says Hubbard, and he was easily able to prove that he’d paid the right amount for the house.

The same policeman later got in touch with him, asking did he know of anything dishonest that was going on in the club, and suggesting that he keep his eyes open. Hubbard assured him there was nothing, but the calls continued over the next couple of months, asking the same questions.

I wrote to the detective, telling him what I had told Roger. If I knew of anything untoward in the club, it would go straight to the board. If they did nothing, I would take it to the police. I also asked him to stop calling me.

For directors such as Hubbard, the repeated approaches from Howe and his colleagues reinforced the impression that the investigation was not winding down, despite the failure of the original allegations.

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  1. Phyro Holdings Pty Ltd is the family company of Roger & Phyllis Cowan contracted to Penrith Rugby League Club Ltd to supply various services including the publications of The Panthers Magazine.
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  2. Some 20 years later this scenario was replicated. Directors or former directors publicly asserting they had no knowledge of Phyro Holdings and the slipping on their story, showing they must have had knowledge. The final “slip-up” was during the Temby Inquiry when testimony by a former director in one session was recanted the next morning for fear of being in contempt.
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  3. Barry Walsh was appointed Chairman when Leo Armstrong retired, and he held that position until 2009 when Don Feltis took the Chair.
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  4. This approach was not unusual for Cowan, his belief that it was besst to be very open with investigators was considered naive by many colleagues and supporters of Cowan’s. Many saw it as a weakness that made him vulnerable to being ambushed. ↩︎

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An Investigation Starts

Part 22 of 70 — Original Chapter: Chapter 8: A Taste of Injustice

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

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One afternoon in 1986, Roger Cowan was driving back from a meeting of the Registered Clubs Association in Sydney when he received a phone call from the club.

The call was to advise him that about 12 police and officers from the Liquor Administration Board had arrived at the club. They were demanding to see all the club records including minutes of meetings and financial records. There had been no prior notification of the raid. In Cowan’s absence, the task of meeting the officers fell to Glenn Matthews, then a young accountant. Nobody at the club had any idea of the purpose of the visit, or what they were looking for.

Phil Bennett1, now with his own computer graphics company, was a gaming machine inspector for the LAB at the time and had worked with some of the police officers before. The officer leading the investigation was Detective Sergeant Mick Howe from the NSW Poker Machine Task Force. Howe had requested that Bennett join in the raid.

The group descended on the Club believing that Cowan would be on the premises. It was a logical assumption – he was there most days, from quite early in the morning. When he wasn’t, they jumped to the conclusion that he had seen them coming and left, adding fuel to the notion that he had something to hide.

Cowan, as we know, had not been in the club that day because of the meeting in Sydney. There was no way he could have known of the police visit.

At the time it was seen as a big deal, says Bennett. Mick had brought in a whole lot of people from other units – the Fraud Squad, Corporate Affairs, and the Sydney police unit that did all their accounting investigations.

The NSW police Poker Machine Task Force had been set up to overcome gaming machine crime. Steve Foote2 came to Penrith as a police constable soon after the raid on Panthers. He was later to become part of the NSW police’s Licensed Gaming Investigation section. He is no longer in the police force, but he is aware of the raid, and of the task force and its history. The Task Force was, he says, ‘a clandestine operation that had special powers from the commissioner’.

Nothing like this had ever happened at the Club. The LAB investigated complaints from time to time, and made regular routine visits, but this was unprecedented. Before returning to the club, Cowan contacted the club’s solicitor, John Ffrench, to see if he knew anything about it and to ask for advice.

Ffrench’s first reaction was very cautious. He tactfully suggested to Cowan that if he was aware of anything that the police might find in their investigations, he should ‘come clean’.

The idea was, if there were any ‘snakes in the woodpile’, it would be better for John to know in advance rather than be surprised later. He satisfied himself that I had no knowledge of anything that could be of interest to the police, and we talked about what we should do next.

My preference was to simply answer all their inquiries and be quite open with the records. As far as I was concerned there was nothing to hide. But it was obvious that the police thought they had something, just because of the gung-ho way they were approaching the whole thing.

I wondered if I should have a solicitor with me when I was interviewed, but I still didn’t see the need. At first, John Ffrench thought that I should, but we finally agreed that I would go without legal representation and give the police every co-operation. In that way it would all be over quickly, and the club would be cleared of all suspicion.

That strategy backfired badly, but much later and for different reasons.

Ffrench called the officer in charge and set up an interview in my office for the following morning. In fact, that was the last involvement of the club’s solicitor in that chain of events. In hindsight that proved to be a serious mistake.

The officers conducting the interview were Mick Howe and a detective sergeant from the fraud squad. Cowan remembers being impressed by the fraud squad detective. He was highly qualified academically, asked probing questions, seemed to understand situations quickly and was all business and no nonsense. He seemed to assess what was happening quickly and then lose interest.

At that moment though, Cowan was asking himself how had he come to that point? Later, things would slowly fall into place and he would see a strong connection to an innocent event that caused some friction 2 years earlier at the end of Season 1984.3

The connections — between the end of season event and the police raid – began to fall in place for Cowan after the first police interview.

At the outset of the police interview, Cowan was told that the investigation arose from a written complaint to the Assistant Commissioner of Police. It would cover a number of issues, but there were three specific matters of importance. Cowan’s family company, Phyro Holdings Pty Ltd, was one matter. The second was related to the club’s purchase of 100 poker machines from Aristocrat. The third matter was the sale of a property in Station Street, Penrith, the site of the club’s premises before it moved to Mulgoa Road.

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  1. Phil Bennett is the principal of Phil Bennett Consulting, established in 1989 to provide gaming consultancy services to clubs, hotels and casinos.
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  2. Steve Foote grew up in the Penrith region, attending Penrith High School. After leaving the NSW Police Force, he took various roles in the safety & security sector. He is now retired and focuses on art.
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  3. For Cowan there was a connection between this Police raid and an invitation to players & officials for drinks in the Boardroom after the final round game of the 1984 Season. You can read about this in Beyond the Book – The End Of Season Drinks That Weren’t So Cordial ↩︎

← Part 21 · All Parts · Part 23→

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