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Keep socialist blog En Passant going - donate now
If you want to keep a blog that makes the arguments every day against the ravages of capitalism going and keeps alive the flame of democracy and community, make a donation to help cover my costs. And of course keep reading the blog. To donate click here. Keep socialist blog En Passant going. More... (4)

Sprouting sh*t for almost nothing
You can prove my 2 ex-comrades wrong by donating to my blog En Passant at BSB: 062914 Account: 1067 5257, the Commonwealth Bank in Tuggeranong, ACT. More... (12)

My interview Razor Sharp 18 February
Me interviewed by Sharon Firebrace on Razor Sharp on Tuesday 18 February. http://sharonfirebrace.files.wordpress.com/2014/02/18-2-14-john-passant-aust-national-university-g20-meeting-age-of-enttilement-engineers-attack-of-austerity-hardship-on-civilians.mp3 (0)

My interview Razor Sharp 11 February 2014
Me interviewed by Sharon Firebrace on Razor Sharp this morning. The Royal Commission, car industry and age of entitlement get a lot of the coverage. http://sharonfirebrace.com/2014/02/11/john-passant-aust-national-university-canberra-2/ (0)

Razor Sharp 4 February 2014
Me on 4 February 2014 on Razor Sharp with Sharon Firebrace. http://sharonfirebrace.files.wordpress.com/2014/02/4-2-14-john-passant-aust-national-university-canberra-end-of-the-age-of-entitlement-for-the-needy-but-pandering-to-the-lusts-of-the-greedy.mp3 (0)

Time for a House Un-Australian Activities Committee?
Tony Abbott thinks the Australian Broadcasting Corporation is Un-Australian. I am looking forward to his government setting up the House Un-Australian Activities Committee. (1)

Make Gina Rinehart work for her dole
(0)

Sick kids and paying upfront

(0)

Save Medicare

Demonstrate in defence of Medicare at Sydney Town Hall 1 pm Saturday 4 January (0)

Me on Razor Sharp this morning
Me interviewed by Sharon Firebrace this morning for Razor Sharp. It happens every Tuesday. http://sharonfirebrace.com/2013/12/03/john-passant-australian-national-university-8/ (0)

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Ask the tinkler to play it again: Good knight to Benny and the Jets

Nathan Tinkler is, or rather was, a billionaire. He owns the Newcastle Knights, a rugby league team in the national competition, and the Newcastle Jets, a soccer team in the A-League.

Tinkler’s main wealth is his 20% holding in Whitehaven Coal. Last year it was worth more than a billion dollars. A drop in the price of coal and the high Australian dollar mean that his holding is now worth about $600 m. BRW this year estimated his wealth at $400 million.

Some reports suggest he has borrowings of about $700 million, which is OK, sort of, when your assets are worth more than that. But when they aren’t, as appears to be the case today for Tinkler, then you might well have problems, big problems. It would partly depend on whether you have enough income flow to temporarily tide you over until your worth increases (or so Tinkler hopes.)

Before Newcastle area boy Tinkler came along the Knights were in trouble. They were a club which had $4 m in debts it couldn’t pay. Tinkler won 97% membership approval to privatise the club, pay off the debts and guarantee sponsorship of $10 million a year. 

There is also a bank guarantee of $20 million. This means the bank will pay any debts of the Club up to $20 million. Banks aren’t charities. They only do that if the client has enough assets to provide security for the guarantee. It appears Tinkler has placed $20 million in a trust fund to be drawn against the guarantee if things go pear shaped. It is due to expire at the end of the year and be replaced with one for just over $10 million, not enough evidently for a club with turnover of over $20 million.

Banks also charge a fee for the guarantee.

Armed with the guarantee from the bank to the Club customers and employees of the club can be confident they will paid for their contractual entitlements and any goods or services they provide to it.

On top of all that, Tinkler threw $6 million over 4 years to entice supercoach Wayne Bennett (Benny) to come to the Knights. As I understand it the remuneration side of the contract is with a Tinkler company, not the footy club.

However on Thursday a Deputy Commissioner of Taxation applied to the Federal Court to wind up the Newcastle Knights Pty Ltd and the Newcastle Jets Pty Ltd over unpaid tax and superannuation debts of $1.424 million and $1.063 million respectively.  The ATO also applied to have Hunter Sports Group, which owns both the football clubs I understand, wound up with debts of $184, 257.

Tinkler is closing down a number of his sporting interests. His grand racehorse venture is in tatters, purportedly losing $500,000 a week. He sold off a number of horses recently at a massive loss. Two of his other companies not so long ago went into receivership. His private jet and helicopter have been repossessed. Tinkler moved to Singapore earlier this year.

Creditors are pursuing him. The Tax Office is just one, and my guess is they are getting in to get the money before it all disappears in a sea of debt and unprofitable investments and to save others who might deal with the clubs and group.

Tax debts have some priority but the winding up process means the ATO must have worries the businesses are no longer going concerns.  Here is what the ATO website says:

Wind-up action

We will take action to wind-up a company if it has failed to pay its debts and we have not been able to make a suitable payment arrangement. These circumstances may indicate that the company is insolvent and there could be a risk to the Commonwealth (and possibly to other creditors) if the company is allowed to continue trading.

That is very serious.

 The National Rugby League issued a statement on Thursday night saying it had ‘informed the Hunter Sports Group it will be required to ensure the next NRL Club Grant payment ($583,333 due later this month) is used to ensure that all Newcastle Knights player superannuation payments are current before being put to any other use.’

So my guess, for what it is worth, and based on the NRL’s statement, is that Newcastle Knights Pty Ltd may not have been making the required superannuation payments for their players. Not meeting superannuation requirements is often the first sign of a business in trouble.

Business has a requirement to pay superannuation guarantee, 9% of ordinary time earnings (salary etc) into a superannuation fund every quarter, and to report these payments a month later to the ATO. If they don’t make the payments then a charge and penalties are imposed on the business and become payable to the ATO as tax.

The ATO by the way is the main applicant for winding up in Australia, being the one most often in the best position to judge the solvency or otherwise of businesses because of a range of statutory payment and reporting requirements on business to the Tax Office. It often acts to wind up companies to prevent further damage.

The Court documents say the claim is prompted by business activity statement provisions. This could mean GST payments, pay as you go employee tax payments and/or fringe benefit payments. If the NRL are concerned about superannuation payments, then I would guess that PAYG tax instalments – employer withheld tax amounts for employees’ tax on their wages and required to be remitted to the ATO – might be in the firing line. I wonder if the players and other employees are being paid.

Tinkler’s group has said they will pay the money soon, well before the 20February hearing date. One strategy by businesses int rouble is to shuffle what remaining money you have to priority debt leaving the others unpaid until they too begin to make demands. If that is the case here, and indications are that other Tinkler business debts are being unpaid, that is a sign of an organisation in deep trouble.

Sport under capitalism is a compartment of life. It is separate from work for most of us. Because we work long hours we have to fit in exercise and sport around our work commitments. Some of us are lucky to be good at it. And if we are very good at it and by and large are male we can make a good living out of it, for example as rugby league players like those at the Newcastle Knights.

Of course you only have a shelf life of about a decade at most at the top so you need to cram a lot of earnings into that time and save a lot for future medical bills relating to all the injuries suffered over the time you were bashed and beaten playing rugby league.

The commercialisation of all aspects of life hasn’t by-passed sport. As a generalisation top level sport in Australia turned from being played for enjoyment and some money to being a fully fledged business around the time Kerry Packer set up World Series Cricket.

It was and still is profitable to package and market sport as a commodity to supporters and fans. Most of the profit goes to the broadcasters, the administrators and some clubs.

The players, apart from a few superstars, don’t see the rewards their prowess generates.

So like all business ventures, the bottom line is not success on the field but success in the books. This puts sporting clubs like the Newcastle Knights at the mercy of the market. It looks as if the profit gods aren’t smiling on Newcastle.

Its support base is not that big; it hasn’t tasted success for some time; the rugby league market might already have too many clubs; other sports might be attracting new fans. On top of that, ever since the steel works at Newcastle shut down in 1999 my guess is the city has lost some of its working class grunt and its young people are drifting somewhat to the big smoke of Sydney and elsewhere.

Counterbalancing that, the Hunter region is a strong coal mining area and attracts money and people. However the fall in coal prices of late and the high Australian dollar are having an effect too on the coal industry across Australia, including in the Newcastle area.

In August 2012 unemployment in Newcastle, at 4.6% was running just above the NSW average of 4.5%. This may indicate not a strong stable working class presence but a more transient one; one whose commitments may not extend to rugby league or if they do may not include the Knights.

So what can save the Newcastle Knights? I don’t know the extent of the funding crisis, but my ramblings on this page indicate I think they might be substantial.

Certainly imagining a white Knight like Tinkler could save the club by privatising it seems to me to have been the wrong response. At the time, if I were a member, I may well have voted for it too, because of the dire situation of the club at that time with its large debts.

However the privatisation may prove to have been a case of out of the frying pan and into the fire.

Building a community based organisation with mass working class support would require re-building a sense of community, something that may have been easier to do with thousands of steel workers employed in the area.

The NRL and all rugby league supporters have a vital interest in seeing the Knights continue, to keep the sense of the game as a viable option for players, supporters and for the survival of rugby league itself.

In 1999 the powers that be and their bean counters threw foundation club South Sydney out of the competition; South Sydney with is traditions and support; South Sydney with its premierships and great people. The community rallied and after a vigorous campaign, the Rabbitohs won a curt case and were readmitted in 2002.

Loyalty is a foreign concept to the profit pushers, unless they can make a buck out of support and fealty too.

So saving the Newcastle Knights will I believe require the people of Newcastle, and the Knights supporters more generally, to rally, to make the club a community organisation of members ans supporters, to receive and accept support from the rest of us till it gets back on its feet without Nathan Tinkler and the other show ponies of capital. It is about empowering the members and supporters.

It is working class supporters who will have to rally to the defence of the Newcastle Knights and force the NRL, and the rich parasites who make money off the sport, to pay for its survival. In doing that they can reclaim their club and make it a club for, of and by the community.

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Comments

Comment from Michael. Harris
Time December 14, 2012 at 3:49 pm

You really do have a lot of time on your hands. I got to ‘rally the workers ‘. And decided your world is fantasy. I’ll keep reading your stuff but treat it for what it really is.

Comment from John
Time December 14, 2012 at 4:30 pm

Probably right Michael. That is why the radical left in Greece almost won power at the last election; why the Revolutionary Socialists in Egypt, although small are growing and winning a bigger audience. No doubt they are fantasists too. As I have written before, I am running to where the ball will be. But tell me, why shouldn’t we have community clubs rather than privately owned ones? In the case of Newcastle why wouldn’t that mean we will need a mass movement, much as happened in defence of South Sydney in the late 90s and early noughties? Explain why that shouldn’t be the case, especially since Rugby League is in fact, historically, a working class game with real roots in the working class. I suspect one answer in this specific case is that if Tinkler falls over the club reverts to membership control. However who would want to control a debt ridden club?