Sharks outlook not negative
Margie McDonald
November 15, 2008
THE salaries of Test players Anthony Tupou and Paul Gallen and former international Trent Barrett are safe and the Cronulla Sharks will not be relocating or shutting down minor-grade teams.
The club will admit it is in financial trouble. But, despite newspaper reports to the contrary, it is not broke and it is not Robinson Crusoe in the world of the NRL.
The Sharks saw the writing on the wall three months ago and commissioned accountancy firm and Cronulla sleeve sponsor PKF to do a review of both the leagues club and football club.
That report is in its final stages and due before the Cronulla board in early December.
CEO Tony Zappia said the NSW Government's poker machine tax and smoking bans had hit the leagues club hard.
The Sharks have in the pipeline a proposed commercial development for a 2.8ha block of land they own adjacent to the leagues club.
"We're going forward with a proposed development so we needed to ensure that what strategies we have in place now meet the requirements in going forward," he said of the PKF review.
"It's something probably that other clubs should be doing.
"I'm not saying there's other clubs in dire straits like us, but they are still having difficulties with their bottom line."
But as the leagues club's revenue had been slowing and the forecast losses for the year would be about $500,000, the Sharks went to the bank requesting a $1 million loan. They were given $500,000.
"The bank has been very supportive but said they would give us 50 per cent now and when the review is completed and they see the recommendations, we would sit down again," Zappia said.
Cronulla had awoken to headlines reading: "Sharks Broke".
But Zappia insists this is not the case. The club's land assets alone are worth $24m. The proposed development has value projections of between $80m and $100m. It will become a wholly owned subsidiary of the club with the Sharks eventually selling about 50 per cent.
Zappia, who was football manager at Parramatta before taking on the Sharks role in 2007, said the football club normally received about $1.5m a year from the leagues club.
He knows this has to be reduced, a problem many Sydney clubs face. Some receive up to $4m from their leagues clubs.
The Roosters are trying to trim $2m and Wests Tigers have chipped away at their dependency from $3m - when the joint venture club formed in 2000 - to $500,000 in 2008.
"We watch our costs carefully, we're not extravagant," Tigers chief executive Scott Longmuir said.
"And we drive our business hard. We use that brand to its best effect - the third-most recognised in the NRL - to bring in sponsors, membership and more merchandise sales."
But the 2009 national and world economy would be in a far more perilous state than for the 2008 season, he added.
"But we're in a good position to drive our core business. Others have different models like at Manly and Souths, which have gone down the path of the private ownership model.
Newly arrived Roosters chief executive Steve Noyce would not give a figure on his proposed cost-cutting.
"I've only been here four days but one of my jobs is to work hard and minimise the dependence on the leagues club and grow our own income," Noyce said.
"On one hand we've got to keep a close eye on our expenses but you can never lose sight of the fact you've got to drive revenue.
"The climate makes that difficult but if it was easy, everyone would want to be an NRL club CEO or director."
Zappia wanted to allay any fears the Sharks cost-cutting would lead to players' salaries being reduced or junior teams being axed.
"The issue of players getting reduced salaries or not being paid is absolutely incorrect," Zappia said.
"As for other grades, and unlike some clubs, we are in SG Ball (under-18) and Harold Matthews (under-16), and we've got development squads.
"We're not going to reduce teams that are the livelihood of our club and the district."