Inquiry in Relation to Penrith Rugby League Club Limited Essay

When the club was directed by Cowan the accent was made on the entertainments as one of primary sources of earning money. “Success in business affairs does not happen accidentally, and the Club grew and grew. There were of course difficulties, but they were overcome. In 1984 the Club moved to a very large site in Mulgoa Road, Penrith which has been developed over the years to provide a remarkably wide range of facilities.” (TEMBY) By the 1981 the Penrith Rugby League Club Ltd had the best growing rate among all other clubs. “Success was due to many factors, including a steady recognition that the core business was entertainment, and the putting into place of first class systems” (TEMBY). Starting from 1999 the Club has amalgamated with several other clubs. It amalgamated with the number of clubs in Sydney metropolitan area, in Bathurst, at Libington, Albufy, etc. ClubNova Co-operative limited and Port Macquarie RSL club limited were big clubs with members numbered in thousands. With the most of the clubs the process of amalgamation went in a form of friendly takeover. Such a policy proved to be a successful one. It caused the growth of gaming machines, which constituted the considerable part of Club’s income. The number of members of the club also grew. It grew more than two times since 1999. The income also increased. “The Club strengthened its position by obtaining assets cheaply, as well as members. It provided a strong balance sheet and expert management. Most of the clubs taken over would have collapsed if amalgamation had not proceeded. The problems, which appeared during the elections in 2001 after several amalgamations showed the conflict between new member of the executive board and old ones. A number of directors wanted to wave status quo and wanted all nine directors to be elected only from the Penrith, which made the basis of the club. They didn’t want the directors from amalgamated clubs to enter the executive board and explained it by the wish to save the traditional roots of the club. Cowan felt offended with such a reaction because he promised the directors of the amalgamated clubs the places in the executing board. The way out was found by expanding the number of directors from nine to fifteen and by distinguishing the maximum Non-Penrith directors.

“As Cowan states, the Club gave employment to several thousand employees including employees from clubs amalgamated, which would lost without jobs otherwise. The Club paid taxes and brought considerable profit to the state” (TEMBY).  The report from 2003 shows that ordinary activities, such as catering and beverages and gaming were the main sources of income.

The report of the Panthers Entertainment group for CEO introduced in October 2003 give the following numbers.

“In that year its revenues from ordinary activities were shown as $177,532,000, of which $42,079,000 came from catering and beverages, and $104,003,000 from gaming machines. Other significant revenue sources were accommodation ($6,233,000), gate receipts ($1,207,000), functions and banquets ($4,177,000), advertising and promotion ($1,136,000) and sponsorship ($2,107,000)“ (Knight, 2006).

The conflict between the Club and the Government arose because of the disagreement over the new tax rates. The government decided to increase the taxes for the Club and Club management in general and Cowan in particular refused to recognize these changes as fair ones. The government of the club believed the taxed changes to be unaffordable. According to the claim of the state the Club should have paid additional $ 17 million. In his personal report Cowan states that after the Club had expressed its dissatisfaction the Government started company against the Panthers and personally against him. All the actions which followed the conflict described were directed in order to compromise the Club. Cowan states that different means were used in order to destroy his authority. He was accused of misappropriate money of the Club.

During the long period when Cowan was the manager of the Club the number of successful steps performed under his rule lead to positive development of the Club and enforcements of its positions on the market of entertainments.

Until the conflict, which started in the end of 2003 there, Cowan had no problems with law and proved to be a talented manager respected by both, lowers and club members.

Kenneth Maxwell Brown, the director of Liquor and Gaming signed up the act of inquiry on April 2004.

The investigation was performed in order to investigate the causes of possible abuses from the side of the executive board of the club and Cowan in particular. The hearings of this case took part in the Police Integrity Commission, in Sydney. The hearings lasted for several months and additional information uncovered during these hearing made to delay the date of final hearing for several times. “In favor of the Club’s submission were that the Act does not define either corrupt conduct or improper conduct, and does not say in terms that findings as to them can be made” (TEMBY).

The conflict, which appeared between the government and the Club, had several reasons. The problems, which existed inside the club, were sharpened by the changes in state tax policy. Treasurer Michael Egan’s announced 40 per cent tax increase for clubs, which earn more than one million a year from pokier machines. Sport clubs, initially created as non-profit organizations, which would project the development of sports and created opportunities for people to organize their leisure, became business conglomerates, which earn millions of dollars. The tax increase can be partially justified by the economic necessity and the changes of the policy of the clubs, which ceased to be non-profit organizations, but the increase from 18 to 40 per cent became too challenging for the Club, which experienced its own internal problems at that time. Another approach to the implementation of the tax could have helped the situation.

I think that the conflict was partially initiated by Cowan and his policy of conspiracy, his strong wish to keep in secret his personal financial matters including his salary. His wish to save the information about his income confidential has finally provoked a lot of doubts about his honesty and finally led to loud investigation and hearings.  “From the very day I started I always had that belief and desire for confidentiality. When I came in to the industry it was an industry riddled with dishonesty. It took me two years to pluck up the courage to buy a new car in case people thought I was ripping the players off. Confidentiality was extremely important to me ”¦” (Egan Clubbed, 2003) The policy of conspiracy was guaranteed by the number of contracts signed up by the representatives of Pernith Rugby League Club and Cowan. So, Cowan had eligible reasons to insist on the conspiracy as long as it was guaranteed by the contracts.  His reasons are quite understandable but unfortunately it can become the object of manipulation from the side of his competitors and those who want to limit his power.

Not all the members of the executive board were ready to the changes in the policy of the company caused by amalgamation of the number of other clubs. Amalgamation seem to be a good policy till it was regarded as a source of additional profit but soon become a problem when it became evident that the chairmen of the amalgamated clubs want to take part in the ruling of the company. Elections turned to be a real fight for the place in the executive board, which spit the Club into two fighting groups. The policy of statue of the Club had been changed several times during the process of elections, which caused doubts in the honesty of the executive board. Personal ambitions of the directors became for them more important than the future of the Club and withstanding between the old directors and the “Footy Five” lead to inquiry and investigation, which will definitely have negative impact on the reputation of the club and its directors.

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