FFC Mariner
Well-Known Member
(From the Tele)
Penniless Parra face financial oblivion
EXCLUSIVE by Josh Massoud and Dean Ritchie
April 21, 2009 12:00am
PARRAMATTA Leagues Club is staring into a $28 million black hole that has led one bankruptcy expert to declare it on the verge of "woeful insolvency".
Already reeling from a record $9.12 million loss last year and a bitter boardroom challenge this weekend, the club is also in immediate debt to the tune of $24,137,651. Believed to be an unpaid bank loan or mortgage, the monster debt constitutes a major chunk of the $31,603,787 worth of current liabilities declared in the 2008 Annual Report.
Current assets are valued at only $3,611,364 - leaving a $27,992,463 shortfall that led to auditors admitting the club's future can no longer be guaranteed in the report that was last week sent to all 43,000 members.
The Daily Telegraph yesterday obtained a copy of the report, in which PKF auditor Paul Cheeseman wrote: "These conditions indicate the existence of material uncertainty, which may cast significant doubt about the Group's (Parramatta Leagues Club and affiliates) ability to continue as a going concern."
The huge liquidity imbalance has placed the club's future under threat because directors don't have enough money at their disposal should creditors call in the $24,137,651 owing.
The club does boast $53,387,383 in non-current assets, but these could not be activated if the loans were called due immediately.
Cheeseman made directors define the debt as a current liability because the club had breached the terms of the loan by allowing its current liabilities to outstrip its current assets by about $3 million.
Veteran CEO Denis Fitzgerald is relying on patience from creditors to keep the club going.
He has already sold properties worth $5.6 million and last night reported a profit over the first quarter of 2009. Asked if the club was close to insolvency, Fitzgerald replied: "We are definitely not. We have had the worst possible year given it was the first full year of the highest poker machine tax rate together with a full 12 months of the smoking ban in place.
"Our first-quarter trading for 2009 is showing a profit and we expect that to continue through the year, despite the economic and club-industry conditions.
"The board and myself are very confident that we will trade our way out of this difficult situation through the strength and experience of our directors and senior management."
Bankruptcy expert Nicholas Crouch - the man who wound up the Sydney Kings - said the club would be declared "woefully insolvent" should the creditors come calling. Crouch said Parramatta had only 10c worth of current assets for every dollar of current liability.
The Kings had 40c for every dollar when they were declared insolvent nearly two years ago. He said: "Most companies would have $2 or $3 worth of current assets for every dollar worth of liability. So 10c is really bad.
"On the surface of this balance sheet, the club looks to be woefully insolvent. The key to the situation is the attitude of the creditors.
"If the directors can continue to defer payment, they can continue to trade."
The finances will be a major talking point in the final lead-up to this weekend's Leagues Club election, with voting to run over three consecutive days from Friday morning.
Rebel ticket 3P is seeking complete control of the Eels after winning a majority of four seats on the seven-man football club board last December.
The rebels, however, accept they must steal the Leagues Club to affect real change for fans because it oversees the Parramatta NRL team
Penniless Parra face financial oblivion
EXCLUSIVE by Josh Massoud and Dean Ritchie
April 21, 2009 12:00am
PARRAMATTA Leagues Club is staring into a $28 million black hole that has led one bankruptcy expert to declare it on the verge of "woeful insolvency".
Already reeling from a record $9.12 million loss last year and a bitter boardroom challenge this weekend, the club is also in immediate debt to the tune of $24,137,651. Believed to be an unpaid bank loan or mortgage, the monster debt constitutes a major chunk of the $31,603,787 worth of current liabilities declared in the 2008 Annual Report.
Current assets are valued at only $3,611,364 - leaving a $27,992,463 shortfall that led to auditors admitting the club's future can no longer be guaranteed in the report that was last week sent to all 43,000 members.
The Daily Telegraph yesterday obtained a copy of the report, in which PKF auditor Paul Cheeseman wrote: "These conditions indicate the existence of material uncertainty, which may cast significant doubt about the Group's (Parramatta Leagues Club and affiliates) ability to continue as a going concern."
The huge liquidity imbalance has placed the club's future under threat because directors don't have enough money at their disposal should creditors call in the $24,137,651 owing.
The club does boast $53,387,383 in non-current assets, but these could not be activated if the loans were called due immediately.
Cheeseman made directors define the debt as a current liability because the club had breached the terms of the loan by allowing its current liabilities to outstrip its current assets by about $3 million.
Veteran CEO Denis Fitzgerald is relying on patience from creditors to keep the club going.
He has already sold properties worth $5.6 million and last night reported a profit over the first quarter of 2009. Asked if the club was close to insolvency, Fitzgerald replied: "We are definitely not. We have had the worst possible year given it was the first full year of the highest poker machine tax rate together with a full 12 months of the smoking ban in place.
"Our first-quarter trading for 2009 is showing a profit and we expect that to continue through the year, despite the economic and club-industry conditions.
"The board and myself are very confident that we will trade our way out of this difficult situation through the strength and experience of our directors and senior management."
Bankruptcy expert Nicholas Crouch - the man who wound up the Sydney Kings - said the club would be declared "woefully insolvent" should the creditors come calling. Crouch said Parramatta had only 10c worth of current assets for every dollar of current liability.
The Kings had 40c for every dollar when they were declared insolvent nearly two years ago. He said: "Most companies would have $2 or $3 worth of current assets for every dollar worth of liability. So 10c is really bad.
"On the surface of this balance sheet, the club looks to be woefully insolvent. The key to the situation is the attitude of the creditors.
"If the directors can continue to defer payment, they can continue to trade."
The finances will be a major talking point in the final lead-up to this weekend's Leagues Club election, with voting to run over three consecutive days from Friday morning.
Rebel ticket 3P is seeking complete control of the Eels after winning a majority of four seats on the seven-man football club board last December.
The rebels, however, accept they must steal the Leagues Club to affect real change for fans because it oversees the Parramatta NRL team
