ATO Issues Wind Up Order Against The Newcastle Knights

The financial problems facing Newcastle Knights owner Nathan Tinkler have come back to hit both the Newcastle Knights and Newcastle Jets, with the Australian Tax Office moving to have both clubs wound up.

The Sydney Daily Telegraph is reporting that the Hunter Sports Group, which owns the Knights and the Jets, Newcastle’s A League soccer club, have unpaid debts of around $2.7 million.

Representatives of Tinkler have claimed the debt will be paid “very soon”.

When the possible privatization of the Newcastle Knights was brought up, the clubs administration at the time were very cautious. They understood that there were some very big benefits that could be gained by having a wealthy backer step in and take over the Knights, but that those benefits also came with the risks involved with handing over the fate of the club to one person.

A media campaign was run in Newcastle with a host of the clubs highest profile former players urging club members to hand over ownership of the club to Nathan Tinkler. They said it was a move that needed to happen for the Knights survival. On that back of that, Knights members voted to hand over the club to Tinkler at a bargain basement price, and within the space of 2 years the ATO have issued a winding up order.

Where are all those former players now?

The Knights are safe. When it comes down to it the NRL has just sold the broadcasting rights to a 16 team competition to various media entities. They need the Knights to fulfill that obligation and if push comes to shove, they can take the Knights over or ever start a new company that will have the same name, colours, logo and will honour all contracts the Knights currently have. A similar thing has happened on the Gold Coast with the Titans. So this isn’t about there being Rugby League in Newcastle…because that is not under threat.

What this shows though is that private ownership of a sporting clubs has benefits  but it also has drawbacks. When you link your clubs financial well being to that of a single person, especially one who made so much money so quickly, you are running a risk.

This is especially true in smaller media markets like Newcastle. It is not like the Knights have a big corporate base to draw sponsors from or a major city full of TV viewers it can sell sponsorship off the back of. Small market clubs reply on a lot of good will from owners.

Thankfully the game in Australia has the money to make sure clubs in this situation survive. At the end of the day it would cost more to the NRL and its broadcasters to have one less club than it does just to save them. That is not the case over in England where clubs are falling over at an alarming rate and the money simply isn’t there to save them.

All of this puts a spotlight on the way the game is run. How many people within Rugby League are running clubs poorly? How many clubs are running at a loss because of poor management? How were the Knights allowed to be brought by someone that would find themselves in such a dire financial situation within 2 short years?

Nathan Tinkler is probably already finding out that everyone is your mate when you have $600 million to your name. Those mates all leave pretty quickly when the ATO starts trying to wind up your companies.

Lets hope the Knights and Jets can be insulated from this mess, and lets hope Tinkler doesn’t go to the wall completely. Ironically, for a mining magnate, rock bottom can’t come soon enough.

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