THE Newcastle Knights, as they were before Nathan Tinkler’s Hunter Sports Group took over, have finally broken even after a record operating profit of more than $4million last year.
When HSG finalised their acquisition of the Knights last August, they cleared the club’s accumulated debts and liabilities of more than $6million.
Subsequently, the Newcastle Knights Members Club announced an operating profit of $4,092,048 for 2011 and, as of December 31, had a nil closing balance.
Those figures were included in the 2011 financial report and statements the members club issued yesterday to almost 18,000 members.
The members club, which exists to ensure HSG honour the components of the sale agreement, will hold their annual general meeting at 6pm on June 27 at Wests Mayfield.
According to figures tabled in the financial report under ‘‘other income’’, HSG paid $3,623,711 to buy the Knights and contributed another $3,404,048 to clear debts and liabilities.
One of the sale terms was HSG guaranteeing sponsorship revenue of $10million a year.
Sponsorship revenue for 2010 was $6,888,528, but the Newcastle Herald has been told that included some carry-over revenue from 2009. Until August 5 last year, when HSG took over, sponsorship revenue for 2011 was $3,440,532 – about half the 2010 amount.
The Herald has been told HSG does not have to make public exactly how much they will pay each year to ‘‘top up’’ sponsorship revenue to reach $10million, because the Knights became a privately owned company on August 5.
That amount was, however, included in a set of audited figures presented to the members club board.
Members club chairman Peter Corcoran indicated HSG was honouring the agreement.
He said the board, comprising himself, Trevor Crow, Nick Dan, Steve Doran, Leigh Maughan and Allan McKeown, were satisfied the sale to HSG had been ‘‘a success’’.
He said the main details of the deal included:
● minimum sponsorship levels to be topped up by HSG in case of a shortfall;
● the bank guarantee supporting the sale remains current;
● obligations to invest in junior rugby league are met; and
● additional rights to protect heritage matters are preserved.
The heritage issues are retaining the club’s location and name as the Newcastle Knights, the colours to be blue and red, and the home ground to be Hunter Stadium.
‘‘Financial statements recorded a total profit of just over $4million due to the gain on the sale of the business to the Hunter Sports Group and that entity’s payout of the company’s liabilities which accumulated over a 25-year operating history,’’ Corcoran said.
‘‘Income and expenses were for slightly over seven months up to the sale on August 5, which covered almost all of the 2011 football season.
‘‘The sponsorship revenue item accrues on a monthly basis over the calendar year.’’
HSG chief executive Troy Palmer declined to comment.
In a statement issued by HSG on August 5 last year, Palmer said: ‘‘A range of matters in what was a complex transaction were completed for today’s formal handover, with all contracts and agreements transferred to the new entity.
‘‘The vast majority of the club’s liabilities, including its tax bill, under the terms of the acquisition agreement, have now been settled.’’