Our Newcastle Knights: Community ownership model for Hunter's NRL flagship

WHITE KNIGHTS: From left, Mike Rabbitt, Rob Tew, Marty Adnum, Andrew Poole, John Duncan, Nick Dan and Michael Neilson. Picture: Simone De Peak
WHITE KNIGHTS: From left, Mike Rabbitt, Rob Tew, Marty Adnum, Andrew Poole, John Duncan, Nick Dan and Michael Neilson. Picture: Simone De Peak

THE Newcastle Knights can become a community-owned asset by the start of the 2018 NRL season if the Novocastrian faithful rally behind an ambitious plan. 

The region’s rugby league franchise has been run by the governing body since June 2014, when former owner Nathan Tinkler was ousted after a disastrous three-year tenure that left the club with millions of dollars in liabilities.

The NRL recently put the club’s licence out to tender, but despite expressions of interest from 17 entities, none fulfilled enough criteria to clinch a deal.

Today the Newcastle Herald can reveal the seven men who have joined forces to create a business model entitled “Our Knights”, which they hope will eventually create a financially sustainable team owned by tens of thousands of shareholders.

Video by Scott Bevan & Matt Carr. Music courtesy of Morgan Evans & Mark Wells

The group of self-proclaimed “community facilitators” comprises former Knights chairman Rob Tew, ex-Sharp Electronics owner John Duncan, solicitor Nick Dan, entrepreneur Andrew Poole, Newcastle Now executive manager Michael Neilson, marketing and advertising guru Marty Adnum, and former NBN sports presenter Mike Rabbitt.

Their goal is to raise $15-20 million by selling $500 shares in the Knights, which they hope will be enough to convince NRL management that a team owned by the people is a better proposition than privatisation.

The group have studied the fan-based ownership structures of NFL franchise Green Bay Packers and soccer teams Barcelona and Portsmouth to tailor a plan they believe can succeed in Newcastle.

“We’re the perfect market to try this in,’’ Poole said.

“Newcastle and the Hunter is the right demographic. It’s a regional community.

“It won’t work everywhere. Some of the inner-Sydney clubs, this model probably wouldn’t suit them.

“But for this region, it’s perfect. The timing is right. We’ve been through what we’ve been through [failed privatisation] and we need to get over it.

“In my opinion, this is just right and the community asset needs to come back to the community. It needs to reflect the ideals, values and culture of the community, not an owner.’’

Tew, Knights chairman from 2008 until the 2011 vote that ratified the Tinkler takeover, admitted “there was no underestimating how steep this slope is,” in convincing thousands of Novocastrians to invest in a once-proud team who have collected back-to-back wooden spoons.

He explained the plan would involve a “three-phase operation’’.

The first stage was to announce the proposal and call for expressions of interest on the newly created website, www.ourknights.com.au. If there is enough support – and the group believe that will be apparent within a matter of days – people who leave their details on the website will be contacted and offered a chance to buy shares. Meanwhile, community and business forums and polls will be conducted to verify the level of interest and whether the plan is viable.

“We will have a gauge by [Saturday] afternoon, from the comments that are coming back, as to whether exactly this is worth pursuing or not,’’ Rabbitt said.

In a group statement, they estimated three months “is an appropriate time for our community to prove that the passion is there in the region for a community ownership model’’.

If that proves the case, stage two will proceed over a time frame of eight to 12 months, during which an advertising campaign will be rolled out and prospective shareholders will be asked to invest and the money deposited in a trust fund.

If revenue falls short of the projected minimum of $15 million, all deposits will be refunded in full.

But if the share-sale process produces the necessary nest egg to secure NRL endorsement, stage three would kick off. It would be a three-to-four month period, during which the club would make the transition to community ownership before the 2018 season starts.

“The object is to get the NRL to become an endorsee,’’ Poole said.

“We want them to stand side by side with us when we go to the community, asking for shareholders.’’

The Our Knights group met with the NRL in November to outline their plans and said the reception was “supportive”.

They intend to convince the powers-that-be that the NRL should forgo any up-front purchase fee and write off any liabilities the Knights have incurred on the governing body’s watch.

They estimate the Knights will cost around $20 million a year to run, of which $11-12 million will be covered by NRL grants. That leaves around $8-9 million each year to secure through sponsorships, merchandise and gate-takings and it is hoped that within three years, the club would be at least breaking even and reinvesting any profits back into rugby league.

Included in a detailed budget for the first three years is $7.5 million to be spent on a rugby league centre of excellence.

“I think the only opportunity for this club to be viable long term is to have this community invested in it,’’ Tew said. “We think the community’s ownership of this club is its only saviour for the future.’’

Poole said the business plan, if successful, would “future-proof” the Knights.

“We’re not just raising enough money to survive next year and the year after,’’ he said. “We’re targeting $20 million, 40,000 shares … this is about getting enough money to go forward, from day one, fully funded and sustainable.’’

The group believe this will be the one and only opportunity for a region stretching from the Hawkesbury to the far north coast and inland to own their rugby league team.

OUR TOWN, OUR TEAM: The Knights have been the heart and soul of Newcastle for almost three decades. Picture: Dean Osland

OUR TOWN, OUR TEAM: The Knights have been the heart and soul of Newcastle for almost three decades. Picture: Dean Osland

What do I get for my $500? 

WHAT do I get for my 500 bucks? That will be the obvious question that the average Novocastrian asks before committing to the Our Knights community-ownership proposal.

Five hundred dollars will buy one share (of a proposed 40,000) in the Knights, and a vote in the election for a board of possibly seven directors. It will entitle the owner to a discount on season tickets and merchandise.

It will secure a piece of history, because there are unlikely to be any further share releases, and they are non-transferrable (except by bequest). Nobody will be allowed to buy more than four per cent (1600) of the shares.

The remaining inaugural members who founded the Knights in 1988 would each be given a share for free.

The Our Knights group hope that families and fans might buy an individual share, while businesses might buy multiple shares.

A three-year payment plan is proposed, so each share can cost as little as $3 per week.