Patrick Campion, Chairman’s Response to Recent Media Articles

Posted on Monday, 13 August 2012

Dear Member,

You may have read two articles in the Sydney Morning Herald, weekend edition (11-12 August 2012).

The Committee and management assure you that things are not as the articles would have you believe and the future of our Club is secure.

I can confirm to you that there are concerted efforts going into the effective management of the Club. These efforts have already given rise to a notable increase in Club membership this year reversing the trend of past years.

Dealing with the major issues in the articles, I advise you as follows:

1. The Club’s Overall Financial Position

The trading activities of the Club are in total operating at a healthy profit.

The purchase of 194 Pitt Street in 2007 (which members voted for) has resulted in holding costs and, if it were not for these, our profit last year would have been significantly in excess of $600,000.

While 194 Pitt Street is causing us some present pain, we remain strongly of the view that this acquisition was and remains a positive for our Club.

Our recent feasibility discussions with Colliers (see below) have revealed that the ownership of 194 Pitt Street is crucial to our ability to develop the airspace above our Club.

You should keep in mind that we can reasonably quickly sell the building should the need arise.

2. Discussions with Colliers

As stated in the most recent Chairman’s Message to members, we have been talking to experts (Colliers) about the feasibility of developing into the airspace. The discussions are only preliminary at this stage. There is no intention to sell any part of the Club’s land or buildings and nothing will be done without approval of members.

3. Cashflow and Creditors

As with many businesses, our Club is experiencing a current cashflow issue but it is managing creditors and suppliers and monitoring debt levels closely. Our bank remains fully supportive of the Club and we continue to meet all bank covenants. We have been looking at cashflow and are actively looking at ways to address this issue. I will be reporting to you in the future in this regard.

4. Committee Focus & Governance

The assertions about the CEO are incorrect. The Committee has confidence that he is managing the Club competently in difficult times.

Rule changes that were made about 5 years ago are nothing more than aligning the Club rules with modern principles of corporate governance.

Further, two months ago, the Committee engaged an independent consultant to assist the Committee to properly analyse and test the performance of the CEO and other executives. The same consultant is also advising and assisting us to improve our general governance framework.

I remind you that I have been the Chairman for only 15 months. I have been focussed on improving governance and the engagement of this consultant is the first major initiative in this direction.

5. Inquiry by Office of Liquor, Gaming & Racing (OLGR) re Payments to CEO

There was a previous inquiry on this issue which found no problem at all. Owing to further agitation by a few members, there is now a further inquiry into the same issue.

The Committee has arranged for written advice from the independent tax accountant RSM Bird Cameron confirming that the arrangement was not a loan to the CEO. This will be in addition to their previous advice. On receipt, this additional advice will be forwarded to the OLGR as part of our continuing cooperation with the objective of achieving a speedy determination.

6. Donations to Aboriginal Health Charity

Our Club donates in excess of $300,000 to charities each year. The Committee has discretion as to what charities will benefit and how much they might receive.

The Committee in 2007 received an application for a donation to assist the Pius X Medical Clinic in the memory of Dr. John Campion who served as the Club’s Doctor for over 25 years. This clinic, which Dr. Campion had been involved in establishing in the mid 1950’s, is concerned with aboriginal health in country NSW.

In view of my family connection (John Campion was my father and the application was made by my brother), I took no part in the consideration of the donation request. The Committee (with me abstaining from voting) approved the donation for what they regarded as a very worthwhile cause.

I would appreciate members’ feedback on this issue. If members think it is appropriate, the Committee is prepared to consider the introduction of a blanket ban on any relative or associate of a Committee member applying for a charitable donation.

7. Restaurant Losses

Our restaurants are benefits and services to members and are, and always have been, heavily subsidised. This is a usual business model for a Club and so should not be a surprise to anyone. We always try hard to run them as efficiently as possible. The Committee has been looking at how the restaurants might be changed to better serve members and achieve greater efficiencies.

8. Architect & Consultants

As the article states, there is nothing improper about the way the Club has used its architect and consultants. The Committee has at all times approved the use of these people.

The Club has and will continue to put the bigger jobs out to tender. However, for smaller jobs the Committee believes that using an architect and consultants with strong knowledge of the Club, the buildings and the Club’s culture is the most cost and time effective approach.

9. Business Planning Conference

The Committee has for the last several years had one planning weekend annually at an off-site venue. The weekends involve serious planning and business strategising. These conferences are an important part of the Committee’s education on current developments and evolving trends of the club industry generally and of modern governance in particular. The suggestion that they are ‘jaunts’ or ‘junkets’ is completely untrue.

Due to the cashflow issue referred to above, all non essential expenditure is being pared back and the proposed conference in Melbourne this year has been deferred.

10. Disgruntled Members

These members who have initiated the recent publicity have caused serious and time consuming distraction from the Committee’s and management’s real task of managing the Club. The damage and the financial costs to the Club are huge! The biggest single present threat to the survival of our Club is the activity of these members.

11. Conclusion

I want to assure you that, despite the difficult times, the future of our Club is secure.

The Committee is passionate about our Club and is focussed on providing the best possible member services to you while maintaining high standards of corporate governance.

For members who disagree with the Club’s current direction, please feel free to bring your concerns to the Committee. We definitely welcome your feedback. If you would like to discuss any matters with me directly, please call Jan Ellks on (02) 9287 6435 to arrange a mutually convenient time for us to meet.

The Committee thanks you for your support and continued patronage of the Club and we look forward to seeing you here.

Patrick Campion


City Tattersalls Club