As the 2010-11 season began, the banks were squeezing Jets owner Con Constantine as his business empire debts piled up and he failed in paying his player’s wages. Football Federation Australia quietly contracted former Stadium Australia boss Ken Edwards to help find a buyer for the Newcastle Jets.



Edwards decided to cold call young local businessman Nathan Tinkler whose name started to appear in the BRW Young Rich List. Having compiled a billion-dollar fortune in only a few years from a series of successful bets on coal-mining assets, Tinkler was now beginning to build a sporting empire. Edwards thought Tinkler might go for a football team too, so he rang the young mining magnate. According to Paddy Manning’s biography Boganaire: The Rise and Fall of Nathan Tinkler, Tinkler asked Edwards, “How much do you need?” Two million dollars was the reply. Tinkler then said it would be a pity to lose a Newcastle flagship for the sake of just $2 million. Edwards had caught the whale.

The consultant called FFA’s chairman Frank Lowy to inform him of the good news. Lowy was not impressed with a sale price of $2 million and told Edwards to squeeze more from the young billionaire. After about two weeks of secret negotiations, in September 2010 the FFA stripped Constantine of his ownership licence and transferred the club to its white knight, Tinkler, for the remainder of the season. It took only a few weeks for Tinkler to strike a deal with the FFA to buy the Jets outright: he agreed to a fee of $5 million, as he was under the impression that this was the going rate.

At the conclusion of the 2011-12 season, FFA stripped the Brisbane Roar licence from a group of Queensland entrepreneurs after they failed to keep up with the operating costs of the club. The then chief executive Ben Buckley was flicking through the newspaper when he noticed an article about Indonesian conglomerate Bakrie Group searching for mining assets in Australia. He learned that the family also had an interest in football via the ownership of several clubs, including Pelita Jaya.

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Buckley rang his friend Dali Tahir, then on the executive committee of the AFC, to ask whether he knew of the Bakries. Tahir replied that he was semi-employed by them and would make the necessary introductions. Buckley hopped on a plane to Jakarta with his A-League chief executive, Lyall Gorman. They told the Bakrie executives that the club they would be taking over would need minimal supervision. A heads of agreement was signed and delivered to Buckley on the Nirwana golf course in Bali – also owned by the Bakrie family – to seal the deal.

By 2014-15, the A-League’s tenth season, both Newcastle Jets and Brisbane Roar were in peril. Having lost most of his billion-dollar fortune due to the slowing mining sector, Tinkler then ran into trouble over late payments to his creditors, including Jets players. The former billionaire had put the club into voluntary administration, only for the FFA to take back his licence, claiming he had breached his ownership responsibilities. While debts were reported as being $2.7 million when the FFA took Tinkler’s licence on 20 May 2015, that number had ballooned to more than $22 million – including Tinkler’s loans of more than $17 million to the club – when a creditor’s report was lodged in June. FFA took control of the Jets and once again begun the search for a new ownership group. The old Jets entity, meanwhile, was placed into liquidation.

Brisbane Roar’s off-season has similarly been marred by several setbacks as the Bakrie family ran into financial issues and the club racked up an estimated loss of $2.25 million. After failed attempts to find a new owners to take over the licence, the Bakrie Group have spent the last few months staving off creditors trying to wind the club up and drip feeding player’s wages in order to keep FFA from taking away their licence.

The Newcastle Jets and Brisbane Roar stories highlight the structural problems of the A-League model, which has largely been caused by the selection process and a lack of due diligence conducted by FFA on new club owners.

How these structural problems have impacted a club like Newcastle can be traced back the beginning of the A-League. When developing the model for the new competition, FFAs’ inaugural chief executive John O’Neill, realised early on that no one else was going to fund a completely new league. As O’Neill explains in his autobiography It’s Only A Game: “What that highlighted to me was the need to try and lay off much of the risk as possible to private equity investors.”

Matt Carroll, who had followed his boss over from rugby union, and head of legal Eugenie Buckley, joined O’Neill as a three-person panel set about finding owners for the clubs in the new competition. In the end only eleven applications came through for the eight licences. “We weren’t exactly knocked over in a rush by people wanting a team in terms of the spots available,” Carroll recalls. The limited number of applicants meant the new administration team had very little room to reject candidates. “We did due diligence on them, which was an interesting attempt of due diligence on some of these people.”

The due diligence process broke down as O’Neill’s team became desperate in trying to find eight licencees, along with the strict requirements of clubs adhering to best practice in corporate governance. As O’Neill recalls in his meeting with Jet’s Constantine: “I remember trying to talk to him about governance and saying, ‘We need to have to independent directors,’ and all that sort of thing. He stopped me and said, ‘Hey, Johnny, I write the cheques, I do the governance. Have some more wine.’ So we said, ‘Sure, Con,’ and then Matt Carroll and I then got in the car and hot-footed it back to Sydney.”

Constantine was granted a licence but he caused much angst for those in charge of running the A-League as they had to deal with complaints about his payment methods. “We had some issues. Well, the players certainly had some issues about super and things of that nature,” says Carroll. “But he eventually got there on those things. But his idea was to hold out till the end.” Past players, staff and coaches were to sue Constantine over back pay.

Deloitte’s conducted a risk factor analysis on the bids. Even though O’Neill’s A-League model required owners to be well capitalised to fund the start up and operating costs, he again failed to adhere to this requirement when he allowed the Central Coast licence to enter at the eleventh hour.

The Central Coast Mariners consortium was born out the remains of the Northern Spirit NSL club. The bid was originally fronted by Spirit’s last owners and Ian Keirnan, best known as the long-time head of the “Clean Up Australia” campaign, was brought in as chairman. Days before the new league was unveiled, however, trouble struck. Gorman, who had helped do some financial modeling for the consortium, received a phone call 24 hours away from the launch. The consortium had failed to raise the necessary funds.

“So I rang my wife and said, ‘Have we got any money lying around?’ She said, ‘Why?’ So I said, ‘It’s for a friend and a football club, but don’t worry, it will come back very quickly,’” Gorman says with a laugh. “The long and the short is that we had a line of credit and we put the money across. I spoke to John O’Neill and I just wanted to get it going. O’Neill agreed to issue the one share in my name, with the FFA as the beneficial owner.” To this very day, Central Coast Mariners have experienced cash flow problems.

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FFA’s due diligence process did not improve during its first attempt at expansion. Considering the strategic priorities of its World Cup bid, licences were awarded to the Townsville and Gold Coast markets. Property developer Don Matheson never had the deep pockets to fund a professional sporting franchise to begin with and consequently handed back his North Queensland Fury licence after one season. The club was gone at the end of its second year.

In February 2008, the Gold Coast Galaxy consortium, headed by local property developer Fred Taplin, was awarded a provisional licence. By mid 2008 the consortium failed to raise the required funds as the global financial crisis put an end to the Gold Coast property boom. In stepped mining magnate Clive Palmer. Cautious after being burnt by Taplin’s consortium, Buckley requested to see Palmer’s bank statement. Palmer cheekily met the request, as he recalls: “They said, ‘Can you cover the loss of a million bucks?’ We sent them a bank statement with a couple of hundred million dollars on it, which was a bit facetious of us, I suppose. I said, ‘Here’s one. If you want another one, just contact the bank and they’ll give you one from a different account.’”

Palmer lavished on the team in the first year. By the second year he had grown tired of the financial losses as Gold Coast United failed to connect with the local community. By 2012, the club’s third season, Palmer called football a “hopeless game”, and after too many times antagonising FFA chairman Lowy was stripped of his licence. Palmer may have had the funds to own an A-League team, but he did not have the commitment to see it through. Even his comical attempts to set up his own rebel federation – Football Australia – barely lasted a few months.

Last season the ten clubs lost a combined total of $17 million. A fair portion of this total coming from owners whose personal financial issues were largely the cause – Tinkler and the Bakrie Group.

It’s no coincidence that no majority owner has survived the first ten years of the A-League, with many cutting their losses and getting out. Sydney FC’s David Traktovenko is one of the few owners to survive since the first season, though he was then only a minority shareholder. Brisbane Roar, for example, has gone through four ownership groups.

FFA have seemed to learn from its lessons and leaned towards consortium ownership groups. Spreading the financial risk amongst multiple owners rather it being burdened on one individual, increases the opportunity of growth and stability, which can be seen at Melbourne Victory, Wellington Phoenix, Adelaide United and Western Sydney Wanderers.

However, Lowy has been a commanding influence in selecting the owners. The Wanderers, originally owned by FFA, is headed by Lowy’s family friend, Paul Lederer and retailer David Slade who worked for the chairman’s Westfield company for about three decades. Rob Gerrard claims that he was inspired to buy Adelaide United after attending the 2010 World Cup. However, it was more the case that it was Frank Lowy who convinced his fellow former Reserve Bank board member to lead a consortium to buy the club.

“Frank Lowy basically appealed to Rob Gerard that the FFA was not going to keep supporting a team that was bleeding money,” says Adelaide United chairman Greg Griffin, a friend of Gerard’s who also became a shareholder. “Rob was told if a South Australian person or group didn’t come forward, then there would be no Adelaide team in the A-League. Frank picked a pretty easy target in Rob because he’s a philanthropically minded person whose support for sport in South Australia is pretty legendary.”

While many disagree with A-League’s “franchise-type” model, it is certain that FFA will not be changing it anytime soon. However, to pragmatically correct the problems within the framework, FFA could look towards the National Football League’s system in selecting new owners. The NFL scrutinises the financial capacity of new owners and only allows 15 per cent of any buy-out to be funded by debt. This financial data is then provided to the other club owners, with two-thirds of the 32 clubs vote required for any new franchisee to be permitted into the league.

This would at least remove the problem where owners are selected from the business pages or convinced to invest by the persuasive charms of the chairman. As Lowy exits FFA in November, now is the time to put in place robust systems of due diligence. The game can no longer afford to rely on personal connections or desperate short term fixes if it wants to grow to its potential in the next decade.





Shaun Mooney is the co-author of A-League: The Inside Story of the Tumultuous First Decade (published by Nero). On sale now.