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Club mergers and diversification of revenue streams – How to stay relevant

This article originally appeared in Queensland Bowler magazine, August 2018 edition

Recently, we’ve seen a number of clubs seeking to ‘scale-up’ their club by merging with another club or partnering with another community or private group. We discuss the options, and the costs/benefits of each, below.

Mergers

Merger options include merging with a similar club, amalgamating with a larger licensed club that is not a bowls club, or seeking private investment/management.

When considering amalgamation, being proactive and exploring your options early is critical. If a club is considering merging due to financial pressure and delays making such a decision, the club will likely find itself in a weaker bargaining position with fewer options.

A common avenue for amalgamation is to merge with a neighbouring bowls club. This has the benefit of consolidating membership bases of a similar demographic and ensures members do not have far to travel to attend the merged club.

Usually the clubs pool their assets, operate out of one venue and sell off any remaining assets. Where one of the clubs owns its own freehold land, often the merged entity moves to the venue that is a Council leasehold (or similar tenure) so the freehold land can be sold off, generating cash for investment in the new merged club.

Diversification

Another recent trend has seen bowls clubs merging with other licensed clubs – particularly RSL, leagues and general sporting clubs. The other club will generally purchase the bowls club’s freehold land, or take over its Council lease, and take over responsibility for operating the licensed clubhouse premises and maintaining the bowls greens.

The bowls club members will become members of the other club, but the bowls club can still continue to exist as an independent entity in its own right. This allows it to continue with its own elections and committee, running its own competitions, and continuing affiliation with Bowls Qld and the relevant district – without having to move to another site, merge with a neighbouring bowls club, or manage a licensed club business operation.

We have also increasingly seen private investment in bowls clubs. This occurs when a bowls club sells its freehold land to a private entity and leases it back and/or where the bowls club enters into a management agreement with a qualified management company that takes over management of the licensed club business for a fee.

Selling the freehold to a private entity unlocks cash for the club to spend on operations, however clubs must ensure they can service the annual rental payments under the lease-back. A management agreement provides access to a professional manager with on-premises clubhouse operation skills, with a view to improving profitability and long term sustainable revenues for the club.

Investment by retirement village operators has likewise become popular in bowls and other sporting clubs. As the demand for these services increases with our ageing population, this will become even more common. Clubs which own their own freehold land are partnering with retirement villages and subdividing or leasing the land. This provides convenient aged and retirement living facilities for nearby members as well as upgrading the club’s facilities, creating a win-win for the retirement village and club, but more importantly the members.

With all of the above options there are many benefits but also disadvantages and risks. It is important to obtain expert advice and consider your options early, allowing all avenues to be properly canvassed. This will ensure the best possible outcome and structure is achieved for the club, providing maximum benefit for members into the future.

Should you wish to discuss your club’s options further, or have any other queries, please contact our team.

"The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication."