In mid-June 2006 the leagues club went into administration with assets of around $18.5 million and debts of about $7 million. $3 million of the debt was to a club official and it was not attracting interest. The Administrator described the leagues club as “asset rich, cash poor.” The Administrator also said that the club was trading profitably if not for the interest the loan was attracting.
Holmes a Court and Crowe put in a proposal for the assets, which included a 4-level building, 198 space car parking station, and 10 home units. Their proposal was to pay $8.5 million in cash for the building and carpark, plus $1.5 million in fit-out costs. For the 10 home units, they offered $3.2 million. If, they said, the units were ever sold, they would share some of the profit with the leagues club. They were essentially offering $13.2 million for assets valued conservatively at $18.5 million.
To make the proposal more attractive to both football and leagues club members, they promised that they would develop the unused parts of the building so that commercial rentals would secure the financial future of the football club. They added that the rentals from the 10 units would do the same.
Their promises were that if leagues club members went with their proposal, they would fully-own a new club, be debt-free, with $4.5 million in cash, a dedicated Rabbitoh Hall of Fame, and an express lift. Holmes a Court criticised the counter proposal supported by the administrator, which offered $15 million for the building and would re-locate the club to a better trading area. According to Holmes a Court, this offer would involve a $2 shelf company, grubby property developers, moving the leagues club away from Redfern, and breaking the historic links between the football and leagues clubs.
In November 2006 the vote went to members. Many volunteers handed out how-to-vote brochures which included all the above promises. Volunteers also rang members and apropagated Holmes a Court’s proposal on radio stations like 2UE.
When they won the vote, everything changed. Crowe refused to stump up his share of the money. Holmes a Court flew to New Mexico, where Crowe was shooting a film that went on to be an embarrassing flop, but the actor refused to put in his share of the money. Holmes a Court asked for several postponements of settling dates.
On 27 January 2007, the football and leagues club signed a contract. Page 7, under the heading ‘Undertaking by the Football Club’ states: “From the date of the execution of this deed, the Football club will: a) underwrite any trading loss incurred by the Company (Leagues Club) until completion of the Successful Proposal Contract.”
By this stage Holmes a Court was desperately trying to come up with the money. He begged the leagues club to alter terms, including dropping the cash component from $8.5 million to $7 million, and increasing the fit-out costs from $1.5 million to $3 million. This had the added attraction of cheating on stamp duty and the Administrator warned the clubs to get legal advice on this issue, which they didn’t.
Holmes a Court and Crowe did a deal with grubby property developer Albert Bertini of Trivest. They became 50:50 partners in the development and formed two $2 companies known as High Concept Commercial Pty Limited and High Concept Residential Pty Limited. These companies were registered with ASIC on 22 February 2007.
On that same day, Gells Lawyers gave the leagues cloub written advice on the effects of a contract that it would sign the next day with the High Concept companies. The lawyers wrote that there was “a guarantee from the Football Club of the developer’s obligations”. In other words, the football club was the guarantor for the development. Page two of the advising noted that a “guarantee” from the football club was attached.
Also attached to that advising was a document dated 20 December 2006 which dealt with a meeting between the Administrator and the football club. Page two noted that the football club would “provide an undertaking to fund any losses of the Leagues Club until completion of the new premises…”
On 23 February 2007 the contracts were signed. High Concept Commercial paid $7 million for the building and carpark, and High Concept Residential paid $3.2 million for the 10 units. The $3 million in promised fit-out costs was never paid and is still owing. In effect, the football club got away with paying just $10.2 million for assets worth more than $18 million.
By then, Holmes a Court and Crowe (football club) had sold half of the real assets to grubby property developer Trivest. $4.4 million was paid in cash and $1 million was paid as a sponsorship directly to the football club. After settling a bank loan, the football club had $1.9 million left over in SSFC Investments Pty Limited, which was created to house the monies from the development.
Disgustingly, the proposal that was voted in by members was completely and secretly changed. On five separate occasions changes were made – all of which was to the advantage of the football club and to the disadvantage of the leagues club. Former leagues club director Frank Zappia alleges that the leagues club’s directors were looking after the interests of the football club’s owners and not the leagues club members. Zappia accuses that leagues club chairman Bill Alexiou-Hucker told him: “What’s good for the football club is good for the leagues club.”
Then the rot set in. The football club lost $4.6 million for 2007. They transferred the $1.9 million from SSFC Investments to bring the loss down to $2.7 million.
But things got worse. Holmes a Court companies were taking more than $30,000 a month from the football club, in percentages for the sub-contractual employment of Shane Richardson, John Richardson (who had worked for Crowe since 1999) and Chris Green. When the football club posted a $4.2 million loss in 2008, Crowe hit the roof and Holmes a Court was sacked.
At that point, frightened silly by the losses of nearly $9 million over the past two years, Crowe and Holmes a Court pulled out of the ‘no poker machine’ deal they had with the leagues club. They had agreed to pay $300,000 a year to the leagues club for the hospitality rights to the club in return for the club not having poker machines. Holmes a Court had even asked Alexiou-Hucker to sell the 60 machines and licenses, which would have been a multi-million dollar return, with the proceeds going to the football club. Alexiou-Hucker refused. The no poker machine push fell over.
In September 2008, Crowe and Holmes a Court, who were fighting between themselves, secretly pulled out of the Chalmers Street development. They sold the football club’s interest for an unknown amount and transferred complete control to grubby property developer Trivest and Trivest’s new equity partner Sakkara Pty Limited.
As of September 2008, SSFC Investments Pty Limited showed a nil balance.
Early in 2009, High Concept Residential Pty Limited began selling the units. Three units were sold in private treaty deals to NRL footballers. The remaining seven units were sold during 2009 by John McGrath Real Estate. (McGrath went to school with Crowe and is an alternative director of the football club. His company was a third party sponsor for Craig Wing and later Michael Crocker.)
In March 2012, an administrator was appointed to High Concept Commercial Pty Limited, which the football club was a 50:50 partner in, but had no control over. That company could not pay its debts. The administrator is selling the assets. There is now nothing left. The building and car park gone.
Shortly afterwards, High Concept Residential Pty Limited de-registered. All its assets were gone. The 10 home units had been sold.
In short, yes, the owners benefited. The money from the sale to Trivest went to pay the football club’s horrific losses in 2007 and 2008.
And, yes, they are guarantors.
Even if they weren’t, Crowe and Holmes a Court made the promises to leagues and football club members. Trivest didn’t make the promises. Bertini didn’t make the promises. High Concept didn’t make the promises. But Russell Ira Crowe and Peter Michael Hamilton Holmes a Court did.
Unfortunately, they are not man enough to say sorry. They haven’t the courage and integrity to apologise for lying and breaking promises. (Neither does the appalling Flame Thrower, who is cowering somewhere pretending he didn’t propagate the lies.)
The result of the lies and broken promises is this: the 50-year-old leagues club has been murdered; leagues club members, all part of the Souths family, have lost their club and their assets; contractors, all loyal Souths fans, who built the development, are owed $600,00, which they will never see; 20 loyal leagues club workers have been sacked, owed around $50,000 in wages they will never be paid, and callous bastards at various Souths fan forums shrug their shoulders, laugh dismissively, saying “so what, we don’t care.” (Mum and dad investors fleeced by the Firepower promises, all propagated for a % by Russell and Peter, understand how ripped off members, contractors, and staff feel.)
We believe that the football club owes upwards of $10 million to the development and the leagues club. Like Firepower, the leagues club, and High Concept, the football club may well go under. Meanwhile, happy clappers applaud the tragedy and blame everyone except the real perpetrators: Crowe and Holmes a Court.
Finally, without the proceeds from the sale of the leagues club’s real estate assets in 2007 and 2008, the football club would have gone into bankruptcy. That is a fact. It would have closed. Next time it happens, and that next time appears to have arrived, there is nothing left to sell except the brand itself and relocation.
The leagues club saved the football club. Crowe and Holmes a Court killed the leagues club.