Wildcats court new hoop dreams

I've been itching to take a good look under the bonnet of the Perth Wildcats operation ever since sharemarket-listed Sports Entertainment Group bought the NBL’s most successful franchise from the late Jack Bendat for $8.5 million last year.

After all, privately-owned sporting organisations are renowned for burning through money quicker than a private jet, and the long-running rumour is that the Wildcats somehow bucked that trend and earned Mr Bendat an annual profit of up to $1 million.

Unlike many sporting organisations (the Eagles, the Dockers and the WACA, for instance), the Wildcats have long been under private ownership and previous owners, including Luc Longley, Andrew Vlahov and Kerry Stokes, have provided very little information about the club’s financial performance.

So, I was particularly interested in the figures contained in SEG’s recently released half-yearly consolidated report, which provided some detail about the club’s much-vaunted financial position.

The Wildcats’ contribution to SEG’s net profit for the first half, although the club was only purchased in August, was $287,000.

SEG also provided some financial notes that gave the club’s result for the full half year: “The acquired business contributed revenues of $4.997 million and net profit after tax of $0.287 million for the five months to 31 December 2021. Had the business combination occurred as of the beginning of the reporting period, the business would have contributed approximately $5.006 million in revenues and net profit after tax of $0.141 million.”

That’s a 2.8 per cent return on revenue and would have been a 1.7 per cent return (for the half) on SEG’s investment, all of which seems very thin for a company with investors to please.

First, it must be acknowledged that 2021 was another COVID-affected year and there’s not enough information in SEG’s consolidated accounts to determine what a ‘normal’ year might look like for the Wildcats.

Second, SEG has openly stated its purchase of the Wildcats was aimed at “providing strategic value to the group’s operations” and supporting other investments made in the past 18 months, presumably referring to the SEN Spirit South West radio licence.

In other words, it may not need to turn a big profit because of some other mysterious synergies.

But the question is whether a club owned by a company that has a duty to its shareholders can now continue to be the outstanding corporate citizen it was under Mr Bendat’s ownership, given the philanthropist’s personal fortune was estimated at more than $600 million and he could easily have afforded to lose $1 million a year on the Wildcats without a second thought.

Wildcats chief executive officer Troy Georgiu’s statement after Mr Bendat’s recent passing only served to highlight the fact that Mr Bendat wanted the club to put its social impact above all else.

“While Jack demanded success on the court, his greater priority was for the club to make a positive impact on the West Australian community – particularly on school children in lower socio-economic areas,” Mr Georgiu said.

SEG may not be able to take the same path or may need to at least reduce some of its spending in this area.

But the Melbourne-based organisation wouldn’t want to go on a heavy cost-cutting exercise either, because the Wildcats’ entire brand is built on its reputation for being WA sport’s best corporate citizen. Along with the move back into the city, it was one of the main ingredients in the club’s growth from fewer than 2,900 members in 2012 to 12,000 in 2019.

So, there will be plenty of people taking a keen interest in the club’s direction over the next year or two to see whether SEG manages to increase its ROR and yield and, if so, what measures it has taken to achieve that.

I just hope the company doesn’t further bury the Wildcats’ results in the consolidated figures.

Now, has anyone got access to Perth Glory’s accounts?