Football Federation Australia is hoping to finalise the sale of Newcastle Jets by the end of the year after incurring millions of dollars in losses from running the club since assuming the ownership from Nathan Tinkler in May.
The news of six potential buyers having shown interest is welcome relief for the governing body, which is set to announce $2.4 million in losses from the Jets’ operational costs this season, after a proposed sale to Dundee United chairman Stephen Thompson collapsed late last year.
Significant legacy debt associated with the club compounded the FFA’s hefty losses in the first year. These could reach more than $4 million by the end of next season if the governing body is unable to sell the club within the stated time frame. It’s understood the FFA was forced to honour existing debt associated with the club, including outstanding superannuation owed to players, unpaid stadium costs and loan fees owed to foreign clubs. Having cleared these outstanding debts, the forecast loss for next season will be trimmed to approximately $1.8 million.
“FFA is not in a position to comment on financial information relating to the Newcastle Jets while a comprehensive sale process is under way,” an FFA representative said.
However, the governing body is hopeful of finding a new owner for the club before the end of the year. Six prospective buyers have made formal inquiries to buy the 2008 champions. Similar to the sale process of Western Sydney Wanderers, the FFA hired financial service company UBS to oversee the sale of the Jets. Six memorandums of understanding and confidentiality agreements have been signed between UBS and the interested parties.
The FFA reached an in-principle deal with Dundee’s Thompson last year but the proposed sale collapsed after negotiations stalled past the governing body’s deadline. It is understood the FFA’s asking price for the Jets is in the vicinity of $5 million.
“Six parties have been identified as having genuine interest and capacity to purchase the club,” an FFA representative said. “Those parties have an Information Memorandum that clearly sets out the finances involved. The club will be sold when a buyer meets the price and conditions acceptable to FFA. There’s no deadline as such, but FFA has made it clear we don’t want to retain ownership of the Jets any longer than necessary.”
According to a recent report in the Australian Financial Review, only 17 Australian football clubs of all codes recorded a profit last year, of which only two were A-League clubs. Melbourne Victory posted a profit of $1.51 million in the year they won the A-League title and Western Sydney Wanderers were in the black to the tune of $500,000.
© 2016 The Sunday Morning Herald | This article was written by Dominic Bossi and first appeared in The Sunday Morning Herald on 16th March 2016.