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Wests Tigers Rugby League Football Club Pty Ltd is a voting member of ARLC and a licensee of the NRL, entitling it to participate in the NRL competition. Wests Tigers first participated under that licence in 2000.
Before that time, there were the Balmain Tigers and the Western Suburbs Magpies; creatures hardly known for living in harmony in the wild. Each is a foundation rugby league club with a storied history.
Wests Tigers’ membership of ARLC, and its licence agreement tethering it to the NRL, are interdependent – if the licence agreement is axed, the membership of ARLC cuts out too, and vice versa.
Wests Tigers is a company with two shareholders: Balmain Tigers Rugby League Football Club Limited, and Wests Magpies Pty Limited. But this is where things unravel.
The internal governance of Wests Tigers isn’t a democracy, or anything close to it. Balmain holds 1,000,020 Class A ordinary shares in Wests Tigers; Wests Magpies holds quadruple that number.
Wests Magpies owns 80 per cent of the total share equity and voting rights in Wests Tigers. But it wasn’t always that way, as you discover once you examine the history books (and the ASIC registers).
Back in the simpler times of 1999, when the Magpies/Tigers arranged marriage was forged – with the spectre of extinction hovering – the union at least was an equal one.
No more. Sustained financial calamities, striking with dreadful regularity throughout the last quarter-century, have manifested in the renegotiation of arrangements and the destruction of any semblance of balance in what’s now a husk of a “joint” venture.
The control of the Balmain and Wests Magpies shareholders is curiouser still. Balmain’s governance is unremarkable in a sporting club sense; the company is in the control of its members.
Wests Magpies is fundamentally different. It has two shareholders: Western Suburbs Leagues Club Limited and Western Suburbs District Rugby League Football Club Limited. There’s three shares on issue in Wests Magpies: an A Class share, a B Class share and a C Class.
Wests Leagues holds the A Class and B Class shares, Wests Football holds the C Class, but Wests Leagues exerts control over Wests Football regardless. Complicated, much?
Wests Tigers is supposed to be governed by a nine-person board that includes “independent” directors. The concept of being a member of a football club connotes having a democratic say in things.
Conversely, that’s not really how the Wests Tigers structure operates. And it seems nobody really values any independent thinkers and doers there.
In line with the unequal shareholdings, Wests Magpies has the power to appoint many more directors to Wests Tigers than Balmain can. But a different problem exists, in terms of how Wests Magpies itself makes decisions.
West Magpies is a registered club, governed by both the Corporations Act and the Registered Clubs Act. The latter legislation prescribes the classes of members a registered club can have, and other internal governance rules. Like most registered clubs, there’s thousands of members.
But a bizarre quirk of the Wests Magpies structure, is that the majority of power rests with a cohort of 20 “debenture” holders, who’ve (apparently) lent the club $100 at an interest rate of six per cent, in consideration for enjoying entry into the inner cabal that effectively controls Wests Magpies in terms of director appointments.
It’s those 20 lenders, who control four-fifths of the voting strength of Wests Tigers, and the NRL franchise itself. Democratic? Hardly. But there are other issues here as well.
Clause 47.1 of the Wests Tigers constitution says the company shall have a maximum of nine directors.
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The appointment, removal and replacement of the directors is to occur in accordance with the company’s shareholder agreement and other instruments.
The word “independent” is used no less than 55 times across the Wests Tigers’ constitution and shareholders agreement. There’s even an entire schedule that defines what the term means.
Clause 4.11(g)(ii) of the shareholders agreement, governing the relationship between the Wests Tigers’ shareholders, casts material doubt on whether shareholders (not just Wests Magpies) can effectively give notice to remove an “independent director” as classified by the documents.
Clause 4.11(g)(i) permits a shareholder who appointed a non-independent director to remove that director. Clause 4.11(g)(ii) requires notice from both shareholders AND National Rugby League Limited, to remove an independent director.
Which then leads to this question: which of Charlie Viola, Michelle McDowell, Annabelle Williams and Barry O’Farrell are the “independent directors” for the purpose of the Wests
Tigers governance documents? Those documents, in places, contemplate there being two independent directors.
If there are only two directors of the four that, by proper definition, are the “independent directors”, legal questions exist about the proper basis for Wests Magpies’ belief that it, as the majority shareholder, can act alone.
Wests Tigers CEO Shane Richardson.Credit: Oscar Colman
Those questions need answers, before the Wests Tigers descend further. Whether O’Farrell or anyone else would bother torching money seeking Supreme Court injunctions about this stuff is hypothetical – who’d want to risk further damage to their reputation by seeking to stay in the tent?
But assuming that Wests Magpies can issue a notice to remove an independent director, where that notice has proper legal effect, that then leads back to the fundamental question as to why anyone would want to be an independent director at all.
Appointing independent and expert directors to the boards of sporting clubs and franchises serves several governance, risk-management and performance-enhancement purposes. In modern sports administration — especially in professional leagues — the role of the board has expanded well beyond ceremonial oversight.
Independence and expertise help ensure the organisation is governed in a commercially robust way, ethically sound and strategically forward-looking.
If the majority shareholder of the Wests Tigers is intent on creating a set-up like this, why would anyone with the required expertise and nous want to waste it on joining in on the pantomime?
