Rugby League: Former owners suffer major financial loss from Warriors' NRL sale

Carlaw Heritage Trust's former CEO Cameron McGregor (right). Photo / Photosport

The Carlaw Heritage Trust lost at least $2 million — and probably more — from their spell as part owners of the Warriors.

The CHT entered into a joint venture with Autex Industries in April 2018, to purchase the NRL club from Eric Watson.

That partnership officially came to an end on Tuesday, with Autex taking sole control of the Warriors by purchasing the Trust's 67 per cent stake.

The Weekend Herald understands that the Trust received around $8 million from the Avondale-based company for their shares.

It's believed that the CHT, which was set up from the proceeds of the development of Carlaw Park more than a decade ago, paid an estimated $10.6 million for their two thirds share of the Warriors to Watson last year.

As well as that differential, CHT also invested into the NRL club, which will incur a heavy financial loss this year.

Trust director Bruce Cameron wouldn't discuss specific figures, which were "confidential", but said the decision to sell was carefully thought out, and financially prudent.

"We needed to stop the bleeding at one particular point," said Cameron. "The Trust was there to promote amateur rugby league. The investment in the Warriors was right at the time we made it but financially it had gone south and was continuing to go south. Do you want to keep putting money into that situation, or do you pull out at the right time to keep the capital you have got?

Cameron admitted the situation was unfortunate.

"Values can go down and unfortunately we were caught in that downward spiral," said Cameron. "But you can only deal in the here and now. It was the right time and the right offer to sell."

Last Friday at a special general meeting of the Auckland clubs former CHT chairman Cameron McGregor, who was removed from his post earlier this month by the ARL, tabled a letter of intent from a overseas investor to purchase the Trust shareholding in the Warriors.

McGregor claimed the American-based businessman had a cash offer, linked to a limited due diligence process, that may have resulted in a higher sale price for the trust.

"He was prepared to pay full price for our shares," said McGregor, who said the CHT had made a "hasty decision".

However Cameron said that interest, via the letter of intent was part of the discussion.

"All options were considered," said Cameron. "We looked at the offer on the table, the negotiations, the relationship with the ARL going forward and who we were dealing with. We did the best deal for the trust and the ARL. Cameron may have a different view."

Cameron also said that the Auckland clubs had voted, by a significant majority, to take the Autex offer.

"The clubs voted to sell the shares to Autex and they knew who we were dealing with at that stage," said Cameron. "You would need to talk to other club presidents about Cameron's credibility."

Autex managing director and Warriors' chairman Rob Croot also declined to discuss specific figures but said the price paid was a fair reflection of the value of the Warriors, and its current financial position.

"The price that we paid for it is right, otherwise we wouldn't have got agreement," said Croot. "The loss, for both parties, happened at the time of purchase from [Eric] Watson, not the sale here. The money was lost right at the start."

During the negotiations with Watson Deloittes had valued the club at between $10-13 million, contingent on normalised working capital.

But the club had no cash reserves and limited working capital at the time of sale, as well as an outstanding loan in excess of $1 million, taken out by Watson, that was written off at the time of sale.

Despite that scenario, Watson negotiated a price of $16 million, paid by CHT and Autex.

Croot said that the decision to sell was a logical one for the trust.

"The challenge for both parties is who wants to put the money in to get the club where it needs to be?" said Croot. "The decision for CHT and ARL was; you've made a loss this year, forecast to make a loss next year, and you are going to have to put in some serious coin...do you want to do that? That spurred our conversation, and it went from there."

It's believed the Warriors will make a loss in excess of $600,000 for the 2019 season.

Despite the negative financial effect of their Warriors foray, Cameron is optimistic about the future of the CHT.

He assured that the trust will continue to fund the ARL to the tune of $1.5 million annually, and said that it is "100 per cent guaranteed" that they will retain a balanced budget and pay off any debt from the venture.