An administrator appointed to manage the finances of embattled NBL franchise the Illawarra Hawks has recommended the team liquidate its remaining assets.
A preliminary report obtained by the ABC reveals the administrator has advised creditors the company has outstanding debts to players and staff of more than $770,000, and that it is in their best interest for the company to be wound up.
“The Company has a shortfall of assets over liabilities and therefore cannot meet its obligations to creditors,” the report said.
“The Company is therefore insolvent and requires a formal insolvency appointment to deal with their financial position.”
The future of the foundation club was thrown into doubt in March when the NBL terminated the licence belonging to former owner Simon Stratford in accordance with the franchise agreement.
In the report administrator Michael Jones claimed the club had sustained ongoing losses since 2016 and highlighted a loss of $1.7 million across the 2017/18 and 2018/19 financial years.
The team was predicting a rise in profit for the 2019/20 NBL season with the arrival of American teenage star LaMelo Ball.
Despite the club reporting an improved financial position for the 2019/20 season, the team still lost almost $100,000.
Mr Stratford attributed the club’s financial difficulties to unexpected injuries to key players such as Ball and Aaron Brooks, as well as an increase in staff salaries and the impact of COVID-19 on future sponsorship arrangements.
The administrator also identified poor ticket sales and a lack of recent success in the NBL as impacting the franchise’s profitability.
NBL commits to paying players
In a statement the NBL said it made the first instalments of the remaining salary for eight players last month, and it is committed to paying out their salaries in full.
The NBL says it has offered three players — Sunday Dech, Sam Froling and Angus Glover — to fulfil existing contracts for next season with the club.
The new owner of the Illawarra Hawks has yet to emerge despite reported interest both domestically and abroad.
Mr Jones said the previous owner had lined up a potential buyer before the NBL revoked his licence.
“After my appointment I had a quite positive discussion with a group who I introduced to the NBL and they were extremely enthusiastic about proceeding,” Mr Jones said.
“Unfortunately, almost immediately after my appointment as administrator the NBL formally terminated the licence, which effectively cuts me and the company out of negotiations with respect to any potential purchaser.”
A consortium headed by LaMelo Ball was in advanced talks to purchase the struggling franchise, but the outcome of those talks remains to be seen.
Meanwhile, local businessman Tory Lavalle, who owns local football team the Wollongong Wolves and has been a long-term sponsor of the Hawks, has emerged as a potential suitor.
The NBL says it is continuing discussions with a number of interested parties as it looks to finalise the new ownership structure of the Hawks.