Artwork at City Tattersalls Club!

Some of you may have noticed new paintings around City Tatterssals Club. As with everything else in the club. there is more to this than meets the eye.

City Tattersalls Club pays $54 000 to display these paintings
Thanks to members who asked questions at the recent AGM, we now have some information on the arrangement, in particular that City Tatts pays $54 000 a year to have these paintings displayed.
From what we have been able to find out, it seems that these paintings belong to some Aboriginal art gallery and while on display at City Tatts are available for sale. If a member does happen to buy one, the gallery makes a commision and the artists gets what's left.

And for providing a showroom for the gallery- City Tatts  pays them????
This seems like a really good deal for the gallery and the person that introduced it to the City Tatts Club, but it certainly has no benefit to the Club or the members. This has only created more unreasonable and unjustifaible spending by the management and the committee.

City Tattersalls Club - Jimmy Chen's Treasurer's Report for 2011

The City Tattersalls Club Treasurer's Report for 2011 was presented to members at the AGM on 22nd May 2012, and also included in the May-July Club magazine.

Jimmy Chen's Treasurer's Report
Overall, the Treasurer's Report told members very little. As has been the trend at City Tatts in recent years, most of the important financial problems were ignored or explained away with lame excuses.

But Jimmy Chen showed that he has fully embraced the concept of disinformation to members with his latest report. His comments about how the Club's restaurants and bars performed can not be left unchallenged.

What Jimmy Chen told members
In his report, Jimmy Chen said "It is pleasing to report that Food and Beverage revenue has recorded year on year growth for the past seven (7) years. For 2011 our Food and Beverage departments increased revenue by 1% or $68,000." That's it - that was his only reference to Food and Beverage.

How Food and Beverage actually performed in 2011
These are the the facts of how Food and Beverage performed at City Tatts in 2011, which emerged only because members specifically demanded the information under the Club's Rules:

1. Food and Beverage at City Tatts lost $650,000 in 2011.
2. The Esperanto restaurant lost $400,000 in 2011. That is not a misprint - it actually lost $400,000. In fact, it managed to lose $409,000 on sales of $919,000. When you realise that they have no rent to pay, that might make it the worst restaurant performance in Sydney. Obviously, looking at these figures would cause anyone to question management's ability, to put it mildly. But we have checked with people in the restaurant trade and they have told us that even total stupidity would not produce results this bad. And Jimmy Chen? He doesn't even mention it. Maybe he doesn't know.
3. Zest restaurant lost $300,000 in 2011.
4. They even manage to lose money on beverage. The Esperanto managed to lose $105,000, and Zest managed to lose $82,000, on beverage alone ! Since the Club would charge customers, on average, twice or even three times it's cost price, this also must be some kind of record for losing money.
5. Remember, they "had to" close the Smorgasbord because it was losing money. In the three years that Jimmy Chen has been Treasurer, the Club's top two restaurants have lost a combined $2,200,000 !
6. The other notable point about the Esperanto and Zest is that they are not cheap. If the meals were being given away at half-price you could understand some losses. But they are charging top dollar for everything, which makes these losses all the more inexplicable.

This is not acceptable !
To tell members that revenue has risen and make no mention of the horrendous losses during the year, or indeed for the past seven years, is a disgraceful attempt to mislead members. Besides, what is the point of increasing revenue if you are losing money on every meal?

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City Tattersalls Club - big salaries for no results (Part 1)

Money is being wasted left, right and centre at City Tatts.

Nowhere is there greater waste than in the inflated salaries given to top management for dismal performance. Here is an introduction to where members money is being wasted on salaries.

Tony Guilfoyle
Guilfoyle has been a failure as CEO from day one. Almost everything he has tried has been a flop. If you were to examine his top 10 projects as CEO, whether restaurants, building jobs, property purchases or just general management duties, you would find that 9 of them are failures, sometimes hilariously so. In fact, you will have to look hard to find the one that is a success. But a track record of failure is no longer a barrier for top management at City Tatts. Instead they get increases and bonuses. Here is what City Tatts has paid Guilfoyle since he became CEO -

Year Ended 31 December 2004          $410,000
Year Ended 31 December 2005          $410,000
Year Ended 31 December 2006          $430,000
Year Ended 31 December 2007          $430,000
Year Ended 31 December 2008          $460,000
Year Ended 31 December 2009          $530,000
Year Ended 31 December 2010          $540,000
Year Ended 31 December 2011          $540,000

Some things about City Tatts are so strange that it is no wonder people don't believe them when they are told for the first time. Here is someone who clearly has no ability of any kind to run the Club and yet he has been given $3,750,000 in 8 years. And the best part is - he is only there 3 days a week !


Michelle Abbey - Million Dollar Baby !
Michelle Abbey was the first high profile appointment by Guilfoyle after he became CEO. She was paid an insane salary of $250,000 per year as Marketing Director and was a total failure. In the four years she was at the Club she received a cool $1 million. She would not have brought in enough revenue to cover her own salary, never mind contribute anything to the Club.

She is also a perfect example of everything that has gone wrong with City Tatts. The whole notion of a Marketing Director on $250,000 at City Tattersalls Club is ridiculous. The Club's facilities, lacation and tradition provide all the promotion necessary. City Tatts was a thriving club for years without any Marketing Director. And, with the greatly increased population living in the city centre, it should be doing even better now.

There is another reason why paying someone $250,000 a year to promote the Club is nonsense. At the same time that Guilfoyle hired her to promote the Club, he started to take away the very things that used to bring people to the Club !  So the Smorgasboard (probably the Club's greatest attraction) was closed down, Then entertainment was reduced and eventually stopped. Other restaurants and bars were closed before spending millions on new restaurants and bars that members rejected. It simply makes no sense to pay huge salaries to attract people to the Club while you remove the very things that have proven in the past to attract people to the Club.

Members are being deceived in other ways by these insane salaries. By paying someone $250,000 a year, Guilfoyle is trying to convince everyone that City Tatts is a large complex business that is difficult to run. In fact, it is a very simple operation that anyone could run using basic common sense. If you stopped somebody at random walking past the front door they would run the Club better than it is now.

Trevelyan Bale
Trevelyan Bale was a chef who was hired on a salary of $250,000. That, in itself, tells you how insane City Tatts had become by then. The idea of paying $250,000 for a chef in any club is madness but squandering members' money was in full swing by then. (Bale's salary dropped to around the $200,000 mark later - we're not sure why.) Meanwhile, of course, the majority of the staff were paid minimum wages.


It goes without saying that he was a total failure. During the time he was there, restaurants were probably the worst performing part of the Club. The losses racked up while he was in charge were staggering. Someone calculated that restaurants and bars lost over $4 million while he was there. Obviously his own bloated salary contributed to these losses, but aside from that there must have been astonishing incompetence to lose that kind of money.


What is even more amazing is that restaurants and bars used to do well at City Tatts. In the past they were run much better by people on half that salary. And don't forget that back then each restaurant had it's own kitchen. By the time Bale arrived the Club had a centralised kitchen which was supposed to provide big savings. So, if anything, it should have been easier for him. So, either he is even more incompetent than he appears or the centralised kitchen was another grandiose building project that failed.

Jan Elks
Jan Elks is Guilfoyle's secretary. We are not sure what her qualifications were to get the job but it should be a fairly easy job given that Guilfoyle is only there three days a week on average. But this is City Tatts, so it will not surprise you to learn that she is now paid $135,000 a year !  That's right - City Tatts pays Jan Elks $135,000 a year.

This is how members' money is being wasted. Do you really think that Jan Elks would get $135,000 a year if Kevin Smith or Bill Hurley were paying it from their own pockets ?  Not a chance - but if members are paying it (and the members don't know) then don't worry about it. Incidentally, we have checked around the CBD and the maximum salary for what she actually does is $50,000. So, how much has she been overpaid in the five years she's been there - $200,000? $300,000?  How's that for waste ?

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There is another aspect to paying these insane salaries. By paying someone $250,000 a year, Guilfoyle istrying to convince everyone that City Tatts is a very complex business that is difficult to run. In faxt, the Club is avery ple operation that anyone could run using basic common semse. If you stopped someone at random walking past the front door and asked them to run the Club they would do it better than Guilfoy

City Tattersalls Club, Sydney's leading club - for excuses !

One of the best indications that someone can't do their job is the amount of excuses they use. Ever since Tony Guilfoyle got the top job at City Tatts, members have been subjected to a barrage of jargon, hype and propaganda like never before. There is an underlying thread to this propaganda onslaught - they are all excuses to hide his inability to run the Club.

City Tatts is a very simple operation. It has a few bars and restaurants and 400 poker machines. In the past every part of the Club was easily managed and no excuses were necessary.

The list of excuses used in recent years has grown so big that it's hard to remember them all. So to help you, here is a selection of the excuses used since 2006, together with the reality they are trying to hide. Some of these are truly hilarious, although they show the decline of a once great club.

"..the difficulty of being landlocked on all sides.." (John Healy December 2006)
City Tatts owns a large building in a fantastic location in the centre of Sydney. The passing trade alone guarantees a successful club. Only a complete idiot (or a con-artist) would see that as a disadvantage.

"..we are behind on our building works program due to Management of the operations being directed towards Member issues.." (John Healy June 2007)
It was Healy's decision to embark on a spiteful campaign to reduce members rights - no one forced him to do that. Besides, what possible effect would that have on a building program ?

"..being able to position the Club closer to the Pitt & Market Street intersection and the Pitt Street Mall is of huge significance.." (John Healy March 2008 on buying 194 Pitt St)
When you read something like this you have to wonder if Healy even read it himself before he sent it to members. This is coming from the man who thought our city centre location was a disadvantage. Now he is happy to spend $9 million on an old run-down building - to get us 6 metres closer to the corner. Basically, he is trying to convince us (or himself) that everything in the Club would be so much better if only we were 6 metres closer to the corner ! But the most hilarious part of all this is that, to this day, the additional street frontage has never been used. Now that is something of huge significance !

"..the club continues to trade reasonably well in spite of all the negativity which is being peddled by the media.." (John Kennedy May 2009)
Yes, he actually said that. It's a pity he never stopped to ask why City Tatts was the only club in Sydney whose trade was affected by this "media negativity".

"The closure of Centrepoint has impacted negatively on club trading.." (John Kennedy November 2009)
They used this excuse for about 2 years. The only problem was that the re-opening of Centrepoint did not impact positively on club trading - which exposed this "explanation" for the excuse it always was.

"..a postal ballot...will cost the club of a minimum $30,000.." (John Kennedy August 2010)
Obviously Kennedy feels that money spent on members is wasted. But in the same magazine he talks about a "research trip" to Singapore, Macau and Hong Kong but does not mention the cost. It cost $56,000 for 4 people ! (including Kennedy)

The other hilarious aspect of the "research trip" is the reference to how casinos in Macau have coped with "the restrictions on Visas for mainland Chinese". Apparently, "their strategies will be of great interest as to whether they are applicable to the CTC circumstances" !! Really ?  How Exactly ?  Is Clover Moore going to require visas to travel from Parramatta to Sydney CBD ?

"..abnormal expenses were attributable to a handful of members.." (John Kennedy February 2011)
The handful of members were the ones who knew how badly the Club was being run and consistently tried to alert other members before it was too late. Kennedy knows he should have taken action years before on Guilfoyle's incompetence. That would have removed the cause of member protests. The "handful of members" were doing what Kennedy should have done.

"..there will be ongoing costs to adequately defend this matter.." (John Kennedy February 2011 on the Supreme Court case)
Another blatant attempt to deceive members. What Kennedy does not say is that the member took action in the Supreme Court only after the Club refused to have the case heard by an independent arbitrator - where Kennedy would have to prove his allegations, not have them "rubber-stamped" by a weak committee. The Committee are entirely responsible for the costs of the Supreme Court case (now up to $150,000).

"..the recent long period of wet weather didn't help matters.." (Patrick Campion May 2012 "explaining" the Club's poor trading) 
Well, it had to happen. It was only a matter of time before someone blamed the weather for how City Tatts is doing !


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The decline of City Tattersalls Club - who is to blame ? (Part 4)

There is no question that City Tattersalls Club has gone downhill dramatically since Tony Guilfoyle started in the top job. But he is only an employee, answerable to the Committee. It is the Committee who are supposed to be in charge, in this or any other members club. So who is to blame ?

Jimmy Chen - gone to the dark side ?
In City Tatts one of the best guides to whether a Committee member is doing anything is to watch the reaction from the rest of the Committee. Anyone upsetting the Committee is probably acting in the interests of members. And this certainly did apply to Jimmy Chen. He was very unpopular with the established Committee from the time he was first elected. We don't know what exactly he did to upset the others but presumably he was asking questions about things that they felt should be left alone.

But he really had them hopping mad when he decided to run for Treasurer in 2009 - against the Committee's nominee, Paul Cavallaro. (Both Chen and Cavallaro are accountants.) To say that the Committee were unhappy about this does not begin to describe their reaction. They were fuming. (This will tell you what the Committee thinks about democratic elections in the Club.) This anger, at his decision to run, reached it's high point (or low point) when another Committee member called him a "chinese c**t" !

Jimmy Chen as Treasurer
Jimmy Chen managed to get elected by a narrow margin. And this gave his supporters some hope that at last someone would probe the mysterious finances of City Tatts. But they were in for a letdown. Jimmy's first Treasurer's Report turned out to be a replica of the useless propaganda that used to flow from Keith Free. All the same empty jargon was there to conceal the facr that the Club was incredibly badly run. In fact Jimmy may not have written the report. Certainly at the AGM he gave every impression that he was seeing it for the first time.

So what has gone wrong ?  Basically there are two possibilities -

1. Jimmy's gone to the dark side - ie. decided to go along with the Committee and stop asking the tough questions. Why would he do that ? Hard to say - but he may have a long term goal to be Chairman and thinks this is the best way of achieving it. If that's what he is thinking he will be very disappointed - the Committee will never support him.
2. He has done nothing as Treasurer because he has been denied the information that would allow him to do anything. This is a real possibility. In reality Mark Cooper (Keith Free's nephew) controls the financial information and may supply Jimmy with the minimum possible. It could be that Jimmy really doesn't know much about the finances of the Club.

But whatever the reason it is clear that Jimmy Chen has been a total failure at discovering the real story of what happens to all the money at City Tatts.

The Decline of City Tattersalls Club - who is to blame ? (Part 3)

There is no question that City Tattersalls Club has gone downhill dramattically since Tony Guilfoyle started in the top job. But he is only an employee, answerable to the Committee. It is the Committee who are supposed to be in charge, in this or any other members club. So who is to blame ?

Patrick Campion - a study in weakness
When John Kennedy decided not to run again, because of the rising anger over his role in the Bookmakers Superannuation Fund, he was replaced by Patrick Campion. Campion, a solicitor, had been the Vice Chairman under Kennedy and had been on the Committee since 2005. Campion's key personality trait is that he is weak. He never really takes a stand on anything - he just goes along with whatever others have decided. There is no record of him ever standing up for members.

Campion;s track record - before becoming Chairman
Since Campion's time on the Committee coincides exactly with the the decline of City Tattersalls Club we need to have a closer look at his track record:

• First and foremost, since he joined the Committee, Campion has gone along with everything that Tony Guilfoyle has done to the Club. And that means everything. Every reduction in member amenities, every bit of waste (fees to consultants, overseas trips, legal fees etc), every failed project (Zest, the Coffee Cart, 194 Pitt Street etc) - you name it, Campion supported Guilfoyle om it. Not once did he question anything. And it also means that he voted for every pay increase and bonus that Guilfoyle has ever received.
• Campion blindly followed John Healy and John Kennedy on everything they did to restrict or remove the rights of members trying to save the Club.
• Campion was on the Committee when a donation of $80,000 was paid to a clinic in Moree run by his brother, Michael Campion (but never disclosed to members).
• Campion was Vice Chairman when he, along with most of the Committee, discovered that an employee had taken over $200,000 without their knowledge. Naturally Pat decided to do nothing about it.
• Campion's role in the Supreme Court case deserves special mention (see below).

Patrick Campion and the Supreme Court case
Campion's role in the Supreme Court action is very interesting for two reasons - he is a solicitor, and he specialises in defamation, which would be central to the case.

The basic facts of the Supreme Court case are fairly simple. A website devoted to City Tatts posted two articles - one explaining John Kennedy's role in the Bookmakers Superannuation Fund and another detailing a potential conflict of interest involvimg Tony Guilfoyle. A member was expelled by the Committee on the grounds that he was responsible for the website and he took action to have his membership reinstated. It is clear that there was no benefit to members from the Club's action. It was done purely to protect Kennedy and Guilfoyle. From a variety of sources we have been able to piece together Campion's role in the case:

• Kennedy and Guilfoyle were watching the website, and getting legal advice on it from Bartier Perry, from January 2010 but did not tell the Committee until April 2010.
• This is the explanation for the so-called Committee Executive mentioned in the Club magazine. There is no Committee Executive - that was just a way for Kennedy to justify the delay in informing the Committee. In fact, the Club rules have provisions for setting up a Sub-Committee. But they didn't suit Kennedy because they would mean that the Committee would set the terms of reference of the Sub-Committee and also require that minutes be kept of any meeting - which defeated the purpose of what Kennedy wanted to do.
• Campion's initial reaction was that the website was fairly harmless and that there was no need for the Club to do anything.
• When the rest of the Committee decided to expel the member Campion agreed with them !
• The Club (ie. Kennedy and Guilfoyle) claimed that the website was defamatory. Every court in the country would have rejected that idea since the website basically pointed out what had been obvious for years - that the Club was going downhill under present management. And truth is an absolute defence to defamation. If Campion knew anything about defamation he must have known that the defamation case was nonsense.
• After the member served notice of his intention to take action in the Supreme Court, Campion altered the minutes of the earlier meeting to make it appear that he had given the member a fair hearing before voting to expel him. (Bet you never thought anyone would find out about that  - eh Pat ?)
• The Club's legal tactic was essentially to bully the host of the website. They basically said to him - "just sign an affidavit to say that the expelled member was responsible for the website and we will drop any action against you". Did Pat have any problem with this blatant blackmail? - Not at all, he specifically mentioned in his own affidavit how he was confident in expelling the member because of the credibility of the web host's affidavit !
• But Campion's key move was during the week leading up to the hearing in the Supreme Court in September 2011. The case essentially rested on whether the Club had given the member a fair hearing or had just decided to get rid of him without any real cause (the legal term is "pre-judgement"). The problem for the Club was that the summons served on the member before they expelled him pointed strongly to the latter - that they had pre-judged the member. Campion's legal tactic was to get the entire Committee, including himself, to swear an affidavit that they were not aware of the contents of the troublesome summons !
• Let's just stop and consider what Campion is asking the court to believe here:

1. In a case which will be decided on the issue of pre-judgement, Campion simply swears an affidavit to the effect that he has not pre-judged - how simple is that !
2. Campion, a solicitor specialising in defamation, never bothered to read the summons - in a case where the Club's stated reason for taking action was the website's alleged defamation !
3. Campion was happy to spend over $100,000 of members' money to expel one member with no knowledge of the contents of the summons. 

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Boolmakers Superannuation Fund

The Bookmakers Superannuation Fund (BSF) pays .615% of its assets each year to Super Promoters Pty Ltd to be its "promotor". This has generated millions for the shareholders of Super Promoters since 2004 and enabled them to sell the company for $7 million to Diversa Limited, a company listed on the Australian Stock Exchange. From its formation in 2004, until its sale in 2009, Super Promoters had four Directors (who were also the shareholders) - three of whom were members of the fund's policy Committee and one was the fund's Administrator.

Documents lodged with the ASX revealed for the first time the full extent of this arrangement and it is hard to believe that a scheme like this could be acceptable to supervisory authorities.

The following are just some of the issues that arise from this arrangement:

A Super Promoters received almost $2m from the BSF in 2008 but it's operating expenses were less than $500,000 resulting in a profit of $1.5m to be distributed to the four principals. (In fact, Super Promoters only spent $24,000 on advertising and promotion in 2008.) The obvious question is - Why didn't the Trustee of the BSF insist on paying these expenses directly and save at least $1.5m of members funds ?

B Apart from the cost of this arrangement, there is no benefit whatsoever to the members of the BSF from this "promotion". Part of the arrangement is that the total fee to Super Promoters is fixed at 1.108% of fund assets. This means that increases in total assets could not lead to reduced expenses for existing members - but did result in extra fees to Super Promoters. It also means that the statement in the accounts that it is important that the fund "grow and thereby provide economies of scale" is simply false. Where was the benefit to members ? In reality the average member paid $800 each year to Super Promoters in an arrangement where the only party that could possibly benefit was Super Promoters !

C The announcements by Diversa released to the Australian Stock Exchange were very revealing. They openly state that "the opportunity exists to generate attractive returns from the Super Promoter's business by growing the Funds Under Management". And this is due to the "relatively low cost base which results in an increasing margin and increasing profitability". But this artificial "business" only exists because the fund paid $2 million for expenses that in reality cost less than one quarter of that. The "increasing profitability" is coming directly from member's retirement savings.

D How many superannuation funds pay "promoter" fees ? Is there another superannuation fund in Australia that pays fees to a "promoter" in a scheme like this ? The most likely answer is that in other funds someone in a position to protect members interests, whether a Trustee or a Member Representative, would have rejected a scheme like this at first sight.

E In the Annual Report members are told to direct any enquiries to the Administrator. But the Administrator has been part of the "promotion" from the start (and was able to get $1m from Diversa for his business). Likewise the normal procedure for a concerned member is to contact the Member Representative on the Policy Committee. But in the BSF the Member Representatives were often the same shareholders who received substantial amounts from the arrangement. It seems that in the BSF the very people who would normally protect members interests were part of the arrangement to extract fees from the fund.

F Many members of the BSF joined the fund on the recommendation and high praise from the Committee and senior management of City Tattersalls Club. Almost all of the leading players have been or still are connected with the Club -

• Of the four individual Trustees before it converted to a Public Offer Fund in 2004, three were Committee members or senior employees of City Tattersalls Club.
• The former Treasurer of City Tattersalls Club, Keith Free, managed the BSF for many years.
• The Policy Committee of the BSF, even in 2010, was still composed entirely of Committee members or senior employees of City Tattersalls Club.
• The BSF operated from an office in City Tattersalls Club for many years.
• The City Tattersalls Club Staff Super Fund merged with the Bookmakers Superannuation Fund in September 2004. (It would be very interesting to know how this came about.).

G When Super Promoters was set up in 2004, the four Directors and Shareholders were the same four people who had complete control of the Bookmakers Superannuation Fund -

• The Trustees of the fund, before it became a Public Offer Fund were John Kennedy, Peter Mueller, Peter Hayes-Williams and Ian Buxton. (It would seem to be a blatant breach of fiduciary duty for any Trustee to set up a scheme for their own benefit by exploiting the very assets they are holding in trust for others. And it must be a serious matter when it is done in a Superannuation Fund which has far more stringent regulations to safeguard member' funds.).
• The Manager of the Fund was Peter Mueller & Associates (who employed Peter Hayes-Williams)
• The Member Representatives were John Kennedy and Ian Buxton.
• The Employer Representatives were Peter Mueller and Peter Hayes-Williams.

Incidentally, these Member Representatives seemed to get appointed and replaced without any input from members

Given the circumstances outlined above it is easy to understand that APRA or ASIC would want to have a close look at this "promotion" scheme. It is hard to believe that a scheme like this could be legal.