South Sydney members will be given the first option to buy Russell Crowe's stake in the Rabbitohs as the actor's decision to sell out of the club casts doubts over privatisation in the NRL.
The provision for Crowe and Peter Holmes a Court to offer their 75 per cent shareholding in Souths to the club's members if they ever decided to sell is detailed in the terms of the deal negotiated by the Rabbitohs board in 2006.
Under the arrangement, two independent valuations of the club's worth will be obtained and the members will be offered the chance to buy back the club at the median price.
The members - through a company called Member Group - already hold the other 25 per cent stake and a ''golden share'' preventing any owner from changing the club's name, colours, logo or moving Souths from Sydney.
However, if the members can't afford the price, the stake will be offered to South Sydney Juniors, whose leagues club is one of the wealthiest in NSW.
How much the shareholding will cost is unclear as Crowe and Holmes a Court have spent more money than they have received from the Rabbitohs in the seven seasons since members narrowly voted to give them control.
It is also unclear whether it is the full 75 per cent stake that Crowe and Holmes a Court purchased through a company known as BlackCourt Holdings, or merely Crowe's shareholding.
The process for the sale that will be outlined by Souths chairman Nicholas Pappas and chief executive Shane Richardson at a news conference today vindicates the lengths the Rabbitohs' board went to install safeguards in the deal.
Newcastle officials copied many of the measures for their deal with coal baron Nathan Tinkler as it is widely accepted that no one makes money out of owning a rugby league club.
Crowe and Holmes a Court paid $3 million for their 75 per cent stake in 2006, while Newcastle's deal with Tinker provided for him to guarantee $10 million in sponsorship for 10 years.
What Crowe has done is help transform a great club that was struggling for success into one of the game's powerhouses again. And not just on the field, where the Rabbitohs made the finals for the first time in 18 years in 2007 and this season got to within one win of their first grand final since 1971.
Off the field, Souths are acknowledged as the most successful Sydney club with 22,000 members, $6 million annual sponsorship and average crowds of 18,904 at home matches.
But the Rabbitohs still carry a debt to Crowe and Holmes a Court in their financial accounts each year, and even if they never have to repay that, it highlights why the future is likely to be a return to a members-owned club.
With NRL clubs receiving an annual grant of $7 million next season and their share of the new $1 billion broadcast deal in future years set to increase, the days of clubs relying on leagues club funding and private benefactors are over.
With the annual funding grant now higher than the salary cap, NRL officials hope football operations will become self sufficient and Souths may be the first club to test that theory.
It is a situation the Rabbitohs have been in before, as they have not had a profitable leagues club for decades and needed to find other ways to balance the books.
That was how Crowe became an owner as he was sick of being asked to help the club meet its debts without any official say.
While the early years were difficult financially and the Rabbitohs continued to live beyond their means, they have traded profitably for the past four seasons. In the process, the club's turnover has doubled from about $8.5 million before the privatisation deal to $17 million this year. It is a good time for Crowe sell his stake and put the Rabbitohs in a strong position to control their destiny again.
- Sydney Morning Herald
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