The strange rise and fall of Elenberg Fraser

There has always been a cloud over Elenberg Fraser’s participation in the the City Tatts property project.

Many in the property industry were sceptical almost from the start about their commitment to City Tatts. This has been aired before on this blog (See 2016 blog Are Elenberg Fraser still working on the City Tatts project?)

As that blog pointed out, there was something a bit strange about Elenberg Fraser being paid less than $30,000 in 2015 for 8 months work on a $200 million project, that had non-stop problems. During the same year an architect who never designed a 48 storey building in his life, Peter Georgeson, got $205,000.

In 2016 the same thing happened. Elenberg Fraser got less than $30,000 (only payments over that amount have to be reported), while Georgeson got $86,000.

So how much work could they really have done on the City Tatts project since April 2015?

Of course, if they actually do charge so little probably everyone should use them.

It is also interesting that they always kept very quiet about their involvement with City Tatts. In over two years they hardly mentioned it.

But the funniest part about their departure is Patrick Campion’s explanation. In his attempt to spruik the new architects he said they were selected because of their “strong working relationship with the council, solid heritage experience and a sound submission strategy”!!

Is this Campion’s way of now telling us that Elenberg Fraser lacked all this?!!

City Tatts Information Desk


What would Tony Guilfoyle have done with a property development?

Restaurants were the first area to alert City Tatts members to Tony Guilfoyle’s destruction. In fact they are a very good guide in any club to the competence of management, and whether the club is run for members or for management.

Closing the Smorgasbord and replacing it with Zest, at a cost of $2 million, told you everything you needed to know about Tony Guilfoyle. Clearly it was not done with members in mind.

But the sheer scale of the rorts in the City Tatts kitchen during Guilfoyle’s time is staggering. Any one of these examples of waste, entitlement, greed or plain stealing on their own would be a concern. But in total they must have amounted to a huge cost to the club.

And would help to explain the dismal losses on restaurants and bars.

Remember, it was just a simple kitchen, there to provide meals for members and guests. If Guilfoyle could establish such a culture of wholesale looting in a kitchen, what would he have done when the club became a building site for a $200 million property development?

Especially with Patrick Campion supporting him all the way.

City Tatts Information Desk

TABCORP Gaming Solutions?

You may not have heard of Tabcorp Gaming Solutions before but you might hear a lot about them in the very near future.

The rumours are that Marcelo Veloz is about to do a major deal with them.

Any deal with Tabcorp Gaming Solutions would represent a dramatic change in the finances of City Tatts. You only have to see what happens when they go into other clubs to understand why.

When they move into a club they give the club a cash payment up front and often pay for a makeover of the gaming floor. This can be very attractive to the club but there is no free lunch. For supplying the cash and makeover they get the right to operate the gaming machines as if they owned them. Thereafter the gaming profits go to Tabcorp, not the club.

The obvious question is: Why would City Tatts go into a deal like this?

On the surface, the idea of a club with 400 poker machines, or probably 300 now, needing a cash injection is ludicrous. So a deal like this sounds like absolute desperation. But then they have spent millions on a failed property development attempt.

You can’t help feeling this is like running up the white flag on City Tatts.

Of course it is possible that the trials and tribulations over the proposed TAB at 196 Pitt Street may give Tabcorp pause for thought about any deal with City Tattersalls Club.

City Tatts Information Desk

Colliers cast doubt on Colliers advice

There is a building for sale on the Parramatta Road at Auburn with an asking price of $20 million. It is a 4 level bulky goods retail centre with a total area of 7500 square metres, and a yearly rental income of $1.36 million.

The interesting part is that Colliers International are the selling agents.

According to Colliers “director” John McCann, “This building is in an outstanding position close to the busy intersection of Great Western Highway and Silverwater Road …”. Another Colliers “director”, Trent Gallagher chipped in and said it was a “retail landmark”. (Colliers seem to have a lot of “directors”. Wonder if any of them are in the Australian Institute of Company Directors?)

Anyway, if a bulky goods centre, “close to the intersection of Great Western Highway and Silverwater Road” in Auburn is worth $20 million, then the City Tatts site with 45 metre frontage on Pitt Street, 20 metres from Pitt Street Mall, would have to be worth $75 million to any developer.

But hold on!

It was Colliers who advised City Tatts that $25 million from Mirvac was a good deal, and the same again from the Chinese developer. Robert McCuaig and Jon Chomley were the Colliers reps dealing with City Tatts.

Yes, $25 million to build 270 apartments in the centre of Sydney CBD.

This is not the first time a Colliers sales team has highlighted the City Tatts property deal as so bad for the Club it bordered on fraud. There have been quite a few since 2013.

It would be very amusing to watch the various Colliers representatives defend their different valuations in court.

City Tatts Information Desk

The City Tatts Leasehold Apartments

There is one detail about the the City Tattersalls Club property plan that could easily be forgotten, but which might turn out to be the most important of all – the famous “leasehold apartments”.

This small detail makes you wonder if the property development was ever a genuine venture from the start.

Pat Campion told members in 2012 that the apartments to be built over the club would be sold as 99 year leases, with City Tatts retaining the freehold title. On that basis the property development could have made sense, because it would have created an asset the club would own.

It’s important to point out that every legal expert who heard this predicted at the time it would never happen. Every one. Incidentally, Pat Campion is a solicitor. Surely he would know too?

Anyway, a year later Campion told members the leasehold apartments plan was “not feasible” and the apartments would be sold as normal strata title apartments.

But now we come to the most amazing part. Pat Campion agreed to give Mirvac full title to the 270 apartments, so they could sell them and keep all the profits. But he did not get one dollar extra from Mirvac for this.

This must be the most extraordinary contract variation of all time.

City Tatts Information Desk

Crescent Hotel sold for $40 million

The Crescent Hotel in Fairfield sold for $40 million last week.

It has a TAB, a restaurant and 30 poker machines.

Just compare that to the deal Pat Campion and Tony Guilfoyle negotiated with Mirvac (and later the second developer) for the City Tatts site.

Remember Mirvac planned to build 270 apartments above the club – and would keep all the profits from their sale. In recent times developers have been getting top dollar for apartments in the Sydney CBD. And even by CBD standards apartments in new developments around City Tatts are going for premium prices – as much as $2 million for 2 bedroom apartments.

City Tatts got $25 million from Mirvac. But, in the strangest decision in the history of club redevelopments, Tony Guilfoyle asked Mirvac not to complete the club’s floors. They were to hand over the club’s new floors as “cold shell” ie as bare concrete shells. This made absolutely no sense in construction terms. It was also an insane decision in financial terms.

Combine that with the fact that the club did not even get enough to pay for the fitout of these floors and would have to borrow at least $7 million to finish them ready for members. Remember when City Tatts went into this deal they already had a fully furnished, fully fitted-out premises.

Taking everything into account, City Tatts would have needed to get at least $75 million to even consider a deal with any developer.

$25 million was not just a bad deal.

$25 million was basically fraud.

City Tatts Information Desk

6 months since Land & Environment Court rejection

On May 30th the Land & Environment Court rejected the (second) City Tatts DA.

Next Thursday marks six months since then.

You may recall what Patrick Campion said at the time. The Committee were going to “consider the judgement in detail” and “communicate the club’s position and possible next steps to members”.

And what happened to all that?

Well, absolutely nothing, it seems.

A lot of what was said was standard public relations fluff – just Campion and the developer putting on a brave face on what has been a complete disaster. But apart from that Campion is supposed to represent members. Which means he has a responsibility to tell members, honestly, what is going on with their property. Not to mention accounting for the millions spent pursuing Tony Guilfoyle’s property dream.

And, yes, it has been a complete disaster. Remember, they tried two developers, two DA’s, and spent $6 or $7 million of members money. And the result? Total failure.

If they have abandoned the property development, they should say so.

Members shouldn’t have to rely on blogs to know what is happeneing to their club.

City Tatts Information Desk