PUBLIC ANNOUNCEMENT – PVRSC & PDBA UPDATE

This announcement aims to clarify facts and address concerns circulating in the community. Both PVRSC and PDBA Boards recognise that past challenges should not detract from the shared goal of delivering the best model for the community and basketball, in line with governance requirements and legal obligations.

At this time, PVRSC is pausing the implementation of its own competition pending final confirmations on key matters affecting both organisations. This ensures that a joint solution remains possible, with PDBA members having the opportunity to vote on any proposed merger conditions as per their constitution. If the merger is not approved, PVRSC will set a new date for its competition and communicate this accordingly.

Key Facts & Responses to Common Questions raised by PDBA members:

The current model between PVRSC and PDBA

The current operating model between PVRSC and PDBA has presented challenges and inefficiencies that have led to some confusion within the community. A council review also identified areas where the operating model could be improved to enhance long-term sustainability.

Is PVRSC financially viable?

PVRSC is financially viable and not operating at a loss. Since the 2001 demerger, PVRSC has taken steps to maintain financial stability while navigating challenges related to asset renewal and maintenance.

We have heard PVRSC has millions of dollars in loans with Banks they cannot pay?

This is incorrect. The PVRSC has a loan we took out with Westpac in 2020 for $500,000. The loan was taken to complete the renovations to ensure all the changerooms and bathrooms on the lower floor were upgraded. The loan was approved based on PVRSC’s financial position and continues to be serviced.

What is the debt PVRSC has with Council? Our understanding is PVRSC are broke, and council had to bail them out?

The PVRSC management want to explain the entire journey. At the completion of the 2020 renovations, the PVRSC discovered water and what appeared to be a leak at the front of court 3. During testing of the hydrant to find the source of the leak by contractors, the hydrant failed and flooded courts 3 and 4, this was during October 2020 just as we were about to reopen from the first COVID lockdown. The PVRSC put a claim for the cost of the floor under their insurance, which was covered. To get occupancy the PVRSC had to now install a new fire hydrant system to be fully compliant with current standards. The PVRSC discovered during the lockdown and renovation project that the federal government had placed lending restrictions to a maximum of $500,000 on small businesses. At this point in time PVRSC had to get insurance for the building which cost $56,672 and it also needed $30,000 to finish the renovation project. This was the money that the PVRSC borrowed from the PDBA. As we explained, the PVRSC couldn’t get finance from the bank and went to the council at this point to seek funding for the new hydrant system.

While a grant could not be provided as requested, a loan was provided to the PVRSC. The works had to be completed under the strict supervision of a council appointed Project Control Group and under the strict council’s procurement processes. Councillors approved the loan for $1,200,854 in October 2020 in which PVRSC is making regular repayments as per the agreed loan terms. The project was completed prior to Christmas, in December 2020, which allowed us to obtain our occupancy certificate to reopen our doors, meeting the modern Building Code of Australia (BCA) requirements. However, the PVRSC still had to wait until March 2021 to have courts 3 and 4 repaired. Losing a substantial amount of income.

During the repeated lockdowns, PVRSC began repaying the $121,984 owed to PDBA, which included the previously mentioned amounts as well as costs for new lights and a lift that PDBA requested. While payments were not made every month due to lockdown disruptions, consistent repayments resumed throughout 2022, and the debt was fully repaid by January 2023.

In December 2022, increased concerns arose regarding the condition of Courts 5 and 6, including signs of termite activity identified through monitoring and pest control programs. The floor, constructed in 1988, did not meet modern building standards and lacked accessibility for thorough inspections. In some areas, clearance was so minimal that a standard-sized soft drink can could not fit underneath. While pest control measures were in place, the structural limitations made comprehensive inspection and treatment challenging.

Initially, PVRSC funded repairs for a large section of the floor in March 2023, believing the issue was isolated. Additional pest control treatments were also applied to the affected area.

It started to become evident that the termite infestation was not limited to a single area but had spread throughout the entire hall, including the grandstand. PVRSC conducted bi-weekly assessments of the floor, monitoring its condition to determine when it would no longer be safe for play.

An inspection in June 2023 confirmed that Court 5 & 6 were no longer safe for use.

Discussions with the council resumed, and PVRSC consulted WorkCover to determine whether the floor could be removed in-house using hand tools. Approval to proceed was provided, allowing PVRSC staff and a board member to complete the work internally. By undertaking this work ourselves, PVRSC management saved tens of thousands of dollars in labour costs. Additionally, making the removed timber available to the public for collection further reduced expenses by eliminating the need for costly disposal of tonnes of material.

In September 2023, after extensive discussions with the council, a motion was put forward to councillors to approve a maximum loan of $1,638,398. Due to PVRSC’s proven track record of successfully completing major infrastructure projects—such as the installation of a 650m ring main hydrant within two months under strict procurement controls—the council approved the project with limited oversight, acknowledging PVRSC’s ability to adhere to local government procurement requirements.

As part of the loan discussions, it was agreed that an independent review of PVRSC’s business model would be conducted by independent consultants to support long-term sustainability. A key loan condition required an independent assessment of financial planning and operations, including an evaluation of a business model that considered re-amalgamation between PVRSC and PDBA as the recommended path forward. Additionally, the review will also consider the potential future impacts of the new indoor multisport facility to be constructed adjacent to the Gipps Street Recreation Precinct. This review is still ongoing, and PVRSC has not yet received the report for comment. The report was originally due within six months, following the operating model review discussed in the September 2023 council meeting. However, the consultants were not appointed until October 2024 and commenced work in December 2024. Upon their appointment, the council still advised both PVRSC and PDBA that merger discussions should continue, with the goal of negotiating and forming a single entity by 31 December 2024.

The second condition stipulated that while interest on the loan would continue to accrue, repayments would not commence until two years after the floor was reinstated, meaning the first repayment is due in May 2026. This deferral prompted PVRSC’s recent announcement regarding a planned change to its business model in April 2025. While interest accrues during this period, adjusting the business model will enable PVRSC to build financial reserves to meet future loan repayments. Given the timeline, this change has now become critical to proceed without further delay.

Why not let Basketball just run the stadium?

In 2018, PVRSC proposed a model where PDBA could manage the facility, but an agreement was not reached. At the time, PDBA opted to allocate its funds based on its own strategic priorities.

What is not stopping PVRSC at the point of the merger taking what money the PDBA has and spending it on for example Netball?

Under the proposed merger conditions, PDBA’s funds would be designated exclusively for basketball, subject to agreed governance structures.

What happens to the existing PDBA staff?

It was agreed in the previously proposed Heads of Agreement, PDBA staff would be retained under PVRSC employment.

Can’t we have more than 2 seats on the Board?

Firstly, it is important to note that when an individual becomes a director of any organisation, they have a statutory responsibility to act in the best interests of that organisation as a whole. This means that all decisions must be made with the organisation’s overall success and sustainability in mind.

Through much needed advocacy we received constant feedback from all levels of government, that Grant funding outcomes, are more successful to organisations that have a community board instead of a single user group board. This was one reason why the 2019 Federal grant for $1.2 million was awarded to the PVRSC. It is also important to acknowledge that, until recently, PVRSC had three nominated board members from PDBA, one of whom has since resigned. Additionally, the current General Manager, a former PDBA Director, was nominated by PDBA to serve as a director of PVRSC until 2018, before transitioning into their current role. Several other directors have also been, or remain, actively involved in PDBA programs as members, collectively bringing 150 years of basketball-related experience to the organisation.

To ensure basketball remains well-represented, PVRSC offered PDBA two seats on the board, with representatives to be nominated by PDBA members through a basketball advisory committee. This structure was designed to enhance communication, improve collaboration, and ensure basketball stakeholders have a direct voice in decision-making while still aligning with governance obligations.

What happens if the PVRSC go broke or council take the facility over?

As demonstrated in 2001, a de-merger could be facilitated by basketball representatives and members if necessary. To provide further security, discussions have included provisions that may allow PDBA to explore independent re-establishment in the event of significant operational changes at PVRSC. This safeguard guarantees basketball’s continued presence and operation within the community, regardless of future circumstances.

Why does the PVRSC cancel local basketball games and take other bookings other than Basketball?

PVRSC schedules events that generate higher revenue compared to the current court hire arrangements for sports. These events are booked well in advance to allow for planning around these.

PVRSC Financial position

As previously stated, the demerger of basketball from PVRSC was originally intended to ensure that overhead costs and asset renewal would be covered by PDBA’s contributions to PVRSC since 2001. However, the current board only became aware of the 2001 demerger conditions in 2023, which is why previous management had not pursued this as an issue with PDBA.

While PDBA remains one of PVRSC’s largest hirers, it currently contributes approximately 27% of total turnover averaged over 5 full years. Hosting large-scale events provides significant benefits, including increased grant opportunities, vital revenue for facility sustainability, and broader community engagement. Additionally, these events serve as a recruitment pathway for new participants in local sports and contribute positively to the local economy by attracting visitors from the wider community.

One of the biggest concerns raised by PDBA has been the future viability of the stadium. This concern arose from a misinterpretation of figures from the Building Condition Assessment Report (BCAR), leading to misunderstandings about its purpose. The report serves as a long-term planning tool, outlining potential asset renewal and maintenance costs based on the facility’s current condition. It does not mandate specific replacements but provides estimates for future asset management.

For clarity, this does not mean that all the costs outlined in the report will occur, nor does it dictate that all works must be undertaken within this timeframe. The report also does not explore alternative solutions that may be more cost-effective or staged over a longer period. Instead, it was a due diligence exercise undertaken by PVRSC to better understand potential future capital needs for asset management.

PVRSC acknowledges that this report has raised concerns within the community. To address this, PVRSC sought legal clarification regarding any potential financial obligations the board may need to consider.

With this in mind, our actions remain on hold as the PVRSC Board work to obtain clarity for the community and PDBA members.

PVRSC and PDBA remain committed to ensuring a sustainable future for basketball in Penrith. Our priority is to provide a single, safe, and well-managed home for our basketball community. Once further financial clarity is obtained, PVRSC will confirm its next steps in alignment with PDBA and council discussions.

Thank you for all the correspondence we are receiving from the members that acknowledge the need for change for a better program and the importance that you all place on ideally the solution being one made collectively where everybody remains in the current facility. The PVRSC appreciate your patience and understanding as the PVRSC work towards the best outcome for all stakeholders.

Sincerely,

PVRSC Board of Directors