NRL news: Paul Smith reveals how close he came to buying St George Illawarra Dragons

Self-made millionaire Paul Smith thought he had a deal to buy the St George Illawarra Dragons in 2018 but the Sydney Kings owner reveals how it all fell apart.

Paul Smith, owner and chairman of the Sydney Kings, came close to buying the Dragons in 2018. Picture: Jonathan Ng

Sydney Kings owner Paul Smith has lifted the lid on how close he came to buying St George Illawarra — admitting he’s glad the deal fell through because “I can’t work with people I can’t trust”.

The self-made millionaire agreed to be interviewed as part of a two-part series for the Saturday and Sunday Telegraph that delves into the merge of the once mighty St George Dragons and the blue-collar club from Illawarra, the Steelers.

Ahead of an uncertain 2022 season for the club, ‘The rise and fall of the Mighty Red V’ explores the success and failures of the joint venture, through the eyes of the club’s most influential figures.

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Smith’s opinion is that the merger “should never have happened — it was poor decision-making” and that the Illawarra should have its “own team”.

“As disappointed as I was at the time, I laugh at how gullible I was,” he said. “It was a huge lesson for me about how Australian business is done.

Paul Smith, owner and chairman of the Sydney Kings, came close to buying the Dragons in 2018. Picture: Jonathan Ng

“The fish rots from the head. Now it is a two-headed fish – you have the Gordons on one side and the Dragons on the other.”

Over an extended period in late 2018, Smith held high-level talks with Dragons powerbrokers over buying out the financially-stricken Illawarra side of the joint venture.

Smith had served as chief executive of sports consulting firm he founded – Repucom – for more than a decade before selling the company for nearly $300 million. He was preparing to plough some of that windfall into St George Illawarra.

His love affair with their region’s NRL team has been badly strained in the wake of the failed talks that eventually resulted in the WIN Group and the Gordon family buying 50 per cent of the Dragons.

After a meeting at St George Leagues Club three years ago, Smith was convinced a deal was on the verge of being done. That was, until he was overcome by a sense of dread.

“The strangest question we got was after I thought we had agreed to terms – everyone was nodding and winking in the room,” Smith recalls.

He says he was asked: ‘What are your thoughts on getting a new CEO?’

“It was a conversation point multiple times along the way,” Smith says.

“I thought we had gone over it several times. What we had said consistently is we don’t think you should hire anyone. I thought we had a deal, frankly.

“They could have pulled me aside and said, ‘Listen mate, we have a bit of a problem here, we love you but Johnno has to be CEO’.

“I would have said, ‘No worries, make him CEO as long as he doesn’t get in my way’. No one ever said a word.

LISTEN! David Riccio, Michael Carayannis and Brent Read go behind the merger of St George and Illawarra and the impact it had on the region.

“We jumped in our cars, happy days, thought we had done the deal. The next morning, good night. We were a stalking horse in all of it.

“We got played a little bit.”

Smith recalls talks with the Dragons through a prism of suspicion and regret.

“I get so many questions or people contact me about it,” Smith said. “My take on it all was the Gordons were always the preferred landing point.

“They were playing hardball. I was certainly couched as a wolf in sheep’s clothing by the St George people. They thought I was an Illawarra guy and would be another problem.

“I think we offered $11.5 million cash. That would have made the Illawarra side of it whole. I know (WIN) pulled up about $5 million short on our offer.

“I think we were played and there were occasions where we were lied to in the process by people with some reputations.

“If that is the way they are going to handle themselves, it wouldn’t have worked. My mind would have exploded, I can’t work with people I can’t trust.

“I feel sad for it and sad for the development of the game. Illawarra deserves its own team back as much as that would horrify people.’’

Other interviewees who will feature in the two-part special include Brian Johnston, David Waite and Andrew Gordon. Peter Doust declined to be involved.

How WIN was one

The joint venture was tipped to be a financial juggernaut but by the early 2000s, Illawarra was failing to contribute its financial share. That forced St George Leagues Club to stump up millions of dollars in loans to the Steelers.

The debt was nearing $10 million when WIN Corporation intervened in 2006.

WIN bought 24 per cent of the Steelers’ half-share of the joint venture and repaid $6.5m to St George Leagues Club as part of the deal, with Andrew Gordon given a seat on the St George Illawarra board and a guarantee matches would remain being played at WIN Stadium in Wollongong.

With the Steelers nearing insolvency, the Dragons started protracted negotiations with WIN to come on as equal partners as far back as 2015.

In 2018, the WIN Group found itself embroiled in a bidding war with Total Sport and Entertainment — led by founder and chairman Paul Smith — to take over the entire Illawarra stake.

St George Leagues Club considered buying full control of the Dragons but eventually a deal was made with WIN for a 50 per cent share.

St George and WIN make up an even split of the St George Illawarra board with Gordon installed as chairman in 2018.

“Over time, our involvement at board level led to the view WIN could add value in other areas to the NRL club if an ownership position was taken up,” Gordon said.

“WIN also viewed its alignment to the free-to-air NRL broadcaster and own involvement in free-to-air television as a positive for the club.”

WIN’s first task was paying off the $6m debt the Dragons owed the NRL. Brian Johnston replaced Peter Doust, who would not be interviewed for this story, as chief executive for a second stint but was in the role for just 18 months. He insists WIN was a natural fit.

“St George Leagues Club carried the financial burden,” Johnston said.

“It’s enabled the leagues club to get ahead again with significant money in the bank.