The inside details of Illawarra Hawks owner’s NBL shock boilover attempt
Illawarra Hawks’ owner and Donald Trump loyalist, Jared Novelly dropped a bombshell ahead of his team’s most important game ever. Now, CODE SPORTS reveals the inside details of the boilover attempt.
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Larry Kestelman has delivered a short, emphatic rebuke of Illawarra Hawks’ owner Jared Novelly’s shock attempt to unite the NBL’s 10 clubs and force him to sell the league — “The NBL is not for sale.”
The NBL grand final series was, on Friday, rocked by revelations the billionaire oil scion and Donald Trump loyalist had launched a hostile takeover of the competition in a bid to oust Kestelman.
Adelaide 36ers and Melbourne United are the first NBL clubs to come out in support of the NBL and Kestelman in the wake of the revelations.
In a statement to Code Sports, Sixers owner Grant Kelley said the club did not share Novelly’s concerns and backed the current ownership “completely and with no hesitation”.
“We’re extremely happy due to a clear business strategy which has yielded great success measured by record attendances, strongest ever TV ratings, the NBL positioned as a destination for past and future NBA players, and an extraordinary increase in license values,” Kelley said.
Melbourne United, who will face the Hawks in Wollongong in Sunday’s grand final decider, affirmed its backing of Kestelman — who is in the throes of selling his 15 per cent stake in the club.
“We are currently 100 per cent focused on game five of the championship series. Melbourne United is fully supportive of Larry Kestelman and the NBL,” the statement read.
Multiple sources confirmed the Hawks had the lowest revenue in the NBL and lost over $6 million last season, more than any other club.
In an email to clubs, Novelly claimed seven had voted in January to “determine a new path forward for the NBL”.
In the email, Novelly raises issues of alleged “secret ambassador agreements, gambling revenue, the sale of the JackJumpers, integrity concerns and financial transparency” and offers up terms for the takeover.
Novelly touches on a report from financial auditor KPMG which alleges a history of inconsistent club distributions that “shines a light on the relatively small revenue share which the clubs receive when compared to the total NBL associated profits of NBLCO and the broader LK Group companies”.
“We think that the clubs need to act now to move towards a fair, sustainable ownership structure of the league which safeguards our investment in our Clubs and the league,” Novelly wrote in the email.
Code Sports has contacted all clubs asking if they supported Novelly.
Sydney, Perth, Cairns, Tasmania and Brisbane declined to comment.
One club source, who wished to remain anonymous, did say they backed Novelly’s desire for “change to create more club sustainability and better financial alignment” but made clear they were not on board with the takeover attempt.
It’s understood Novelly’s email to club owners landed in their inboxes on Thursday afternoon, setting off a chain reaction of shock and disbelief for some that the Hawks owner would take such an action just days before his team hosts the championship decider.
In a take over term sheet detailed in his email to club owners, Novelly proposed each of the 10 franchises would own a 10 per cent share in the league and Kestelman would:
-receive $1 million from each club (except Tasmania) in a total of $9 million
-retain the proceeds of the $35 million sale of Tasmania JackJumpers
-an ongoing position such as “honorary president” or a trophy named in his honour
Code Sports has been told there are no grounds for clubs to force a takeover of the NBL ownership. One source called Novelly’s offer “grossly out of touch” when clubs are valued at $40 million or more. Some believe the NBL itself could be worth upwards of $500 million.
NBLCO is solely owned by Kestelman. He was granted the NBL licence in perpetuity by Basketball Australia.
Kestelman is not obliged to entertain any offers to buy him out and, even if he were to sell the league, the sale would also need approval from BA.
A source told Code Sports the relationship between Novelly and the league first began to deteriorate four years ago.
“This has been brewing for years and will likely get very ugly,” said another source.
One source called Novelly’s actions “Trump-style bully tactics”.
“What I think this is going to lead to is Jared leaving the league because he’s clearly bringing the league into disrepute. I don’t know this for a fact but I think he could have his license suspended at a minimum,” the source said.
Code Sports has been told the NBL has reminded Novelly on a number of occasions of his obligations as a club owner.
If the Hawks owner continues his threats of launching multiple legal actions against Kestelman, Code sports has been told the NBL could take its own legal action.
Code Sports understands Kestelman will be at Sunday’s grand final decider at WIN Entertainment Centre and will hand over the Dr John Raschke Trophy to the victor, leaving the potential for an awkward presentation if the Hawks defeat United.
It would be an incredible win for a club that struggles to financially compete with the rest of the league.
The average revenue across the 10 teams is understood to be $9.2 million.
A source said the Hawks brought in $3.8 million last season and lost over $6 million, more than any other club.
Last season, the Hawks spent $2.91 million on player wages, according to ESPN.
One source said the Hawks had become serial complainers - not unlike coach Justin Tatum, who the NBL just stung with a $7500 fine after he intimated Melbourne United received preferential treatment over the Hawks.
“They are so disruptive, all they care about is complaining, they complain about refereeing, the commercial set up of the league, the categories of sponsors, everything,” one source said.
“Everything’s a written letter to the league saying ‘you’ve got to change’.”
Novelly said he could not comment when contacted by Code Sports early on Friday.
In a statement later that day, Crest Sports and Entertainment, the Limited Liability Company which owns the Hawks and of which Novelly is a member, hit out at the tenor of the reporting around his proposed buy-out.
“Crest is disappointed that a private email circulated to NBL club owners has been made public and inaccurately reported as a “hostile takeover”, the statement read.
“The proposal sent by Crest was for the 10 NBL clubs to buy the NBL, resulting in each club holding an equal 10 per cent ownership interest in the league and sharing equally in the profits made by the league.
“The proposal did not involve a takeover by Crest.
“This proposal was sent after many months of discussion about a restructuring of the NBL to achieve a fairer and more sustainable structure which would secure and promote professional basketball in Australia into the future.
“It follows longstanding concerns by clubs regarding the current operation, management and governance of the NBL.”
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