Sydney Fish Market staring down financial collapse

Sydney Fish Market is on the brink of insolvency just as the roof takes shape on its taxpayer-funded billion-dollar new premises, with auditors refusing to sign off on the company’s accounts three months after the mandatory reporting deadline.

The company’s financial statements are yet to be published, but company sources not authorised to speak publicly said Sydney Fish Market would post an $8 million loss in 2023-24 and had retained insolvency experts.

The new Sydney Fish Market is rising on the other side of Blackwattle Bay from the existing site.Credit: Dion Georgopoulos

Its auditors were concerned it would not be able to pay the increased cleaning, insurance and operational costs associated with the new building, which is double the footprint of the current site and spread over two levels.

The company was forced to write down the value of its assets by $7 million in 2022-23 due to concerns it held about the design of the new building, conceding that some of its sunk costs were unlikely to bring future economic benefits. It posted a $6.3 million loss for the year.

It also faces the prospect of legal consequences, following the breakdown of its partnership with a technology company that was developing a digital trading platform, known as SFMBlue.

The Herald can reveal that Sydney Fish Market paused trading on SFMBlue in December, just two years after it was launched with $900,000 in seed funding from the NSW government, after wholesalers refused to support the platform.

SFMBlue was designed to boost trading power for fish catchers, enabling them to sell seafood directly to customers over the weekend when the auction was not running, and to lock in prices for a portion of their product.

It is the first time in Sydney Fish Market’s 30-year history that it has failed to lodge its financial statements on time. But the company has denied trading while insolvent and said in an official statement that it remained viable.

“We have no reason to believe this will change in the foreseeable future,” the statement said.

“It is taking longer than anticipated to finalise our financial results due to extenuating circumstances related to the once-in-a-generation transition to the new Sydney Fish Market. We are finalising the accounts with the appropriate level of due diligence, and these will be lodged this quarter.”

The statement said the company and its technology partner had mutually agreed to end their collaboration on SFMBlue, and the trading pause was an opportunity to engage with customers and stakeholders.

“Presently, our priority remains on ensuring a seamless transition to the new, iconic Sydney Fish Market facility on Blackwattle Bay.”

Fish sold at auction from the Sydney Fish Market are given picking slips before being wheeled into refrigerated trucks and taken to restaurants, fishmongers and grocery stores.Credit: Kate Geraghty

The financial crisis engulfing Sydney Fish Market comes five years into the construction of a new market that has already cost the government at least $836 million, and is set to be handed to the company on a 40-year lease for peppercorn rent.

It will also house 27 new subtenants paying market rent directly to the government.

The building was originally slated to open in 2024, but is now not expected to open until at least November, having been beset by construction delays, the collapse of a crane, and haggling over the design.

An Infrastructure NSW spokeswoman said Sydney Fish Market had committed to relocate to the new building once it was complete under the agreement for lease that it signed with the government in 2019, and the government was preparing to hand over the building later this year.

“The question of insolvency has not been raised by SFM with Infrastructure NSW, and we have not received any requests from SFM for financial support,” she said.

Sydney Fish Market’s 38 existing tenants, who own half the shares in the company (with the other half owned by the NSW Catchers Trust on behalf of the state’s fishermen), have consistently argued that the new building has insufficient power to meet their considerable refrigeration requirements.

They have warned that the building may need to resort to diesel generators over the Christmas period, causing disturbance to its neighbours and breaching environmental standards.

Wholesalers are concerned that delays caused by the logistics of moving seafood between levels after it has been sold at auction will flow on to retailers and reduce the value of their product.

If retailers do not receive their stock until the afternoon, they lose a day of trading, and potentially 20 per cent of the value of a product with a five-day shelf life.

Seafood wholesalers and retailers at the Sydney Fish Market are concerned that the movement of fish from the auction floor to the shops will be inefficient in a multi-level building.Credit: Kate Geraghty

Other gripes include the increased cleaning and maintenance costs of the new building and whether it will be able to meet its goal of doubling annual visitor numbers, given there is no increase in parking places, and a designated ferry wharf has disappeared from scope.

Infrastructure NSW promised when the project was announced that it would include a ferry wharf, but it is now describing the structure as a “recreational passenger wharf” that will be used for various private and public purposes and “can accommodate a ferry stop”.

INSW said it was discussing options for a Sydney Ferries commuter wharf with Transport for NSW.

Most of the existing tenants have refused to sign their new leases, which is likely to cause further construction delays because they cannot lodge development applications or enter contracts with builders. The doubts over the viability of the market are a further disincentive to sign.

If Sydney Fish Market becomes insolvent, the government can dissolve the head lease, but the NSW seafood industry would be thrown into chaos by the demise of the Dutch auction, which is unique in Australia and ensures that the daily fishing catch is sold quickly at fair prices.

Former chairman Grahame Turk said the biggest winners if the company went bust would be the wholesalers because they would pick up the $150 million worth of fish currently being sold at auction.

“If Sydney Fish Market disappeared, the fishermen would then be in the hands of the wholesalers, which would be very difficult for NSW fishers,” Turk said. “They will again be price-takers.”

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