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Kooyong Lawn Tennis Club, one of Australia’s most prestigious tennis venues, has called in accounting giant Grant Thornton to investigate a $2.4 million loss from its club dining and functions operations.
The announcement comes amid a growing feud within the exclusive gated club, with several members concerned by what they said was a lack of transparency, while the president has issued a warning to members against making “inappropriate comments” to staff about the ongoing financial issues.
Members of Kooyong Lawn Tennis Club are concerned about a lack of transparency from the board, following the announcement that accounting giant Grant Thornton would investigate the club’s missing millions. Credit: The Age
The need to call in external auditors to review its books was prompted after the club announced an overall $2.4 million loss from its club dining and functions operations, and an overall loss of nearly $1 million – a seven-figure swing from the previous year’s $980,000 profit.
The loss-making year came despite an increase in memberships and record operational levels.
In the club’s annual report, Kooyong treasurer Ian Anderson attributed the cost blowout to catering and staff costs. It also led to the early departure of the club’s chef, who resigned in August.
The club’s executive team is adamant that no funds were misappropriated, but have admitted that they cannot fully explain how the $2.4 million loss came about.
Club president Adam Cossar informed members on Friday that Grant Thornton had been selected to undertake the review, weeks after he told this masthead that a shortlist of auditors was being considered by the club’s three-person financial, audit and risk committee.
“The board has made changes to resolve the situation and ensure it will never happen again including appointing accounting firm, Grant Thornton,” his letter to members, seen by The Age, read.
“They are to undertake an independent evaluation to forensically assess the accounting practices and specific operational aspects of our club and to make recommendations to address the situation.”
The president said they had chosen Grant Thornton because of its reputation for “high-quality, independent assessments”.
He added: “Additionally, they have extensive experience in dealing with hospitality operations.”
The firm has begun the review, though it is not known how long the process will take. Cossar also said changes had been made to its catering and bistro operations following a review from long-time CEO Chris Brown.
Grant Thornton has led other high-profile cases, including a review into Hillsong Church financials, following allegations of fraud and extravagant spending at the church. Partners from the firm were appointed as liquidators following the collapse of one of Australia’s largest home builders, Porter Davis.
Also in his address to the club’s 8700 members, Cossar wrote: “It is concerning that some members have made inappropriate comments to our staff regarding this matter and we request all members to treat all Kooyong team members with courtesy and respect.”
Fifteen members have spoken to The Age about their concerns amid the financial woes. They all requested anonymity as they feared they would be suspended from the club.
One long-term member said people were asking questions of staff because the club had not provided enough information on the issue to members.
“It’s almost as if you’ve got the board going ‘nothing to see here’ and you go home and pick up The Age and go ‘hang on’,” the member said.
“The silly thing is, the room is full of highly intelligent business people – and they’re treating us as if we’re in kindergarten.”
The other 14 members echoed this sentiment, with some saying they had been denied meetings with Brown to discuss the matter.
Cossar did not respond to detailed questions about the ongoing issues, including members’ concerns or what kinds of inappropriate remarks had been made to staff. Instead, he said:
“The Kooyong Lawn Tennis Club board has been open and transparent with members and will continue to keep them informed.
“We have already refined our operational procedures and have appointed accountancy firm Grant Thornton to undertake an independent evaluation of our financial practices.”
He added that the board would inform members of the review’s findings once it was complete.
The accounts show that overall, the members’ dining and functions component of the business went from a profit of almost $330,000 for the 2022 financial year to a loss of $2.48 million the following year.
The food and beverage section of the accounts reveals a near doubling of total expenses for the year to $10.96 million.
The accounts show a 155 per cent increase in food costs to $4.18 million. Comparatively, food revenue increased by just 43 per cent to $6.29 million. Staff costs jumped 77 per cent to $2.5 million.
Once the home of the Australian Open, council records value the sprawling tennis club located in Melbourne’s eastern suburb of Kooyong at $63 million. The club’s 8700 members added $10.7 million to the club’s balance sheet this financial year, with most paying more than $1000 in membership fees annually.
During the past financial year, the club chewed through $300,000 from its cash reserves, but it still has current assets of almost $3 million and total net assets worth almost $90 million.
Grant Thornton did not respond to questions.
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