Profile: Gy Wallace, CFO of Cronulla Sharks
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By Brendan FitzPatrick (CFO World)
Childhood Sharks fan Gy Wallace as CFO of the embattled Cronulla-Sutherland Sharks Rugby League Club seems the perfect mix of his early rugby league playing aspirations with an ideal career progression for this talented finance professional.
And Wallace is playing a key role in the club’s ambitious game plan. Using a substantial property asset to restore financial stability, the tactic involves capitalising on a prime bayside location and well-loved brand to restore the struggling club as a serious contender to win a coveted NRL premiership.
The CFO is the lock that holds the whole plan together. With money tight, the club has eschewed a CEO, relying on their hot-shot financial wizard to get them over the line.
For Wallace, it’s a dream job. “I've been a Sharks fan since I was a kid, and I’m privileged to have the opportunity to do something I really want to do.”
Although the Cronulla-Sutherland Sharks represents the fiercely partisan Sutherland Shire in Sydney’s far south, their fanatical followers stretch far and wide - despite never winning a Premiership.
Financial struggles have dogged the club through much of its 44 year history, but they’ve survived lean times before. Perhaps there’s no silverware in the trophy cabinet but this is a club that knows how to fight for its life.
It’s the sort of place where the names of its former sons are uttered with knowing reverence and admiration. Names like Tommy Bishop, Greg Pierce, Steve Rogers, Gavin Miller, Andrew Ettingshausen and David Peachey - all legends of the game whose portraits adorn the corridors, evoking the overwhelming sense of pride this club has in itself and its history.
Amidst the photographs on the walls of these past Sharks legends is a poster featuring the current Sharks captain, the NSW State of Origin captain and Kangaroo, Paul Gallen, above a simple and powerful single-word caption, “BELIEVE”.
That single word speaks volumes of where the Sharks are today, and keeps providing Wallace and the rest of the leadership team with real motivation inspired by Gallen’s legendary workhorse achievements.
While the Sharks’ financial position has long been tenuous, by 2009 the club was amidst a catastrophic crisis. Historically asset-rich but cash-poor, equity in their assets had been steadily diminished through bad luck and worse management. With a large debt to be serviced, a re-structure of the club was its last chance at survival.
“When I took over the running of the Sharks in 2009, the club was based on an old-fashioned model both constitutionally and structurally,” says Sharks chairman, Damian Irvine.
“Having acquired large debt over the previous 10 years and with declining cash flows, the club was under extreme financial pressure. Worse still, it was also under extreme external pressure from a public relations and branding point of view.”
An outdated administration model gave the CEO an inappropriate level of independence, with limited governance from HR or financial departments. The business had also assigned critical functions (including all financial reporting, policy and systems management), to a financial controller with limited experience and qualifications, Irvine says.
“The need for sound financial management, sound governance and visionary leadership was paramount.”
The Sharks needed a new player, a chief financial officer to take responsibility for the financial management of the Sharks and to also act as a conduit between the board and the general managers of the three primary business units that make up the Sharks group.
35-year old Gy Wallace fitted the bill perfectly, and understood the game, to boot (pardon the pun).
Bringing over fifteen years of professional business experience in commercial, financial and operational fields and with past roles including work in London, Dubai and Singapore in business, project and financial management, Wallace had worked across both private and public sectors.
“The thing I pride myself most in my professional career is the leadership I bring to a job or a project,” Wallace says. “Preparation, strategy and a focus on finding solutions are fundamental to me, and it’s important that I have a team of ‘can do’ people who come up with those solutions.”
But while he offers a broad range of expertise, experience and abilities to the Sharks, he says some of his most valuable skills are those he developed before entering his current career.
Having played amateur rugby league in his teenage and young adult years in country NSW and while at university, Wallace says he’s applying the lessons he learned on the pitch to the work he does now.
“Football taught me that if you want to be really good at something, there really is no substitute for hard work, commitment and preparation,” he says. “You’ve also got to believe in yourself and your abilities and play to your strengths.”
There are lessons for his colleagues, too. “The other thing I took out of playing footy is the importance of teamwork and leadership. On the footy field, everyone has a job to do. When everyone commits to doing that job, success will follow.”
The different club
The Sharks are actually two separate legal and business entities - a rugby league football club, comprising football operations and corporate functions (Cronulla Sutherland District Rugby League Football Club Limited) and a licensed club (Cronulla Sutherland Leagues Club Ltd and Controlled Entities). Both sit under the stewardship of one member-elected board.
Wallace jokes that from time to time he is forced to play referee between those business units but is yet to send anyone to the sin-bin.
He stresses that his focus is on considering what is the best use of the available resources and what will maximise the return to the group as a whole – every dollar being spent where it’s most needed.
Necessity breeds innovation, and the Sharks have become NRL trendsetters, focussed on stepping outside traditional ways of doing business.
The CFO works closely with a hands-on board boasting a formidable combined skills-set embracing all key business disciplines.
“It's quite a unique and interesting business structure to be involved in,” Wallace says. “It works because of the range of talents on tap within the board. We’re very lucky with our chairman, who in many ways plays a role more similar to a managing director and who has strengths in marketing and media liaison.”
However, trailblazing a new business structure in an unfamiliar industry and under large amounts of financial pressure has its highs and lows.
“When I started here... the Sharks were at the beginning of a four game winning streak. Staff in the football club were walking around smiling, the Leagues Club was full of patrons and the turnover was up. There was such a positivity and buzz around the place.”
But Wallace was soon to learn about the volatility of cash flow in a business that is so intrinsically linked to its team’s performance on the field.
“From there, the team wasn’t getting the results on the field and the whole mood of the place changed completely. In most businesses you have your highs and lows, but it is quite unique to be in a situation where things can change so remarkably week to week. That’s when having strong management and leadership skills come to the fore and you focus on staying positive and mitigating risks.”
The solution
Gy Wallace’s single greatest challenge is managing a club hamstrung by a legacy of debt. Former club administrators had borrowed on land assets to pay for operational costs, leaving an estimated aggregated debt of approximately $13.5 million.
The key to recovery was to reduce inefficiencies and to address under-performing assets.
By an almost unanimous membership vote, the club entered into a joint venture partnership with a consortium of three well-established property developers to develop the land holdings of the Sharks.
The bold $300 million project will be the first mixed residential-retail development of such a size in the Sutherland Shire and incorporates upgrades to the stadium and club buildings, along with a mid-sized retail, medical and leisure centre on the site of the club’s existing car park, and a multi-storey bayside residential development on the site of existing playing fields.
In August 2012, the NSW Planning Assessment Commission approved the concept plan for the Sharks $300 million property development
Wallace is keen to spruik this new venture. “One of the biggest reasons I wanted to come to the Sharks was to be involved in the transition of the club from a financially struggling business hampered by significant debt to a financially secure and profitable business realising the best potential out of its assets. There are certainly exciting times ahead.”
As a part of the joint-venture partnership agreement, the consortium will pay a $10 million advance to the Sharks on approval, bringing the club’s estimated debt from a crippling $13.5million to a far more manageable $3.5 million.
Wallace admits that the approval of the proposed Sharks development will be the club’s watershed moment. “So much of the business and culture of the Sharks will change at that crucial point in time,” he says. “We’ll go from a business that is currently hamstrung to one with a whole new range of ventures and opportunities that we will be in a position to deliver.”
With the high-profile proposal already attracting interest from large retailers like Woolworths, Coles and Aldi, Wallace predicts the associated re-zoning will lift the land value significantly.
“The scope and nature of how the Sharks do business and what they offer the customer will never be the same. The knock-on effect of that is we will immediately become a far more attractive opportunity for sponsors and investors."
Irvine, the chairman, agrees. “We've done the hard yards and are currently building a strong foundation for the club. As new revenues and increased cash flows provide the organisation with greater financial capacity and freedom in the next 24 months, we’ll be in a strong position to make the best out of future opportunities.”
He doesn’t rule out a future re-structure of the business and says the Sharks administration welcomes the flexibility of change offered by their current business structure.
The lean team running the club today now has the stamina to last past the next season. Breaking with tradition has spurred the Sharks on to explore new ways of providing customer experience outside the traditional club industry model. With reliance on traditional gaming revenues continuing to be under pressure, the club is committed to exploring alternative business opportunities and revenue streams.
Wallace says that the introduction of new technologies in gaming, business management and game-day experience will be an important point of differentiation for the Sharks, who plan to connect and engage with their patrons beyond the customary models in sport in Australia.
“We’d like to explore new technologies in connecting and interacting with our clientele. We see a time where people could book facilities via their mobile phone directly through to a wi-fi intranet, or gain direct access on game-day by simply tapping their phone on a turnstile sensor and to receive value-added news and commentary at the game. The opportunities really are endless.”
Wallace’s face lights up when talking about his future and the road ahead for the Sharks.
“In nine months, I’m hoping to be sitting in this office, with our football team in the top eight, preparing for a finals series. The development will have been approved and the debt that’s hung over our heads down to a manageable amount. The Leagues Club will be a lively, buzzing place to be seen,” he says.
“Looking out this window, I’ll see the preliminary work going on for the retail component of the Sharks development, and at the end of the day, I’ll return home to spend time with my wife and by that stage, two kids.”
Indeed, the future could look very bright for the Sharks and Gy Wallace. Perhaps the caption under Paul Gallen’s poster is right after all.
