The iconic City Tattersalls Club has reluctantly been forced to sell off its under-development Pitt St site in Sydney’s CBD, as it battles to exist in an environment of changing times and falling revenues.
After a recent announcement that a sale was forthcoming, the Club closed a deal last week on the premises for $24.7 million.
The buyer is a consortium 90 per cent owned and led by Singapore-based and listed First Sponsor Group, which is the company responsible for the club site redevelopment, in conjunction with developer ICD Property.
City Tatts secured approval late 2021 for a major redevelopment, slated to deliver a new premise, beneath a 100-plus room hotel and residential tower of 241 apartments. Existing heritage elements of the facade and interior of the club will be restored. The site at 194-204 Pitt Street was closed at the end of 2022 to begin works.
The nearly 130-year-old club area, spanning several storeys plus basement, will now be part of the broader redevelopment.
At the recent AGM chairman Patrick Campion warned of the increasing difficulties it faced, which has escalated to “a world of pain” since moving out of Pitt St as works were being done.
“Even when at Pitt St, gaming, whilst still profitable, was in decline,” Campion said.
The situation forced the Board to make the “very tough decision” to sell Pitt St, which he stresses was one not made lightly but was essential if it was going to survive at all.
“The club explored several options to sell, and ultimately, accepted the best offer presented, which came from the consortium led by First Sponsor.
“This deal will safeguard the club’s future and will enable City Tatts and members to fully embrace its Castlereagh facility,” said the chairman.
In a stark admission, Campion explained at the meeting that the club’s only real profit centre for more than 40 years has been gaming, and it has subsidised other “largely loss-making” activities.
However, even the gaming is now in decline, and is said to have fallen “alarmingly” since leaving Pitt St, leading to serious losses each month and a rapid rise in debt. Minutes from the AGM outline current debt of $28 million.
The club sees the downturn as stemming from the increase in online gaming, as well as rising competition from casinos and other venues in the CBD, but also points to gaming regulation and anti-gaming pressure from both the community and politics.
Outside of gaming, the Club also cites falling membership at one of its other city sites, The Castlereagh, which is paying high rent on its prime premises, and the overall cost-of-living crisis. The pandemic already brought impacts by way of extended periods with little or no revenue, and the transition of potential patrons to working from home.
It’s hoped the sale will allow the Club to pay off debt and to buy another clubhouse, preferably in Castlereagh St, but the century-old institution may be looking at a location outside the CBD.
Reportedly a lot of potential buyers were put off by the complexity and risk of the development, with some preferring the option to purchase after the project had been completed.
For the past year the Club has taken “drastic steps” to reduce overheads, but remains burdened with “unacceptable” levels of debt. Campion told members the developer was making a commercial decision, and not doing them any favours – but a deal should allow the Club to pay its debts and “give it a chance at survival”.
Similarly, last month the Kirribilli Club on Sydney’s north shore announced it was entering voluntary administration, succumbing to rising costs and falling profits.
Effectively unable to borrow its way out, the pressure forced Tatts’ decision to sell early, while the property was being redeveloped, although this meant sacrificing value it would have realised if sold after the project was done.
“Our Club cannot wait for the development to be completed … it needs funds now,” boded Campion.
