National Basketball League supremo Larry Kestelman told the billionaire owner of the Illawarra Hawks that “volunteers normally get shot” while rejecting a proposal for a team charter, according to court documents that have escalated the dispute between the newly crowned champions and the league.
The claims have been made as part of a preliminary discovery action filed in the NSW Supreme Court by the Illawarra Basketball Club, the latest step in its American owner’s battle against the NBL, which has been owned for the past decade by Ukraine-born businessman and property developer Kestelman.
The Illawarra Hawks celebrate their NBL title triumph a fortnight ago.Credit: Getty Images
The case has been driven by Jared Novelly, son of a late oil-products magnate and the Trump administration’s newly appointed ambassador to New Zealand and Samoa, who owns the Hawks through his US company Crest Sports and Entertainment.
In an email to other club owners, the Hawks said they had launched an application to the court over concerns about financial transparency and distributions to teams, Kestelman’s ownership and control of both the NBL and the Tasmania JackJumpers, as well as over transactions between the league and other companies owned by Kestelman and “opaque accounting of revenue received from sports betting”.
“The application has been made because the club has reason to believe that it may have claims against NBLCo, but needs certain information and documents to determine the claims available and to decide if it will commence proceedings,” the email to owners said.
In an affidavit filed with the court, Hawks solicitor Mark Easton named NBLCo, the Kestelman-owned entity that operates the league, as the prospective defendant and cited a series of potential breaches of its licence agreement over which he said the club may be able to claim relief. The club also believes NBLCo’s exclusive arrangement with Basketball Australia to conduct men’s professional basketball may violate the Competition and Consumer Act as a restraint of trade.
Hawks owner Jared Novelly wants the NBL to open its books further.Credit: Getty
Novelly, who has owned the Hawks since 2020, has for at least three years been seeking to secure more of a voice for the backers of the league’s 10 teams, who include business heavyweights such as Tesla chair Robyn Denholm and minority stakeholders such as NBA championship winners Luc Longley and Andrew Bogut and tennis star Nick Kyrgios.
According to documents, Novelly in April 2022 proposed establishing an NBL team charter on behalf of a number of team owners during a phone conversation with Kestelman.
The Melbourne-based NBL owner dismissed the concept, according to the Hawks affidavit. It claimed Kestelman replied with words to the effect that “volunteers normally get shot”, which “Mr Novelly perceived to be a threat against himself”.
This masthead does not suggest that the statement was meant literally.
NBL owner Larry Kestelman has vowed to protect the league at all costs.Credit: Getty Images for NBL
According to the discovery claim, Kestelman told Novelly during the exchange “I will be watching your actions and will take appropriate retribution when you step out of line,” and that there would be “no more favours. Last year you got a distribution – don’t expect to get one again”. Kestelman said, it is claimed, that “the model will never change”, which Novelly took as a reference to the NBL’s governance structure.
Illawarra and other teams did receive distributions in the following years from the NBL, which has pledged to split at least $10.5 million between them over the next three years as Kestelman’s company LK Group sells the JackJumpers for $35 million.
“Despite Mr Novelly’s threats, there has been no claim brought against the NBL, just a fishing expedition,” an NBL spokesman said.
“The NBL is disappointed to see Mr Novelly misusing the club and court process to generate media attention. We will address Mr Novelly’s allegations through the proper channels.”
The Hawks have sought access to a trove of financial and other material from the NBL and Kestelman’s other companies associated with the league and the email to team owners invited them to consider joining the application as a co-plaintiff or bringing their own application.
Among the club’s stated concerns is that related party transactions totalling $15.6 million over the past three years were “were not entered into on a reasonable, commercial and arms-length basis” and that “those related entities may be generating revenue and profits … from NBL related activities” that should flow to teams.
The Hawks have cited other financial discrepancies and sought documents in relation to NBL ambassadorial agreements and royalties from licensed products, over which they believe they also have a potential claim.
The NBL has pointed to the results of a club-commissioned KPMG review of the last three years of the competition’s financials which said there were “no significant issues were noted from the eight scope areas considered”.
Kestelman, who took over the league when it was in financial peril in 2015 and injected tens of millions of dollars into it, said last month that the NBL had never been in better shape, with teams valued at between $30 million and $60 million.
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