Like many other private clubs in the city, Hong Kong’s largest non-profit sports club, the South China Athletic Association (SCAA), operates on heavily subsidised land granted by the government.
One of the key conditions connected to such favourable treatment is to promote sport in the city, something the SCAA has contributed to over the years. But question marks have emerged over the manner in which the club has allowed commercial organisations to operate on its premises – including a restaurant run by the club’s director.
Concerns have also been raised about a lack of transparency in the way the SCAA conducts its business with the membership and about members’ voting rights.
The SCAA firmly rejects the concerns over possible breaches of the rules and regulations which govern the running of the club uncovered by both an HKFP investigation and members’ complaints over transparency and voting rights. However, in response to questions from HKFP, the Lands Department – the responsible government department – says it has launched an investigation.
Long history
The SCAA began life more than a century ago in 1908 as a modest football team. It slowly evolved into a multi-discipline sports club that included field tracks, a swimming pool as well as basketball and volley ball courts to meet growing demands for sport facilities in the city. Its present-day club house opened in 1988. It is home to the city’s oldest football team and has nurtured some of the city’s best swimmers, including Tokyo Olympic silver medallist Siobhan Haughey, who trained with Harry Wright International at the SCAA.
With a comparatively cheap and unselective membership, the club has retained its grassroots style, in stark contrast to its more prestigious neighbours, such as the Hong Kong Football Club and the Hong Kong Jockey Club.
Bowling and roast goose
Kamcentre Roast Goose is one of SCAA’s four restaurants and company documents list SCAA executive committee member and director Kam Cheuk-lam as a director and majority shareholder of Kamcentre Roast Goose. Located in the SCAA’s ten-pin bowling centre, the Hong Kong-style eatery offers roast goose and various other treats for those keen to grab a bite, while they watch others attempt a strike.
According to the SCAA’s annual report for 2020, the club made HK$3.3 million in income from its caterers. However, the report does not provide a breakdown for each restaurant. The total turnover for all of its activities last year was close to HK$99 million.
SCAA’s Articles of Association forbid the distribution of its income or property to any of its members, although they allow “reasonable and proper remuneration” to a member who supplies goods or services to the club. The rules also require its executive committee members to declare any direct or indirect interests in transactions or contracts with the club, and they are not allowed to vote on transactions in which they have interests.
Bonita Wang of iDonate, an advocacy group that monitors the governance and finances of charities in Hong Kong, said whether the restaurant’s relationship with SCAA is problematic depends on whether the club had granted the business a contract or a lease at a price far lower than the market rate, thereby offering them an unfair benefit. “[The organisation] needs to be aware if any person is associated [with the club and the business],” she said.
SCAA’s Chief Executive Officer Richard Wong denied that the association had breached the club’s lease conditions.
Fraction of market rate
As Hong Kong’s largest sports club with more than 66,000 members in the city and a nurturing ground for many of the city’s elite sportsmen and women, SCAA operates on land granted by the government through a Private Recreational Lease (PRL).
PRLs grant land to clubs for a fraction of the market rental rate — some in prime locations like Causeway Bay or Deep Water Bay — but subject them to terms and conditions. Namely, these clubs are required to run as non-profits, to promote Hong Kong’s sports development, and are barred from conducting commercial activities and leasing out its facilities for profit.
The city is home to 66 private or sports clubs which hold PRLs with the government. They include prestigious private clubs such as the Hong Kong Golf Club or the Hong Kong Marina Club, but also more accessible clubs like the SCAA, with its HK$200 annual membership fee.
The SCAA is one such site forbidden from conducting commercial activities or leasing out any part of its facility for rent, its lease says. Its rent to the government for the 32,480 square metre Causeway Bay site was HK$1.7 million for the year 2021-2022, a mere 3 per cent of its total rateable value.
These PRL clubs are also typically required to provide eligible organisations including schools, NGOs and National Sports Associations with access to their sports facilities, under an “open-up scheme” for a minimum amount of hours based on their capacity.
As many PRLs approached their expiry date around the 2010s, scrutiny of PRL arrangements has mounted with critics saying they allowed private clubs to benefit from what amounts to the provision of heavily subsidised land providing exclusive facilities to those who could afford hefty membership fees, while making millions in annual revenue. They urged the government to not renew these leases and retake some of these territories for housing developments instead.
Fearing that they may not be able to seek lease renewal with the government, several private clubs in the city took steps to ensure compliance by shutting down clubhouse restaurants and shops operated by outside commercial businesses. Craigengower Cricket Club and The Filipino Club faced scrutiny by advocacy groups and the media over their restaurants contracted out to other commercial parties in the past two years. The CCC stopped using an outside contractor for its restaurant and began to operate it directly, while the Filippino Club restaurant received a warning letter from the government and a request to rectify its mode of operation.
Voting rights
Among SCAA’s 66,000 members is Christian Ross, a club member since 2010.
Ross said he signed up to the club to use the swimming pool. During the Covid-19 pandemic, Ross began checking SCAA’s website news section for swimming pool reopening dates and noticed for the first time an announcement to delay the club’s 2020 Annual General Meeting (AGM) due to the pandemic.
He emailed the SCAA office in early December to enquire whether the AGM was open to all members, but didn’t get a response until late March, despite repeated emails. The staffer said the club was working on an arrangement to accommodate attendees under Covid-19 gathering restrictions.
After reading the club’s internal rules meticulously he discovered that members are entitled to vote at its meetings and elections, and those who have been ordinary members for more than five years are entitled to 1,000 votes, as opposed to one vote for more recent members. Ross was however told by email that he is entitled to one vote only, even though he has been member for 10 years.
“Are the club members expected to regularly visit the News section in order to learn about such important events or would the club consider to actively (for instance by email) inform their members?” Ross asked in his email. The club told him the AGM meeting notice is typically published in two local newspapers, displayed at the club house and uploaded to its website.
The AGM finally took place on April 15 at the same time as an extraordinary general meeting, where attendees passed a special resolution to replace SCAA’s articles of association. The club has not responded to Ross’s enquiry about the reason he doesn’t qualify for more votes and his request for the AGM’s minutes.
Ross said he believes with its vast membership and use of publicly subsidised real estate, the SCAA should make an effort to inform and consult its members on important decisions. “In a club with 60,000 members there are usually some burning issues,” he told HKFP. “Maybe I’m old-fashioned, I like to be asked because I am a member.”
In response to HKFP’s enquiry, SCAA’s Chief Executive Officer Richard Wong said Ross could communicate directly with their office, citing “privacy issues” but did not respond to questions over members’ voting entitlements.
Lawmaker Paul Tse, a lifetime member of the SCAA, told HKFP he did not recall receiving notices about club AGMs in recent years. “I was at an AGM and election once where there were paper ballots, but that was almost 20 years ago,” he said, adding that he isn’t aware of the number of votes he holds. “I haven’t received any recent mail from them, although I’m not sure if this was because I moved (address).”
“That the club communicates with its members laxly is understandable, because there are so many members. But having more communication is always better,” he said. “Publishing [a notice] on newspapers or by electronic means seems acceptable to me.”
A license agreement
One floor up from Kamcentre Roast Goose, on the second floor of SCAA’s club building, is a golf simulator centre run by Golfzon GreenLive, a commercial enterprise. SCAA members interested in golf simulation first have to sign up for a Golfzon membership which costs HK$2,800 in spending credits. Then for HK$660, players may rent out private rooms for an hour or purchase 4-hour party packages for HK$1,480, to play golf with the help of simulators equipped with augmented reality technology. The same company also has a branch in Lai Chi Kok offering the same rates as for SCAA members.
SCAA’s quarterly fillings to the Home Affairs Bureau in 2017 indicated that it charged Golfzone GreenLive HK$160,000 per month as “management fees.” The club’s lease conditions bar it from demising or underletting any part of the building.
In response to HKFP’s enquiry, Golfzon GreenLive said they have a “license agreement” with SCAA to use their facilities, after backtracking on an earlier statement in which they said that they rented the premises, a status which they said was mistaken. “We are not using [any] sport facility from SCAA,” a spokesperson said in an email. “The golf simulators are [owned] by GreenLive, NOT SCAA.”
Brian Wong from Liber Research, a non-profit research and advocacy group on the city’s land issues, said the term “underlet” may be interpreted as simply subletting a property, or the letting out of a property at below the market rate.
“The lease is written quite vaguely, and gives some flexibility to [government] departments [on enforcement], but if it is sublet to others to make a profit, this runs contrary to the original purpose of private recreational leases,” he said.
“I think when the lease is to be renewed [its terms] need to be more strictly written,” Wong added. SCAA’s lease will expire in 2026, and can be renewed.
When confronted with a question from Tse in the Legislative Council in July on clubs suspected of subletting their space to other commercial organisations for profit-making activities, Secretary for Home Affairs did not respond directly to whether subletting PRL sites or facilities would breach the lease but only said the government would “take appropriate lease enforcement actions.”
Other commercial activities
Kamcentre Roast Goose and Golfzon are not the only commercial businesses operating at the club. All of the club’s swimming classes are contracted out to Harry Wright International, and its golf classes to Australian Golf Academy. These two are private companies limited by shares, and Harry Wright is one of the city’s top swim schools that boasts among its alumni Olympic medallist Siobhan Haughey.
When the company took over SCAA’s swimming classes and training in March 2018 — which require all students to sign up as SCAA members — the now-defunct newspaper Apple Daily reported that the club hiked swimming course fees by 26 per cent.
The Lands Department said in response to the newspaper’s enquiries that it was looking into the matter. The department told HKFP last week that four media enquiries it received since 2018 concerning SCAA’s lease conditions and HWI found no violation.
“Given the latest information provided in the current enquiry, [the District Land Office] will carry out further investigation,” a Lands Department spokesperson said in a statement. ” [The District Land Office] will investigate in accordance with established procedures and consult the relevant policy bureau.”
SCAA’s Chief Executive Richard Wong said in response to HKFP’s questions: “We have been advised by our legal advisers that our operations are not in breach of any of the lease conditions cited by you.”
Tse, the lawmaker, told HKFP that PRL clubs wishing to contract companies for services should be aware not to violate their lease, should hire external parties in accordance with tendering guidelines, and should ensure such agreements serve the overall interest of their members. “If these can be contracted to outsiders in a way helpful to its members and are cost-effective, then why not,” he said.
HWI, Australian Golf Academy and Kamcentre Roast Goose did not respond to HKFP’s requests for comment.
Weak enforcement
A 2013 Audit Commission report said the government “disallows the clubs to operate commercial profit-making activities or to sublet any part of their premises on the PRL sites to other individuals or organisations for such activities.”
“[PRLs] are meant to promote sports and to complement sports policies. If they are making profits, it engenders the question: why public money should be used to subsidise a business offering activities to those who could afford them?” Wong, of Liber Research, said.
If the price to pay for using the sports facilities is not particularly cheap and not at a subsidised rate, then they may be considered commercial activities, Wong said. “Law enforcement of PRLs have always been quite weak,” he said, as the government does not define “commercial activities” on the lease. “The Lands Department’s bar [of enforcement] may be quite high.”
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