The club's board wrote to its 1387 members on Tuesday afternoon telling them that the licensed club in Scott Street would shut its doors on December 2.

President Frank Carter told the Newcastle Herald that the club's difficulties had begun when Newcastle railway station closed five years ago.

"That was the start of the troubles, if you want to call them that," he said.

"And once they started the Supercars and then the light rail, basically, over that last three or four years we've chewed up all our cash reserves to keep the club afloat.

"It's a sad fact of life that in two weeks' time Diggers won't exist. It is a very popular watering hole with residents at that end of the city. Unfortunately, there's not enough residents."

But Mr Carter said he did not blame the state government for the club's demise.

"I don't say I blame them. You've got to have progress. You have to have change. Whether the change was handled correctly, I'm not smart enough to know that.

"I know in achieving this change it knocked us around. And we're getting knocked around again in the last two weeks and probably the next two weeks."

Mr Carter said he had spent 40 minutes on Monday trying to find a park before the board meeting that voted to close down the club.

"Supercars may be very good for Newcastle, but for that three- or four-week period it's not good for a little organisation like ours, and I bet I'm not the only one that's thinking that," he said.

The club moved to Scott Street 30 years ago after the earthquake destroyed its former building on the corner of Perkins and King streets.

The 102-year-old City of Newcastle RSL Sub-branch owns the building and is the licensed club's landlord.

"This will hurt them," Mr Carter said.

"They'll lose a revenue stream which is used for the welfare of returned or still-serving members that are members of the sub-branch.

"I imagine they'll either re-lease the building or sell it."

The licensed club, which employs about 10 people, is a separate entity to the sub-branch, though some of the sub-branch's members are on the licensed club's board.

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Mr Carter said some members opposed the decision to close, but he did not want the club to incur debts to staff or suppliers it could not pay.

"We're copping a lot of flak. I've had a stack load of messages. People have just got to understand if you haven't got the money there's no good racking up bills," he said.

"I don't want to be seen as the president who didn't pay them.

"We are closing with our heads held high. We are not insolvent. We are not bankrupt. We are having an orderly closure of the business."

He said the club's revenue had improved in the past six months, but not enough to sustain the business.

"We don't have any cash reserves, so, if I get hit with a big bill tomorrow, I cannot pay it. I'm not going to put myself or the directors in that situation.

"We can close our doors on December 2, all our staff will be paid, all their entitlements will be paid, and all the bills will be paid."

"I think there's a few people out there who don't think we're correct, but that's one of the battles I've got to fight."

The Diggers club joins a host of other inner-city hospitality and retail businesses to close or relocate in the past two years.

Reserve co-owner Patrick Haddock said after closing the wine bar in July that the east end had gone "deathly quiet and the numbers don't stack up".

Another business less than two blocks from the Diggers club, Flying Tiger restaurant and bar, shut down in August citing similar concerns.

Mr Carter said Diggers and the sub-branch had looked at alternative premises in recent years but had decided not to move.

"If we move too far, we lose that sense of community. We'll just have to find somewhere else to drink."