Hawks announce profit [Archive]

RustyHawk

20 Nov 2006, 17:41

Hawthorn have announced a profit of $308,000 and increase in Football Department budget of $1 million dollars.

From the Hawthorn website

Hawthorn President Jeff Kennett is delighted to announce the Club’s tenth consecutive year-end profit.

At the end of the 2005-06 financial year, Hawthorn Football Club turned over $26.3m and recorded a profit of $308,632.

Mr Kennett said the year-end results were encouraging given the number of changes the Club underwent in 2006.

“This is a strong financial result considering the significant one-off cost of relocating from Glenferrie to our new state-of-the art facility at Waverley Park,” Mr Kennett said.

“This was a major achievement for the Club; and players and staff are now fully utitlising these world class amenities and technology.”

While membership declined slightly in 2005-06, the Club had a better nett financial return resulting from improved match receipts and strong investment performance, including the Waverley Gardens venue.

“There has been more disciplined management and spending throughout all operations of the Club, as a result of strong direction from the Board, Chief Executive Ian Robson and Chief Operating Officer Terry Dillon,” Mr Kennett said.

The 2006 financial result included an extraordinary one-off non cash write-down of Glenferrie Oval leasehold improvements valued at $870,685.

Mr Kennett said the decision to close the Hawthorn Social Club earlier this year was a passionate issue among some members, but the reality was the venue had been trading poorly for the past five years.

The Club’s immediate future both on and off the field is exciting, as before the close of the 2006 financial year, the announcement of a five year Naming Rights Partnership with the Tasmanian Government, and the continuation of HSBC’s support as Principal Partner for a further three years, allowed the Club’s management to boost the football department’s budget in excess of $1 million in pursuit of our reason for being – the tenth AFL Premiership flag for Hawthorn.

philhawk

20 Nov 2006, 17:54

Splendid news. :thumbsu:

Pessimistic

20 Nov 2006, 18:19

Good effort.

now Pleeeeese no more Spud frawleys

medusala

20 Nov 2006, 18:35

At the end of the 2005-06 financial year, Hawthorn Football Club turned over $26.3m and recorded a profit of $308,632.

The 2006 financial result included an extraordinary one-off non cash write-down of Glenferrie Oval leasehold improvements valued at $870,685.

Would have to see the p&l but the cash result looks pretty good (as it should be given the no of games sold).

There are very big wraps on Terry Dillon. Getting him back from Collingwood may well be the best thing Kennett has done for the club.

frankc

20 Nov 2006, 19:37

Great result considering this include a write down of nearly $900,000. This would indicate that our cash position has improved to a greater extent than our profit would indicate.

Considerin our on field performance hasn't been great this is a splendid result.

dipper86

20 Nov 2006, 22:37

Good effort.

now Pleeeeese no more Spud frawleys

Well haven't you changed your tune. :rolleyes:

Their's nothing like a profit to shut up the anti Kennett negativity.

medusala

20 Nov 2006, 22:49

Their's nothing like a profit to shut up the anti Kennett negativity.

Unlike Pess, I am not anti Kennett, but lets keep some perspective. The club had to sell a heap of games to get this result. The financial basketcase otherwise known as Richmond made around $1m whilst selling no games.

Hawkk

20 Nov 2006, 23:41

Unlike Pess, I am not anti Kennett, but lets keep some perspective.

I agree, I'm concerned with the drop in turnover over the past year - down over 2,000,000 on the 2004-5 periods. Its not all rosy news, we still need to improve our financial results…By 2010 we need to get our cash turnover up and above 40,000,000 dollars if we want to become a strong AFL club – achievable if we have success on the field.

The club had to sell a heap of games to get this result. The financial basketcase otherwise known as Richmond made around $1m whilst selling no games.

This year the 4 games we played interstate + the lack of MCG home games I have no doubt affected our bottom line. With only 5 home games at the MCG our membership not only declined but more importantly our reserved seating categories were significantly affected by the lack of MCG home games. The games we played interstate + the 5 home games probably cost us more money then if we played all 11 home games in Melbourne. That is why it was important for the club to get as much money as they could for the Tasmanian games – just about double they currently get + play the remaining 7 home games at the MCG to offset any potential backlash from supporters and members which come from a lack of home games at the clubs home ground.

More importantly, the additional funds should more then cover the opportunity cost associated with playing games in a second market vs. all 11 home games in Melbourne when the club is flying and potentially getting 45,000+ to home games.

We still have a long way to go, but we are moving on the right track.

Just on Richmond – they didn’t have the added problems with ground allocation, asset write offs and moving costs to contend with. Given the circumstances its an admirable result, but we must continue to grow if we want to be a power AFL club in the future.

Robber Baron

21 Nov 2006, 07:18

If Ian Rosbon made us more then $300000 in profits then just imagen when we get all the Tasmanian 15million we are gunna make the biggest profit in the history of AFL. Is there any one better ceo then Ian Robsin? No way, he is the best.

frankc

21 Nov 2006, 09:52

I agree, I'm concerned with the drop in turnover over the past year - down over 2,000,000 on the 2004-5 periods. Its not all rosy news, we still need to improve our financial results…By 2010 we need to get our cash turnover up and above 40,000,000 dollars if we want to become a strong AFL club – achievable if we have success on the field.

This year the 4 games we played interstate + the lack of MCG home games I have no doubt affected our bottom line. With only 5 home games at the MCG our membership not only declined but more importantly our reserved seating categories were significantly affected by the lack of MCG home games. The games we played interstate + the 5 home games probably cost us more money then if we played all 11 home games in Melbourne. That is why it was important for the club to get as much money as they could for the Tasmanian games – just about double they currently get + play the remaining 7 home games at the MCG to offset any potential backlash from supporters and members which come from a lack of home games at the clubs home ground.

More importantly, the additional funds should more then cover the opportunity cost associated with playing games in a second market vs. all 11 home games in Melbourne when the club is flying and potentially getting 45,000+ to home games.

We still have a long way to go, but we are moving on the right track.

Just on Richmond – they didn’t have the added problems with ground allocation, asset write offs and moving costs to contend with. Given the circumstances its an admirable result, but we must continue to grow if we want to be a power AFL club in the future.

Well said Hawkk. The club musty have anticipated the drop in revenue and ran the club more efficiently than the previous year. In think $300,000 is a great result due to the $900,000 write down, relocation costs etc.

Hawkk

21 Nov 2006, 12:58

Well said Hawkk. The club musty have anticipated the drop in revenue and ran the club more efficiently than the previous year. In think $300,000 is a great result due to the $900,000 write down, relocation costs etc.
Exactly right, but I do hope with the extra 3-4,000,000 coming into the club we can increase this to over 30,000,000 and beyond next season.

Anyway you look at it, we are holding up very well considering how many other Victorian clubs are struggling in the market.

You'd hope that over the next 5 years the club can record consecutive 1,000,000+ profits which will should set us up nicely over the next 20-50 years :thumbsu:

The timing of the Tasmanian sponsorship deal could work a treat if it coincides with a successful era on the field - we now have the opportunity to ensure our long term viablity as a Victorian based football club for the next 50 years (if not longer) on the back of very strong financial results over the next 5 years.

Robber Baron

21 Nov 2006, 14:06

Exactly right, but I do hope with the extra 3-4,000,000 coming into the club we can increase this to over 30,000,000 and beyond next season.

Anyway you look at it, we are holding up very well considering how many other Victorian clubs are struggling in the market.

You'd hope that over the next 5 years the club can record consecutive 1,000,000+ profits which will should set us up nicely over the next 20-50 years :thumbsu:

The timing of the Tasmanian sponsorship deal could work a treat if it coincides with a successful era on the field - we now have the opportunity to ensure our long term viablity as a Victorian based football club for the next 50 years (if not longer) on the back of very strong financial results over the next 5 years.

Im in agreeance with you 100%. Top post.

MightyFighting

21 Nov 2006, 14:46

Well haven't you changed your tune. :rolleyes:

Their's nothing like a profit to shut up the anti Kennett negativity.He has a right to his opinions regardless of whether the club made a profit last year or not.

frankc

21 Nov 2006, 15:16

[quote=Hawkk;6259790]You'd hope that over the next 5 years the club can record consecutive 1,000,000+ profits which will should set us up nicely over the next 20-50 years :thumbsu:[quote]

It would be great to see consistent seven-figure profits. Importantly, what our sponsorship allows is to do is invest back into the club - i.e. extra funds for football department.

All the profits in the world become significant if the clubs doesn't provide the playing and coaching staff with the facilities and ongoing resources to succeed on the field.

dipper86

21 Nov 2006, 16:05

He has a right to his opinions regardless of whether the club made a profit last year or not.

Yeh good call bud, Please tell me where i said he didn't have a right to his opinions???

Doesn't mean i have to agree with them.

Pessimistic

21 Nov 2006, 16:56

Well haven't you changed your tune. :rolleyes:

Their's nothing like a profit to shut up the anti Kennett negativity.

Credit where its due.

The PR, for example, has been deplorable - perhaps those were the people "reigned in fiscally"

PS nothing would please me more than to be wrong about Kennett etc. If I am wrong that would mean the club is also doing well.

medusala

21 Nov 2006, 17:50

The timing of the Tasmanian sponsorship deal could work a treat if it coincides with a successful era on the field -

The timing only works well when a club is rubbish on the field. If Hawthorn were averaging 40k+ to home games I very much doubt they would be selling home games. This is exactly the St Kilda reasoning for pulling out of Tas ie it made sense when they were getting spoons but not when they are top 4.

If the Hawks are near top 4 when the deal expires then I would expect them to leave Tas quicker than you can say Errol Flynn.

medusala

21 Nov 2006, 17:52

It would be great to see consistent seven-figure profits. Importantly, what our sponsorship allows is to do is invest back into the club - i.e. extra funds for football department.

I fail to see extral football dept cash as investment. Its simply recurrent expenditure. For a club that is so worried about its finances that it sells home games the cash should be invested in assets that get a return, that is the whole point of Tas.

Will the $1m in spending get us anywhere near a flag in the next two years?

Hawkk

21 Nov 2006, 19:39

It would be great to see consistent seven-figure profits. Importantly, what our sponsorship allows is to do is invest back into the club - i.e. extra funds for football department.

All the profits in the world become significant if the clubs doesn't provide the playing and coaching staff with the facilities and ongoing resources to succeed on the field.

While that is true, greater profits allow us to further invest the money into different investments which give us a chance to multiply our return. If for example we record 1,500,000 profits for the next 5 years we can invest 70% of the profit into different investments across town and set up our future as a Victorian club for the next 50 years purely off the return we get for our investments.

The money we have already made + the additional funds we are set to make, may assure us of another 10 years of consecutive profit irrespective of on field success - this is how Essendon became a financial powerhouse 15 or so years ago.

The timing only works well when a club is rubbish on the field. If Hawthorn were averaging 40k+ to home games I very much doubt they would be selling home games. This is exactly the St Kilda reasoning for pulling out of Tas ie it made sense when they were getting spoons but not when they are top 4.

Not true, if we are a top club we will get our 30,000 Victorian members regardless. If anything, 7 home games at the MCG should do more to maximize our match receipts then play 7 games at the MCG and 4 at the Dome per see - considering the coin we are getting for playing the games.

If the Hawks are near top 4 when the deal expires then I would expect them to leave Tas quicker than you can say Errol Flynn.

Let the market decide whether or not the games are worthwhile after the contract finishes. If we can draw in another 8,000 Tasmanian members and not lose members from Victoria and across the mainland, the 4 games will prove to be an excellent investment, therefore we should continue with the 3- 4 games. However if we gain very little or lose money from playing the games, we should withdraw from playing games down there...its as simple as that.

Anyway you look at it; we will be in a much stronger position in 5 years time because of it.

medusala

21 Nov 2006, 20:37

[QUOTE]Not true, if we are a top club we will get our 30,000 Victorian members regardless.

It is clearly true. Why doesnt Richmond sell games? Because the crowds it gets means there is no benefit. Ditto the Saints.

If we can draw in another 8,000 Tasmanian members and not lose members from Victoria and across the mainland, the 4 games will prove to be an excellent investment, therefore we should continue with the 3- 4 games.

Delusional to think Hawthorn will gross let alone net 8k new members from Tas.

frankc

22 Nov 2006, 07:14

I fail to see extral football dept cash as investment. Its simply recurrent expenditure. For a club that is so worried about its finances that it sells home games the cash should be invested in assets that get a return, that is the whole point of Tas.

Will the $1m in spending get us anywhere near a flag in the next two years?

It is obvious you have never run a business. IMO a club's Football Department (FD) is its most valuable asset.

The difference between an expense and an asset is purely an arbitrary definition, both require an outlay of money. The key difference from a cash flow perspective is that one is recurrent, i.e. expense, (as you rightly point out) and one is generally a lump sum payment, i.e. an Asset - however an asset can be acquired via recurrent cash flows.

The only reason why money spent on labour is an expense is because the Accounting Standards dictate this. However, if you talk to any business person, they would say that their employees are the most important asset to their business.

The Football department is mainly made up of people hence any money spent in this area is treated as an expense.

This is no different at Hawthorn or any professional sporting club. The football department, and the resources allocated to it, have an significant impact on the teams performances on the field. The success of the club on the field is determined by human decisions - decisions made within the Football Department. Therefore your statement that it is simply recurrent expenditure is short-sighted in the extreme.

If this were the case, why not just have Clarkson as coach on his own with no assistants - further why not just have a playing coach?

For a football club the main definition of a return is success on the field - how else are they to do this if they don't allocate extra money to that part of the business that impacts directly on the attainment of this return?

Also what has selling games to Tasmania got to do with increasing the FD's budget? Obtaining revenue and sponsorship is one thing, deciding how to allocate the money is a completly seperate matter.

medusala

22 Nov 2006, 18:00

[QUOTE]It is obvious you have never run a business. IMO a club's Football Department (FD) is its most valuable asset.

You have no idea, I have been self employed for years and run businesses in both the UK and Australia.

If the football dept is the clubs most valuable asset then feel free to explain why there is such a poor correlation between football dept spending and onfield success.

The difference between an expense and an asset is purely an arbitrary definition, both require an outlay of money.

Absolute nonsense. How can a salary be defined as an asset?

The only reason why money spent on labour is an expense is because the Accounting Standards dictate this.

No, its common sense. Lets say St Kilda are still paying off Grant Thomas. You would put this in the balance sheet as an asset. Muppetry.

However, if you talk to any business person, they would say that their employees are the most important asset to their business.

Depends on the business.

Therefore your statement that it is simply recurrent expenditure is short-sighted in the extreme.

No its not. Hawthorn isnt in the position of Collingwood. They can justify large expenditure in the area. For Hawthorn the flipside is the selling of home games.

For a football club the main definition of a return is success on the field - how else are they to do this if they don't allocate extra money to that part of the business that impacts directly on the attainment of this return?

The return on that investment is minimal. The clubs that have spent a fortune in the area havent done significantly better than those that havent.

Also what has selling games to Tasmania got to do with increasing the FD's budget? Obtaining revenue and sponsorship is one thing, deciding how to allocate the money is a completly seperate matter.

If you spend $1m less then the need to sell games is less. Pretty obvious really.

frankc

22 Nov 2006, 19:17

Medusala, we'll have to agree to disagree. Anyway, at least there is money available to dispute how it should be spent.

TIme will tell how well it is spent.

How would you spend the $1 million?

medusala

22 Nov 2006, 20:03

Medusala, we'll have to agree to disagree. Anyway, at least there is money available to dispute how it should be spent.

TIme will tell how well it is spent.

How would you spend the $1 million?

I dont have an issue with the club spending money on the football dept, that is afterall the point of running a football club.

However, in the current climate it would appear to me there are more important priorities. JK and now Costa have come out and said 2 clubs will go in the short term. I am sure others say the same privately. Selling games for $ is clearly a recognition by Hawthorn when they dont have to is recognition of a changing landscape.

I would think its a reasonable argument to make that the football dept can do without the $1m for another three years (when we will/should be pressing for flag contention). After 3 years the club would have around (including inv return) $3.5m. That would generate enough to pay for around 1/3 of the proposed cash and still leave a hefty some invested.

We arent going to win a flag in the next 2 years so I personally believe the investment can wait until such time as we have decent prospects of doing so.

Money begets money to a certain degree. If the club has ambitions to become Collingwood like then it needs to get 11 games back in Melbourne and increase crowds and membership. To that extent Tas is a short term mechanism to achieve that. Then as per the Pies the club can spend a heap both on investments and on the football dept.

I am also (though its another argument) far from convinced that the myriad of assistant coaches have all that much benefit.

frankc

22 Nov 2006, 21:16

I dont have an issue with the club spending money on the football dept, that is afterall the point of running a football club.

However, in the current climate it would appear to me there are more important priorities. JK and now Costa have come out and said 2 clubs will go in the short term. I am sure others say the same privately. Selling games for $ is clearly a recognition by Hawthorn when they dont have to is recognition of a changing landscape.

I would think its a reasonable argument to make that the football dept can do without the $1m for another three years (when we will/should be pressing for flag contention). After 3 years the club would have around (including inv return) $3.5m. That would generate enough to pay for around 1/3 of the proposed cash and still leave a hefty some invested.

We arent going to win a flag in the next 2 years so I personally believe the investment can wait until such time as we have decent prospects of doing so.

Money begets money to a certain degree. If the club has ambitions to become Collingwood like then it needs to get 11 games back in Melbourne and increase crowds and membership. To that extent Tas is a short term mechanism to achieve that. Then as per the Pies the club can spend a heap both on investments and on the football dept.

I am also (though its another argument) far from convinced that the myriad of assistant coaches have all that much benefit.

I can see your point. From my point of view, I just hope the board are making the right decisions. This hope is not from the perspective of our future survival, but from making the most of the opportunity presented.

Four games in Tasmania is not a small price.

I look at the people on our board and can't believe they wouldn't have taken all issues into account in determining when and how resources are allocated to the various areas of the club.

It's a pity I can't make it to the AGM - not that much would be revealed; I sense the board has some long range plans which are going are contingent on what occurs over the next few years.

medusala

22 Nov 2006, 21:29

[QUOTE]Four games in Tasmania is not a small price.

Totally agree. The club needs to make very large profits to justify it.

I look at the people on our board and can't believe they wouldn't have taken all issues into account in determining when and how resources are allocated to the various areas of the club.

There arent too many football people on the board. I dare say its not easy for someone like Kennett to decide if the football dept represents a good investment or not. In the end it probably comes down to the persuasiveness of guys like Dunstall and AC to sell it to them.

Pessimistic

22 Nov 2006, 21:35

I'm quite happy the footy dept is gtting a boost.

Just no more talk of Spud frawley types. let some other club be a charity

By spud frawley type I mean don;t just employ ex players/coaches/media types just because they need a job.

There may be a very good reason why they need a job !

Hawk0373

22 Nov 2006, 21:40

I dont have an issue with the club spending money on the football dept, that is afterall the point of running a football club.

However, in the current climate it would appear to me there are more important priorities. JK and now Costa have come out and said 2 clubs will go in the short term. I am sure others say the same privately. Selling games for $ is clearly a recognition by Hawthorn when they dont have to is recognition of a changing landscape.

I would think its a reasonable argument to make that the football dept can do without the $1m for another three years (when we will/should be pressing for flag contention). After 3 years the club would have around (including inv return) $3.5m. That would generate enough to pay for around 1/3 of the proposed cash and still leave a hefty some invested.

We arent going to win a flag in the next 2 years so I personally believe the investment can wait until such time as we have decent prospects of doing so.

Money begets money to a certain degree. If the club has ambitions to become Collingwood like then it needs to get 11 games back in Melbourne and increase crowds and membership. To that extent Tas is a short term mechanism to achieve that. Then as per the Pies the club can spend a heap both on investments and on the football dept.

I am also (though its another argument) far from convinced that the myriad of assistant coaches have all that much benefit.

No but you can't underestimate personalised coaching, especially on a young developing side. Having more professionals working on specific areas is far more beneficial than a few carrying a greater load. I'd like to see more talent scouts and more research done in player personnel. 2 heads are greater than 1 - especially in this area. This is a key area of "investment". The Tas deal guarantees us a strong positive cash flow for 5 years, enabling us to invest and spend - a luxury we haven't had.

Forget Collingwood, they haven't a dearth of talent in need of professional coaching, they have cash overload and felt the need to spend up on reviews, audits, mentors, managers, new training methods, equipment, coaches and whatever else was out there. Problem is their best players are past it and there isn't much coming through. Our position is a lot different in that we have a core group of 18-22 year olds that need a lot of coaching so that they can gel & perform as a unit sooner rather than later. If we have the money then the time to start investing in this area is right now.

Tas = money = investment = performance = attendance = mcg games = mebership = money = no Tas = future.

MaccaHawk

23 Nov 2006, 03:11

The plus side from these accounts is that despite falling membership and relatively poor onfield performances, income is up (mrginally) and expenses are down (again marginally). if this can be done with declining membership things should look a lot brighter when the membership numbers and interest levels start to climb again.

Plus the impact of the Tassie revenue will make things look a lot more rosy.

Pessimistic

23 Nov 2006, 05:47

frankc

23 Nov 2006, 06:29

They might even...you know....cut costs for members if the CLUB becomes so rich.

Now you are being an optimist, pessimistic!

By the way, who sets the standard memebership price, is it the AFL or the club. I know wach club develops specific packages, but don't the AFL set the standard membership price (i.e. for 11 home games)?

Robber Baron

23 Nov 2006, 07:12

Tas = money = investment = performance = attendance = mcg games = mebership = money = no Tas = future.

This make a lot of sense. I bet that this is what Ian Rovson has made his plan for us to be a sucess in thelong term. We are just using up the Tasmanian money to set us up financial for the next 20 - 50 years. Hes very smart.

Hawkk

23 Nov 2006, 11:05

The 2006 Financial Report - http://hawthornfc.com.au/cp2/c2/webi/article/307208az.pdf

kolchak

23 Nov 2006, 15:10

Having little or no debt is much more important, it is only a smal profit, lots more work to do.

medusala

23 Nov 2006, 17:36

The 2006 Financial Report - http://hawthornfc.com.au/cp2/c2/webi/article/307208az.pdf

The leasehold impairment of $870k relates to Glenferrie (presumably the social club). If this is the case then it may well end up being a cash item.

The club also now has $1.1m of debt (though with offsetting investments).

Of more significance is that "donations and special fund raising efforts" fell from $1.58m to $276k.

frankc

23 Nov 2006, 19:07

The leasehold impairment of $870k relates to Glenferrie (presumably the social club). If this is the case then it may well end up being a cash item.

End up a cash item - how?

medusala

23 Nov 2006, 19:17

End up a cash item - how?

If the asset was sold. Though I am not sure why it refers to leasehold improvement not freehold. Sounds like it relates to the oval and stands but its not make clear. Nonetheless it wouldnt surprise me if the value of the social club was written down after they failed to sell it.

frankc

23 Nov 2006, 19:35

If the asset was sold. Though I am not sure why it refers to leasehold improvement not freehold. Sounds like it relates to the oval and stands but its not make clear. Nonetheless it wouldnt surprise me if the value of the social club was written down after they failed to sell it.

Aren't the board considering developing the site (I think into a medical clinic). I read somewhere, they nearly sold it, but the deal fell through.

its probably been written down in its current form.

IF the land is redeveloped as a medical clinic, and the HFC retains ownership (as against on-selling the developed land), it will probably be revalued upwards again.

Persoanlly, if it is developed, I'd rather they retained it and derived some decent income.

frankc

24 Nov 2006, 07:10

I'm concerned with the drop in turnover over the past year - down over 2,000,000 on the 2004-5 periods. Its not all rosy news, we still need to improve our financial results…By 2010 we need to get our cash turnover up and above 40,000,000 dollars if we want to become a strong AFL club – achievable if we have success on the field.

Turnover only appears to have fallen. In 2005, the gain from sale of shares has not been netted off. So the total sale price is included in revenue and the total cost of those shares is included as an expense. If revenue solely included the gain from the sale of shares, our revenue for 2005 would have been around $26.7m

In 2006, the gain from sale of shares has been netted off and this is included in other income. Therefore our total revenue for 2006 was just over $27m.

So if consistent accounting methods are used, we have had a slight improve in revenue for 2006 (the change in methods I suspect is due to the adoption in Australia of International Accounting Standards).

While this is a reasonable outcome, and our profit would have been over $1million if the write down isn't included, I agree that we need to increase our revenue. We are nearly $20m behind Collingwood and need to close the gap.