Help from the finance experts.

[BudddddyLove]

Hey guys,

I have a general question that relates to off-field finances that I have never really understood.
How do home game crowds affect a clubs profits?
Supporters of clubs purchase memberships before and during the season and this membership allows them entry into the ground.
Yet we here about a particular figure a game must reach for the home club to break even (eg Hawthorn needing to attract 30k to an MCG game to break even). When the figure is under the required target, the blame is usually on the home teams members for not turning up.
The money has already been received from membershops so how does this work? Is it something to do with how much money spectators spend at the ground or is it something to do with money only being received by club memberships when the tickets are scanned at the ground? This is something I have never bothered to find out.
Cheers

[wallyt99]

This is an educated guess as to how it may work.

- The Hawks pay a flat rental fee to the stadium to play their home game.

- The AFL takes the entire proceeds of the gate.

- The AFL pays the home team a fee for each person through the gate - Lets say it's $4 regardless of whether the person is a member or not, it would be too difficult to account for the % of members /public /seated /standing room through the gate each week.

- When the club pays a membership, they are required to pay a percentage of those takings to the AFL for tickets/seats to the ground that are included in the package.

[BudddddyLove]

This is an educated guess as to how it may work.

- The Hawks pay a flat rental fee to the stadium to play their home game.

- The AFL takes the entire proceeds of the gate.

- The AFL pays the home team a fee for each person through the gate - Lets say it's $4 regardless of whether the person is a member or not, it would be too difficult to account for the % of members /public /seated /standing room through the gate each week.

- When the club pays a membership, they are required to pay a percentage of those takings to the AFL for tickets/seats to the ground that are included in the package.

Yeah they all seem likely, I reckon the fourth point is the most valid

[wallyt99]

A more complex interpretation would be on the basis of recognising revenue from memberships in financial statements -

Accounting standards state that revenue can not be recognised until it is 'earned'. What this means is that the seat, or the period of membership (365 Days) must be used before the revenue could be recognised.

A club could 'recognise' (include in financial statements) partial revenue from each member who used their seat at each game.

Recognising partial revenue from the seat usage would be particularly beneficial to the income statement at the start of a season say... when lots of memberships have been sold yet they are still considered in accounting terms 'unearned revenue'.




PS.....the reason I answered this question is that I SHOULD be studying for my accounting exam tommorow.....I used this as an excuse to go on BigFooty!!!!!! HAHA!!!!!!!!!!!!!!

[BudddddyLove]

A more complex interpretation would be on the basis of recognising revenue from memberships in financial statements -

Accounting standards state that revenue can not be recognised until it is 'earned'. What this means is that the seat, or the period of membership (365 Days) must be used before the revenue could be recognised.

A club could 'recognise' (include in financial statements) partial revenue from each member who used their seat at each game.

Recognising partial revenue from the seat usage would be particularly beneficial to the income statement at the start of a season say... when lots of memberships have been sold yet they are still considered in accounting terms 'unearned revenue'.




PS.....the reason I answered this question is that I SHOULD be studying for my accounting exam tommorow.....I used this as an excuse to go on BigFooty!!!!!! HAHA!!!!!!!!!!!!!!

Hah it sounds like you know your accounting pretty well by the sounds of it mate :thumbsu:. Although unfortunately they are unlikely to give you a scenario with a football club in the exam (instead they will bore you with some rubbish about a factory that makes boxes).