Member ownership v Private ownership

[Gigantor]

The issue with private ownership isn't that, it's the ultimate potential consequence

In any league with private ownership, if a team is financially failing it either goes bust or is sold. And if sold, you can see a fire sale of players to stem the tide, or relocation to a city more willing to subsidise its activities

Both of these are loathed in the Australian rules sphere.

We hate the idea of relocations as evidenced by the last decade or two, and extinctions are viewed even less favourably.

A massive chunk of the league is surviving on additional afl subsidies, and with private ownership this goes immediately

Do we want a league where Richmond (for example) is relocated three times in ten years on the whim of its private owners?

Agree with all of that.

 

[Kwality]

For most clubs, fans (i.e members) can vote out some or all of the board. You know, the people running the club.
....
Firstly, they're not listed. But they most definitely have shareholders - and they're lucky enough to be pretty much the only A-League club making a profit, so their shareholders aren't kicking in millions a year like other teams in the league. But in any case, they're going to campaign based on their own personal interests. I would have thought even the most casual followers of the game can see the pitfalls of private ownership. Palmer, Tinkler, Sage, the Bakries. That Manchester City deal could easily go arse up once their supporters realise they're simply a feeder development team. Or the owners get bored with kicking in millions a year for little to no return.

There's benefits to it, no question. But there's also a massive risk to the stability and credibility of the league.

Got similarities, though different, to the early days of the West Coast Eagles, both unlisted public companies as of today.

Victory struggled to raise the initial $5 million equity capital to join the A-League in its first year and the FFA helped the club over the line by contributing franchise and set-up fees of about $500,000. The FFA took a ten per cent holding in the club in return, as well as having a representative on the Victory board.
The shareholding was offered back to the club in 2007 and Geoff Lord* and his partners – including Ron Peck, Richard Wilson and John Harris – raised the money to buy the shares.
In 2014, it was announced that major shareholder, real estate investor Harry Stamoulis and fellow shareholder Robert Belteky ......., along with some other minority shareholders, would offer their combined 35% stake in Melbourne Victory for sale to the general public, making part ownership of the club available to regular fans, a first for an A-League club.
However ...... the entire allocation of shares were eventually purchased "by a small number of long-term substantial shareholders".

* Geoff Lord
https://books.google.com.au/books?i...e&q=geoff lord hawthorn football club&f=false

"I was keen to buy Fitzroy in 1992, and we would have got (Gary) Pert, (Garry) Wilson, (Paul) Roos, $6 million from the AFL and 10,000 fans. That would have been a great move. We looked at it but never got it up."
http://www.heraldsun.com.au/sport/a...-kennetts-claims/story-e6frf9jf-1226175672768


Don't agree with lucky enough, very well run & the current CEO Ian Robson stepped into the role after resigning from the same role at Essendon, accepting publicly 'he should have known'.

Victory haven't tried to compete with AFL, they have built support from soccer loving sports fans IMHO, built by business professionals, not wealthy well meaning & misty eyed fans.

 

[Roylion]

"I was keen to buy Fitzroy in 1992, and we would have got (Gary) Pert, (Garry) Wilson, (Paul) Roos, $6 million from the AFL and 10,000 fans. That would have been a great move. We looked at it but never got it up."
http://www.heraldsun.com.au/sport/a...-kennetts-claims/story-e6frf9jf-1226175672768

I'm not sure where people such as Geoff Lord get this idea that Fitzroy could be bought and sold like any piece of merchandise. Fitzroy was ( and continues to be) owned by its shareholders. Of which I am one. There is a set amount of shares and shareholders and all are Fitzroy people.

 

[Kwality]

I'm not sure where people such as Geoff Lord get this idea that Fitzroy could be bought and sold like any piece of merchandise. Fitzroy was ( and continues to be) owned by its shareholders. Of which I am one. There is a set amount of shares and shareholders and all are Fitzroy people.

He says he tried & did not succeed.

 

[The_Wookie]

He says he tried & did not succeed.

This isnt mentioned by either Ross Oakley in his book, and I dont recall it being mentioned in Dyson Hore-Lacys book on Fitzroy. He cant have tried hard for the League CEO and the President of Fiztroy not to notice.

 

[Kwality]

This isnt mentioned by either Ross Oakley in his book, and I dont recall it being mentioned in Dyson Hore-Lacys book on Fitzroy. He cant have tried hard for the League CEO and the President of Fiztroy not to notice.

I'd take Geoff Lord at his word.

 

[Roylion]

This isnt mentioned by either Ross Oakley in his book, and I dont recall it being mentioned in Dyson Hore-Lacys book on Fitzroy. He cant have tried hard for the League CEO and the President of Fiztroy not to notice.

I'd say the Hawthorn board discussed it amongst themselves and that's as far as it went, especially after they possibly investigated how Fitzroy's company set-up worked. As far as I know, no formal offer to Fitzroy was made and I certainly received no offer to buy my shares. I wouldn't have sold them to Hawthorn or a Hawthorn representative anyway.

 

[Kwality]

I'd say the Hawthorn board discussed it amongst themselves and that's as far as it went, especially after they possibly investigated how Fitzroy's company set-up worked. As far as I know, no formal offer to Fitzroy was made and I certainly received no offer to buy my shares. I wouldn't have sold them to Hawthorn or a Hawthorn representative anyway.

Roy, when did you buy your shares - I've got one lot of shares (not footy) going back to the late 60s, back of the toilet door a the moment.

I know North listed on the Hobart exchange in 1987 soaking up $3mil, after the Eagles parent Indian Pacific Ltd raised $10.5mil a year earlier.

 

[The_Wookie]

I'd take Geoff Lord at his word.

Im not saying I dont believe him, Im saying it never got serious if the head of the AFL or Fitzroy never knew about it.

 

[Kwality]

Didn't think you were not believing ...

 

[Pessimistic]

I'd take Geoff Lord at his word.

Jack elliot will vouch for him too

 

[Roylion]

I'd take Geoff Lord at his word.

I doubt that Geoff Lord's claim about "buying" Fitzroy in 1992 was anymore than board discussion, but Geoff Lord and Hawthorn CEO John Lauritz certaily met with Fitzroy in early August 1994 to discuss a Hawthorn merger with Fitzroy. The new club was to be known as the Hawthorn Lions. Hawthorn made another detailed offer to Fitzroy in 1996. Once again it was to be the "Hawthorn Lions" and based out at Waverley.

 

[Kwality]

Jack elliot will vouch for him too

Not sure they attend Elders reunions together !!

 

[Bunk Moreland]

I'd take Geoff Lord at his word.

I sure as hell wouldn't.

 

[Kwality]

I sure as hell wouldn't.

That's your Essendon experience in play, trust would not be something you've experienced anytime this century.

 

[Tas]

If memory serves, North was listed for a while...Things went (especially) bad however when Carlton started trying to buy them...

Pretty sure that's why the AFL has rules against it happening again.

There are no rules against private ownership, what the AFL has said is that they are not prepared to financially assist clubs that are privately owned. So if you are a club that is owned privately and you have cash flow or debt related issues then you have to go to the owners to acquire more capital.

Another problem we had was with the ATO, because of the ownership structure they made a ruling that we would lose our non-profit status as a club. In Victoria, a club can become an incorporated association in accordance with the Associations Incorporations Reform Act 2012.

I haven't seen the QLD version of the same law but I am not sure how the Broncos can both be a non for profit organisation and issue dividends to share holders, there seems to be a conflict of interest in terms of purpose. Is the entity a not for profit entity? Then servicing the members is the ultimate point, if you are charging members over the point in which you need to run the club then you are violating the purpose of the club.

I think the tax office is way too soft, in general, on entities that are set up to dodge paying tax when they operate in a manner to produce money and assets for profit, ie West Coast Eagles was produced solely for the purpose to make money, not service it's members and they over-charge the members well beyond their needs to service the members, they should be stripped of their tax free status irrespective if their owner is a NFP organisation or not. if a club had enough money to buy a controlling interest in BHP for profit that doesn't mean BHP becomes tax free now, it's intent is to trade to make money, thus is taxed.

I don't think the ATO has been diligent in applying the laws, the vast majority of our large corporations use off-shore tax havens to mitigate paying tax, this is tax avoidance and the ATO/Government does nothing about it. Eagles have tax paying exemption and they exist to screw the people of WA. Broncos are either a not for profit organisation and shouldn't be listed or they are a for profit company and the business is taxed.

 

[Kwality]

What an interesting take on legal status of the Eagles ... .... IF you are in any way wanting to understand the Broncos ownership start here
http://www.asx.com.au/asx/research/company.do#!/BBL
& pls get back to us with your edumecated synopsis for reference to the ATO.

Here is another matter in desperate need of your review /recommendation:
http://www.delisted.com.au/company/north-melbourne-football-club-limited

 

[Rob]

There are no rules against private ownership, what the AFL has said is that they are not prepared to financially assist clubs that are privately owned. So if you are a club that is owned privately and you have cash flow or debt related issues then you have to go to the owners to acquire more capital.

Another problem we had was with the ATO, because of the ownership structure they made a ruling that we would lose our non-profit status as a club. In Victoria, a club can become an incorporated association in accordance with the Associations Incorporations Reform Act 2012.

I haven't seen the QLD version of the same law but I am not sure how the Broncos can both be a non for profit organisation and issue dividends to share holders, there seems to be a conflict of interest in terms of purpose. Is the entity a not for profit entity? Then servicing the members is the ultimate point, if you are charging members over the point in which you need to run the club then you are violating the purpose of the club.

I think the tax office is way too soft, in general, on entities that are set up to dodge paying tax when they operate in a manner to produce money and assets for profit, ie West Coast Eagles was produced solely for the purpose to make money, not service it's members and they over-charge the members well beyond their needs to service the members, they should be stripped of their tax free status irrespective if their owner is a NFP organisation or not. if a club had enough money to buy a controlling interest in BHP for profit that doesn't mean BHP becomes tax free now, it's intent is to trade to make money, thus is taxed.

I don't think the ATO has been diligent in applying the laws, the vast majority of our large corporations use off-shore tax havens to mitigate paying tax, this is tax avoidance and the ATO/Government does nothing about it. Eagles have tax paying exemption and they exist to screw the people of WA. Broncos are either a not for profit organisation and shouldn't be listed or they are a for profit company and the business is taxed.

I think you're confused as to how the law works.

West Coast are a not for profit entity whose main objective is the pursuit of a game or sport. Therefore they are income tax exempt. That's what the law says. If you don't like it, campaign your local MP to change the law. Your beef seems to be mainly that they are profitable. And BHP would not be income tax exempt if they were bought by West Coast - they're not an organisation whose main objective is a game or sport (or any other exemption category). West Coast would probably lose their exemption as well.

The Broncos are not a non-profit entity and have no such exemption. I assume they pay tax on their profits - have a look at their financials, there'd probably be a tax expense item in there.

I also think you're a tad confused about how offshore tax havens work. You can't just set one up and pay no tax. BHP (for example), paid $8.7 billion in Australian tax last year. That's $8,700,000,000.
Sometimes the use of tax havens actually increases the amount of Australian tax you pay. You invest in a managed fund through the Caymans for instance - you're still taxed on the income here. But because it wasn't taxed over there, you won't get a credit for any foreign tax paid so you pay 100% of the tax in Australia. You invest through a country that taxes it there, you'll end up paying the same amount of tax overall but less of it in Australia.

 

[Bunk Moreland]

That's your Essendon experience in play, trust would not be something you've experienced anytime this century.

Oh what a load of s**t. As if my club of support has anything to do with it, grow the * up.

Have you ever dealt with Geoff Lord?

 

[telsor]

I think the tax office is way too soft, in general, on entities that are set up to dodge paying tax when they operate in a manner to produce money and assets for profit, ie West Coast Eagles was produced solely for the purpose to make money, not service it's members and they over-charge the members well beyond their needs to service the members, they should be stripped of their tax free status irrespective if their owner is a NFP organisation or not. if a club had enough money to buy a controlling interest in BHP for profit that doesn't mean BHP becomes tax free now, it's intent is to trade to make money, thus is taxed.

I don't think the ATO has been diligent in applying the laws, the vast majority of our large corporations use off-shore tax havens to mitigate paying tax, this is tax avoidance and the ATO/Government does nothing about it. Eagles have tax paying exemption and they exist to screw the people of WA. Broncos are either a not for profit organisation and shouldn't be listed or they are a for profit company and the business is taxed.

Firstly, I don't think WCE is there 'solely for the purpose to make money', but regardless, the ATO looks at the end result.

Sure, WCE makes profits, but they do so to hand them to entities that are themselves 'not for profit' (WAFC, and through them WAFL and other football in WA), so the end result is that the only entities that benefit from the money earned are NFPs.

Yes, there is a bit of a potential loophole where people and companies get paid out of such money for services rendered and said services may or may not be correctly valued, but the *potential* for using that loophole extends far, far beyond WCE. (to be clear, I have no reason to believe WCE or it's associated entities exploit this).

 

[bigleague]

The Broncos are one of the few successful privately owned football clubs in Australia, but they do own a mini casino filled with pokies & have been one of the more successful team out there with a dream stadium deal at Suncorp thanks to he qld government.
The operating costs of an afl team is pretty much double that of an nrl club requiring more investment.

The afl is on the right track in owning most of its teams cause it at least has full control of them. We have seen it through out this year with most of the nrl clubs being privatsed many of the clubs owners and management were not happy with the way the nrl commission was heading.

The listed company, Brisbane Broncos Limited, is purely the football club, the league's club is an entirely seperate entity.

Not sure where you got the idea they have a dream stadium deal, it costs them 250k per game and they only break even once the stadium is half full.

 

[The_Wookie]

The listed company, Brisbane Broncos Limited, is purely the football club, the league's club is an entirely seperate entity.

Not sure where you got the idea they have a dream stadium deal, it costs them 250k per game and they only break even once the stadium is half full.

Queensland Stadiums doesnt rent its stuff cheap, every tenant except the Suns complains about its rental costs from time to time. The AFL got a very good deal at Metricon.

 

[jatz14]

There are no rules against private ownership, what the AFL has said is that they are not prepared to financially assist clubs that are privately owned. So if you are a club that is owned privately and you have cash flow or debt related issues then you have to go to the owners to acquire more capital.

Another problem we had was with the ATO, because of the ownership structure they made a ruling that we would lose our non-profit status as a club. In Victoria, a club can become an incorporated association in accordance with the Associations Incorporations Reform Act 2012.

I haven't seen the QLD version of the same law but I am not sure how the Broncos can both be a non for profit organisation and issue dividends to share holders, there seems to be a conflict of interest in terms of purpose. Is the entity a not for profit entity? Then servicing the members is the ultimate point, if you are charging members over the point in which you need to run the club then you are violating the purpose of the club.

I think the tax office is way too soft, in general, on entities that are set up to dodge paying tax when they operate in a manner to produce money and assets for profit, ie West Coast Eagles was produced solely for the purpose to make money, not service it's members and they over-charge the members well beyond their needs to service the members, they should be stripped of their tax free status irrespective if their owner is a NFP organisation or not. if a club had enough money to buy a controlling interest in BHP for profit that doesn't mean BHP becomes tax free now, it's intent is to trade to make money, thus is taxed.

I don't think the ATO has been diligent in applying the laws, the vast majority of our large corporations use off-shore tax havens to mitigate paying tax, this is tax avoidance and the ATO/Government does nothing about it. Eagles have tax paying exemption and they exist to screw the people of WA. Broncos are either a not for profit organisation and shouldn't be listed or they are a for profit company and the business is taxed.

As others have said, a desire to make money does not mean you are a `for profit` entity. I work for a large not for profit healthcare organisation, and day to day they are very much focused on making money. However, this is because if they do not then a/ they lose the ability to invest back into the organisation, and modernise and expand and b/ they do not generate the profit required to invest in the various charitable arms they run.

No private owners, no shareholders, funds going back into the business or into a exempt activities = not for profit, that they actually make profit in the millions is neither here nor there.

 

[Kwality]

Oh what a load of s**t. As if my club of support has anything to do with it, grow the **** up.

Have you ever dealt with Geoff Lord?

Worked for him at Elders Resources ..... & you ?

 

[Tas]

As others have said, a desire to make money does not mean you are a `for profit` entity. I work for a large not for profit healthcare organisation, and day to day they are very much focused on making money. However, this is because if they do not then a/ they lose the ability to invest back into the organisation, and modernise and expand and b/ they do not generate the profit required to invest in the various charitable arms they run.

No private owners, no shareholders, funds going back into the business or into a exempt activities = not for profit, that they actually make profit in the millions is neither here nor there.

There is nothing wrong with non-profit organisations making money, it largely comes down to what the focus of the entity is, if it's to cater for members or to make money to return a dividend for the owners.