Resource 2016 Annual Reports Thread - Club Comparisons post #002

[telsor]

Only Watson and Ryder remain outstanding from what I understand.

Perhaps...I don't recall the exact wording, but the implication of the article was that there were several players till to be done.

Regardless, the point remains, there will be some effect on next years financials, and thus while the worst may be passed, it's not yet (quite) over.

 

[Muggs]

Brisbane

The Brisbane Lions Australian Football Club has recorded a net operating loss of $1.78 million for 2015/16.

The Club generated a trading loss of $0.3 million for the year ending October 31, 2016, prior to depreciation and interest costs.

The $1.78 million loss in 2015/16 was in line with the Club’s budget forecast for the year. This year’s result was driven by a range of factors:

• Increased football department investment;
• Costs associated with the release of the Senior Coach from his contract;
• Declining crowds and membership due to performance.

Brisbane Lions CEO Greg Swann said the Club remained committed to improving performance across the entire organisation.

While disappointing, this year’s result was still well ahead of the $3.5 million loss in 2013/14, and the Club continues to work with the AFL to improve its financial performance.

“Off the field, we have done a large body of work in the commercial and membership areas to ensure that we are in a position to capitalise on the improved results that we expect will come with our new approach in football operations,” said Swann.

“There have still been positives across the Club this year, most notably co-major partner Vero extending for two years, and Camperdown Dairy International signing as a co-major partner for three years.

“Better engagement with our loyal fans also remains a priority and we continue to work hard in that area.

“As a Club, we want to become relevant again – that involves a lot of hard work and we are up for the challenge.”

Other key points of the Lions’ 2016 Financial Report are:

• Total Club turnover of $49 million, compared to $51 million the previous financial year;
• Football department expenditure of $22 million, compared to $21.5 million the previous financial year;

http://www.lions.com.au/news/2016-11-18/financial-results-201516

No report yet.

 

[Gigantor]

By rights, with a turnover of $49 mill, despite a small decrease, an AFL club should be able to break even. Is there a large revenue item being included in gross terms which is currently providing zero net return?

 

[Rob]

By rights, with a turnover of $49 mill, despite a small decrease, an AFL club should be able to break even. Is there a large revenue item being included in gross terms which is currently providing zero net return?

Their social club is what immediately comes to mind.

Although they may well be getting a good net return from it - but it is going to increase their revenue by a lot without the same impact on profit. Big difference to the bottom line between $15m in social club revenue and $15m in membership or attendance revenue.

 

[dave10]

Undoubtedly, but the whole saga has taken EFC from being a financial powerhouse to an also ran. It will be interesting to see how full that turnaround will be...Quite likely it will take years before the club is as attractive to sponsors again for example.

Pretty much every revenue category was down (the only exception being 'rental income' which went up almost 20K). That's not something you just shake off.

No denying it was s difficult year commercially, that's obvious. It has also resulted in a large burden of debt short term. But this was to be expected when 3 months before the season started the club had the least marketable offer in the market. It's attendances and hospitality revenue are all one off results. It still generated $53M revenue and will now come off a very low cost base to return to profitability, and more importantly generate strong positive cash flows after amortisation and paper expenses are excluded.

Despite this, whilst it has negotiated a reduction in contribution in 2016 from some key sponsors as can be seen in the annual report, it has retained ALL sponsors inckuding KIA and Fujitsu. In recent months it has also signed the most lucrative apparel sponsorship in history ($7M over 7 years) which indicates that Essendons brand is still fundamentally strong and the club will emerge quite quickly commercially if on field form improves dramatically as expected.

As well as this membership is very strong with the club on track for 65,000 members in 2017. Importantly two key points of interest are the number of new members signing up (1) and the significant shift from low yield (3 game) memberships into more premium packages for 2017 (2). The latter based on supporters planning on attending more games in 2017. On the basis membership grows +12% per current tracking this would likely generate +$1.3M in additional revenue from this source alone in 2017. Then you add +800K in gate takings and the certain upside Vs this tesr across other areas of the business like hospitality sales on match day and game day revenues associated with certainly bigger crowds. The club also has s new apparel provider / Guernsey which always sees merchandising sales spike.

You'd have to expect revenues from normal activities to climb by $3-4M in 2017.

Point being, Essendon will be coming off a low cost base and with good momentum and will rebound strongly in most areas commercially in 2017 which will enable the club to quite quickly start its recovery.

Despite the obvious ongoing challenges, It's not as bad as some make it out to be....

 

[Muggs]

By rights, with a turnover of $49 mill, despite a small decrease, an AFL club should be able to break even. Is there a large revenue item being included in gross terms which is currently providing zero net return?

Suspect its probably due more to paying out Leppitsch, effectively paying two years of coaches wages in one.

The downturn in gate revenue probably also probably provided a negative return towards the end of season when numbers were significantly down. Suspect there is a lot of fixed costs in just having a ground the ground to play on.

There is also a mismatch on timing of expenses (on things like footy department, hiring new coaching and support staff and buying new equipment at the start of the financial year in preseason) and revenue such match receiepts and mechanising (occurring towards the end of the financial year during the season) by time you realise your budgeted revenue is down, you have already incurred (or committed to in case of coaching contract) the expense making it hard to cutback and break even.

 

[Muggs]

Despite this, whilst it has negotiated a reduction in contribution in 2016 from some key sponsors as can be seen in the annual report, it has retained ALL sponsors inckuding KIA and Fujitsu

Well technically you did not retain ALL sponsers since you swapped apparel sponsers.

 

[dave10]

So you haven't lost any, and you've even signed new ones...and yet revenue is massively down.

Could it be they've resigned, but at lower values?

They renegotiated a few sponsors at disc

I thought the explanation was interesting:

In a statement, the Bombers cited the impact of the Court of Arbitration for Sport's guilty verdict and suspension of 34 past and present players in January as a significant factor in the financial blow.

Nearly half ($4.5m) of the Dons' total loss ($9.8m) was registered from covering legal fees and compensation claims.

A further $3.1m was lost through reduced match receipts, plus consumer and commercial revenues.
​

Put CAS in as the bad guy, not the administration and players for the PED doping regime.

Whatever

 

[Kwality]

Dave you refer to a low cost base, how has it been achieved ?

 

[dave10]

Dave you refer to a low cost base, how has it been achieved ?

Not being a smart arse.. They tightened their belts this year given the challenge ahead. Football expenditure was flat v last year st $23M. By cost base I refer to operating costs. Not extraordinary expenses related to the saga.

 

[telsor]

Their social club is what immediately comes to mind.

Although they may well be getting a good net return from it - but it is going to increase their revenue by a lot without the same impact on profit. Big difference to the bottom line between $15m in social club revenue and $15m in membership or attendance revenue.

Agreed it would be something like that.
Social club might bring in $20M in 'revenue' but only profit by $3M
Other items (membership, sponsorship, etc) still have costs, but the ratio would be far better.

That said, the profits from non football items like the social club are especially valuable as they tend not to have the same cycles as football income (poor performance of a football team wont stop people going to the pub or playing pokies) and once the investment is made, the returns tend to keep coming in.

But yeah, it does blow out the revenue figure significantly, and is another example of how looking at one or two numbers on a financial report doesn't give you a full picture, and why you shouldn't read too much into press releases like this one, without the full report.

 

[Kwality]

Not being a smart arse.. They tightened their belts this year given the challenge ahead. Football expenditure was flat v last year st $23M. By cost base I refer to operating costs. Not extraordinary expenses related to the saga.

I wasn't reflecting on the costs from another time, & the operating costs answers my question.
They wrote off some of the Windy Hill assets, clearing the decks that's sometimes referred to, & makes sense to me.

Dave

 

[Kwality]

A source that cannot be publicly disclosed.

A source on the sauce is not the basis for any sort of prosecution, get a new one, your current source is of dubious kwality ... 18 done, 16 to go is the Slater & Gordon* version this day

Fairfax Media report:
http://www.theage.com.au/afl/afl-news/essendon-supplements-saga-bombers-settle-compensation-with-18-players-20161122-gsupyp.html

.... Slater and Gordon class action lawyer Patrick Gordon said the result was vindication for the players.

Former Bomber Stewart Crameri is one of the 18 players who has reached a settlement with Essendon.

"All issues in these 18 cases have been agreed in-principle and subject to the paperwork now being satisfactory and being executed by our clients, the matters will be formally resolved in the next several days," Gordon said.

* given the ASX performance of Slater & Gordon, Mr Prosecutor may argue my source is no better than his sauce (sic) & I could not argue

 

[The Prosecutor]

A source on the sauce is not the basis for any sort of prosecution, get a new one, your current source is of dubious kwality ... 18 done, 16 to go is the Slater & Gordon* version this day

Fairfax Media report:
http://www.theage.com.au/afl/afl-news/essendon-supplements-saga-bombers-settle-compensation-with-18-players-20161122-gsupyp.html

.... Slater and Gordon class action lawyer Patrick Gordon said the result was vindication for the players.

Former Bomber Stewart Crameri is one of the 18 players who has reached a settlement with Essendon.

"All issues in these 18 cases have been agreed in-principle and subject to the paperwork now being satisfactory and being executed by our clients, the matters will be formally resolved in the next several days," Gordon said.

* given the ASX performance of Slater & Gordon, Mr Prosecutor may argue my source is no better than his sauce (sic) & I could not argue

You don't think the deal had been agreed in principle at least for a couple of weeks now?

If you read the article, it also follows says the following...

"It's understood there is still a small group of players yet to secure compensation, including retired Bomber, Nathan Lovett-Murray."

Most of the other 16 have been done, there's just a few left (Watson, Ryder and NLM - haven't been told there are any further).

Perfectly happy with my source.

 

[telsor]

You don't think the deal had been agreed in principle at least for a couple of weeks now?

If you read the article, it also follows says the following...

"It's understood there is still a small group of players yet to secure compensation, including retired Bomber, Nathan Lovett-Murray."

Most of the other 16 have been done, there's just a few left (Watson, Ryder and NLM - haven't been told there are any further).

Perfectly happy with my source.

Perhaps so, but for the purpose of this thread and how this discussion originated, it would be fairly clear that the deal with these 18 players (and those with whom agreement has not been made) wouldn't have been included in the financial report for the year just concluded, and thus there will be a fairly significant impact on next years report as well.

 

[The Prosecutor]

Perhaps so, but for the purpose of this thread and how this discussion originated, it would be fairly clear that the deal with these 18 players (and those with whom agreement has not been made) wouldn't have been included in the financial report for the year just concluded, and thus there will be a fairly significant impact on next years report as well.

They've been included as provisions...

 

[telsor]

They've been included as provisions...

Which require action on the balance sheet when realised...

 

[Kwality]

They've been included as provisions...

All to be revealed when the financials are available .... source or sauce

 

[Gigantor]

Which require action on the balance sheet when realised...

But The Prosecutor is saying the provisions have already been recognised on the balance sheet, meaning the corresponding expense has been recognised in the P&L for the previous financial year.

The liability will need to be met in the future (in terms of a cash payment), but The Prosecutor appears to be correct when he says the actual expense has already be recognised in the large loss which has been disclosed.

 

[telsor]

But The Prosecutor is saying the provisions have already been recognised on the balance sheet, meaning the corresponding expense has been recognised in the P&L for the previous financial year.

The liability will need to be met in the future (in terms of a cash payment), but The Prosecutor appears to be correct when he says the actual expense has already be recognised in the large loss which has been disclosed.

Broadly, yes.

But we're talking about provisions for something that, at the time the accounts were prepared were still under negotiation. If they're off by ~10% we're looking at several hundred thousand. Add in factors that occurred after the event, like a player losing a Brownlow and while that 10% figure looks like a pretty good guesstimate, it still leaves a fair bit to play out in the coming years accounts.

I'm not for a moment suggesting that the impact next year will be of a similar magnitude to this years, but rather contesting suggestions that it's all over.

 

[Gigantor]

Broadly, yes.

But we're talking about provisions for something that, at the time the accounts were prepared were still under negotiation. If they're off by ~10% we're looking at several hundred thousand. Add in factors that occurred after the event, like a player losing a Brownlow and while that 10% figure looks like a pretty good guesstimate, it still leaves a fair bit to play out in the coming years accounts.

I'm not for a moment suggesting that the impact next year will be of a similar magnitude to this years, but rather contesting suggestions that it's all over.

That's a fair point (it could come under, but somehow, you'd have to place that as a low probability).

 

[The_Wookie]

http://www.collingwoodfc.com.au/news/2016-11-22/pies-post-operating-profit

The Collingwood Football Club has announced an operating profit before depreciation of $1,551,350 (2015 - $1,880,927) for the financial year ending 31 October 2016.

The final declared statutory result for the 2016 financial year is a net loss of $2,622,623 (2015 - profit of $848,076).

Collingwood was also required to contribute $1,405,904 to the AFL’s equalisation pool, which included $500,000 of AFL revenue sharing.

Highlights of Collingwood’s 2016 financial year include:

- Operating profit before depreciation of $1,551,350 (2015 - $1,880,927)

- Total profit before depreciation of $1,551,350

- Total depreciation of $4,173,973 (2015 - $2,634,485)

- Total club revenue of $71,475,457 (2015 - $66,485,870)

- Membership figure of 74,819

- Collingwood’s net asset position is $35,311,042 (2015 - $37,933,665)

- 16th consecutive operating profit

 

[The_Wookie]

The Richmond Annual report is now up here.

 

[The_Wookie]

Brisbanes Annual Report is now up here.

 

[Muggs]

Broadly, yes.

But we're talking about provisions for something that, at the time the accounts were prepared were still under negotiation. If they're off by ~10% we're looking at several hundred thousand. Add in factors that occurred after the event, like a player losing a Brownlow and while that 10% figure looks like a pretty good guesstimate, it still leaves a fair bit to play out in the coming years accounts.

I'm not for a moment suggesting that the impact next year will be of a similar magnitude to this years, but rather contesting suggestions that it's all over.

While I get your point losing the Brownlow was a pretty high likely hood and likely factored in as a result, it was certainly not out the realms of possibility.

Also got to remember that most of the compensation is paid for via insurance, that provision is EFC best guest about what they be out of pocket for, and is probably on the conservative side.

The fact that their was no contingent liabilities disclosed in the notes does suggest to me that they don't see any further possibility of additional liabilities beyond the probable ones recognised by provision.