Resource 2016 Annual Reports Thread - Club Comparisons post #002

[telsor]

The Richmond Annual report is now up here.

As I say every year, Richmond's concise report is one of the least illuminating reports and hardest to compare to other clubs.

'note 6', is a case of good timing though...It states that nothing significant has happened since the report was finalised that would effect the coming year (really, a standard/boilerplate declaration seen on most financial reports). A day later that was made however (Nov15), BLK announced they were stuffed.

 

[telsor]

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.

Auditors tend to be a bit like bookies..They weigh their numbers against the chances...If they though the chance of an increased payout due to the Brownlow being handed back/taken was 90% likely, and would cost and estimated that it would cost $1Million, then the provision booked for it would most likely have been around $900k. Same with provisions generally...It's the accumulated best, weighted guess of the anticipated cost. Nobody is saying that will be the number, just that that's the best estimate at what the number will be.

From memory, EFC's provisions went up by a bit under $4Million. If 'most' is covered by insurance, then the full payout must be enormous, because they wont be declaring provisions for that part.

Even so, if that $4M is actually $4.1M (which would make it an exceptional estimate under the circumstances), it's still a noticable impact on the 2017 financial report.

and yes, as Gigantor noted, it could also be $3.9M instead...again, an impact (although probably a less likely one).

 

[Muggs]

As I say every year, Richmond's concise report is one of the least illuminating reports and hardest to compare to other clubs.

You can always take advantage of this...

The full financial report and auditor’s report will be sent to members on request, free of charge. Please email sgordon@richmondfc.com.au and a copy will be forwarded to you.

 

[Muggs]

Auditors tend to be a bit like bookies..They weigh their numbers against the chances...If they though the chance of an increased payout due to the Brownlow being handed back/taken was 90% likely, and would cost and estimated that it would cost $1Million, then the provision booked for it would most likely have been around $900k. Same with provisions generally...It's the accumulated best, weighted guess of the anticipated cost. Nobody is saying that will be the number, just that that's the best estimate at what the number will be.

From memory, EFC's provisions went up by a bit under $4Million. If 'most' is covered by insurance, then the full payout must be enormous, because they wont be declaring provisions for that part.

Even so, if that $4M is actually $4.1M (which would make it an exceptional estimate under the circumstances), it's still a noticable impact on the 2017 financial report.

and yes, as Gigantor noted, it could also be $3.9M instead...again, an impact (although probably a less likely one).

Auditors don't write the report or determine the numbers, they just verify what is in the report.

That is not how accounting standards work, if your estimate is going to be $1million and its a "probable" payout, i,e. greater than 50% chance of payout the full $1 million should be recognised. You call it a provision to show it is uncertain. You don't recognise 500k. You do that kind of weighted guess on recurring payments like employee benefits (see below) not once off payments.

edit* even if you did what your example suggested the extra 100k Should be disclosed as contingent liability as being a possible additional liability, that's not probable.

The provision on this is a touch under 2.3mil, the rest of the increase in provisions (900k) was employee benefits, jumped by a lot percentage wise (up from 1.3mil) which to me looks like a bit of a reset while having a bad year to make future adjustments lower. Much the same way that impairment expense is going to reduce future deprecation.

 

[telsor]

Brisbanes Annual Report is now up here.

Damn! Last year they looked bad, but it's getting even worse.

$1.8M loss. (last year 700K)
$-10.9 million in net assets. ($-9.1M)
$16.7M in net AFL distributions. ($15.5M) Even with this, revenue is well down at $48.7M from $51M last year.
$8.8M in 'trade payables' to the AFL (marginally higher than last year...This is essentially an interest free loan as the AFL refuses to ask for it, knowing that doing so would drive them bankrupt).

 

[Muggs]

$8.8M in 'trade payables' to the AFL (marginally higher than last year...This is essentially an interest free loan as the AFL refuses to ask for it, knowing that doing so would drive them bankrupt).

May as well call it 14.3 Million, if not 16.8million. The AFL has also guaranteed a 8 Million commercial bill (drawn to 5.5mil) due to be repaid Dec next year, if Westpac does not refinance that is cash the AFL will need to cough up to prevent Brisbane going into liquidation. Heck even if Westpac does refinance Brisbane has no hope of paying it off based on current financial performance so effectively debt to the AFL.

 

[telsor]

May as well call it 14.3 Million, if not 16.8million. The AFL has also guaranteed a 8 Million commercial bill (drawn to 5.5mil) due to be repaid Dec next year, if Westpac does not refinance that is cash the AFL will need to cough up to prevent Brisbane going into liquidation. Heck even if Westpac does refinance Brisbane has no hope of paying it off based on current financial performance so effectively debt to the AFL.

True, but I point it out more because it's a 'hidden' loan that you only really pick up on if you dig through the notes (particularly the 'going concern' section).

 

[Muggs]

True, but I point it out more because it's a 'hidden' loan that you only really pick up on if you dig through the notes (particularly the 'going concern' section).

Agree,

Going from memory on last years reports Brisbane not the only club that remains a going concern through such AFL debt, or due to AFL guarantees on normal debt.

That guarantee i along with the letter of support from the AFL is also a key factor in being a going concern. Without the AFL guarantee no way could Brisbane get commercially obtained debt and not have it called in due breaching some kind of debt covenant (e.g LVR or Debt Ratio) let alone debt at an average interest of 2.42%.

Brisbane is only afloat by the good graces of the AFL for a variety of reasons.

 

[Pedantic]

Melbourne's report is http://s.afl.com.au/staticfile/AFL Tenant/Melbourne/PDF/161123_FinReport_FA_ISSU.pdf
And the club's spin http://www.melbournefc.com.au/news/2016-11-23/melbourne-register-third-consecutive-profit

Looks fairly positive from my layman's perspective.

 

[The_Wookie]

Statements

• Brisbane Football Club
  
• Collingwood Football Club
  
• Essendon Football Club
  
• Hawthorn Football Club
  
• Melbourne Football Club
  
• Richmond Football Club

Annual Reports

• Brisbane Football Club
  
• Essendon Football Club
  
• Hawthorn Football Club
  
• Melbourne Football Club
  
• Richmond Football Club

Consolidated Profit/Loss

• Hawthorn - $4,660,824
• Melbourne - $720,218
  
• Richmond - ($80,257)
• Brisbane - ($1,783,506)
• Essendon - ($9,825,37)

Revenue

• Hawthorn - $69,779,234
• Essendon - $53,499, 545
• Brisbane - $48,707,494
• Melbourne - $47,552,639
• Richmond - $47,538,233

AFL Revenue

• Brisbane - $16,753,407
• Melbourne - $12,758,742
• Richmond - $10,478,488
• Essendon - $9,824,470
• Hawthorn - $9,788,488

Membership Revenue

• Hawthorn - $12,422,423
• Essendon - $10,100,110
• Melbourne - $7,578,057 (includes fundraising)
• Brisbane - $5,602,557 (includes Gate reciepts)

Membership Revenue per Member

• Brisbane - $240.59 (includes Gate reciepts)
• Melbourne - $193.58 (includes fundraising)
  
• Essendon - $175.67
• Hawthorn - $164.86

Sponsorship Revenue

• Hawthorn - $14,947,662
• Essendon - $12 ,493 ,197
• Richmond - $10,575,059
• Brisbane - $9,599,634
• Melbourne - $8,916,023

Pokies and Hospitality Revenue

• Hawthorn - $18,338,797
• Brisbane - $15,192,965
• Essendon - $13,540,006
• Melbourne - $12,193,285
• Richmond - $7,217,846

Pokies and Hospitality Profit

• Brisbane - $4,207,183
• Melbourne - $3,620,569
• Essendon - $2,456,768

Gate Reciepts and Match Returns

• Melbourne - $4,592,047
• Hawthorn - $4,372,640
• Essendon - $216 , 850

Merchandise

• Hawthorn - $4,020,932
• Essendon - $2,268,964
• Merchandise - $986,269
• Brisbane - $817,849

Football Department Spend

• Essendon - $22,981,249
• Richmond - $22,794,109
• Brisbane - $22,236,384
• Melbourne - $21,927,456
• Hawthorn - Not completely defined.

AFL Equalisation Levy

• Hawthorn - $1,301,588
• Essendon - $350,004

Assets

• Hawthorn - $62,414,117
• Essendon - $47, 817, 356
• Richmond - $29,521,323
• Melbourne - $17,484,015
• Brisbane - $8,195,809

Liabilities

• Hawthorn - $20,814,863
• Essendon - $20,363,757
• Brisbane - $19,067,673
• Melbourne - $12,644,379
• Richmond - $5,430,252

Net Assets

• Hawthorn - $41,559,254
• Essendon - $27,453 , 599
• Richmond - $24,091,071
• Melbourne - $4,839,636
• Brisbane - ($10,871,864)

AFL Guarantees

• Brisbane - The Company has an $8.0 million commercial bill facility with Westpac which is secured by a guarantee from the AFL. The facility expires 31 December 2017. The facility was drawn to $5.5 million at year end
• Melbourne - Actually two guarantees of 0.896 million and 4.5 million, the latter of which is currently drawn to 3.7 million and has a maturity date of 31 December 2017

 

[Muggs]

Melbourne's report is http://s.afl.com.au/staticfile/AFL Tenant/Melbourne/PDF/161123_FinReport_FA_ISSU.pdf
And the club's spin http://www.melbournefc.com.au/news/2016-11-23/melbourne-register-third-consecutive-profit

Looks fairly positive from my layman's perspective.

Only issue I see is in the spin...

“Two of our other financial priorities over recent years have been increasing the level of investment in our Football Department and reducing debt levels, both in terms of bank debt and gaming machine entitlement debt. Investment in our Football Department grew by $635k during 2016, taking the increased investment since 2013 to $1.9m. Our overall debt position reduced by $561k in 2016, with debt reduction since 2013 totaling $2.7m.


Agree gaming debt went down (by amount stated), but bank debt went up on a net basis by 6k. Trivial amount.

Suspect it's just copying last years statement and not realising.

Otherwise positive.

One thing I noted is you carrying land at cost unlike EFC at fair value so worth remembering if doing a comparison.

 

[Muggs]

Brisbane - The Company has an $8.0 million commercial bill facility with Westpac which is secured by a guarantee from the AFL. The facility expires 31 December 2017. The facility was drawn to $5.5 million at year end

If you lisiting these Wookie from the Melb report note 13

The facility maturity date is 31 December 2017 and is supported by a $0.896m guarantee by the Australian Football League. The facility is also secured by a fixed and floating charge over all existing and future assets of the Club.

And

The facility provides the Club to draw funds up to a limit of $4.500m (comprising $0.400m overdraft and a $4.100m commercial bill facility). The commercial bill facility was drawn to $3.700m (FY15: $3.100m) as at 31 October 2016 (overdraft undrawn).The maturity date is 31 December 2017 and the amount drawn at 31 October 2016 is classified as a non-current liability. This facility can be used as either an overdraft facility or a commercial bill facility. This facility is supported by a $4.500m guarantee provided by the Australian Football League.

Wouldn't be surprised to find most clubs this arrangement to get a lower interest rate.

 

[Pedantic]

Only issue I see is in the spin...

“Two of our other financial priorities over recent years have been increasing the level of investment in our Football Department and reducing debt levels, both in terms of bank debt and gaming machine entitlement debt. Investment in our Football Department grew by $635k during 2016, taking the increased investment since 2013 to $1.9m. Our overall debt position reduced by $561k in 2016, with debt reduction since 2013 totaling $2.7m.


Agree gaming debt went down (by amount stated), but bank debt went up on a net basis by 6k. Trivial amount.

Suspect it's just copying last years statement and not realising.

Otherwise positive.

One thing I noted is you carrying land at cost unlike EFC at fair value so worth remembering if doing a comparison.

Yep, true. It's explained better in the directors' report:

"Overall debt comprised of bank debt and gaming machine entitlement debt, and this has reduced by $561k in 2016, which is completely attributable to gaming machine entitlement debt. Reducing debt has been a focus of the Club over the last three years, with total debt having reduced by $2.658m since 2013, comprising of a $1.680m reduction in gaming machine entitlement debt and a $0.978m reduction in bank debt."

 

[Rob]

If you lisiting these Wookie from the Melb report note 13

The facility maturity date is 31 December 2017 and is supported by a $0.896m guarantee by the Australian Football League. The facility is also secured by a fixed and floating charge over all existing and future assets of the Club.

And

The facility provides the Club to draw funds up to a limit of $4.500m (comprising $0.400m overdraft and a $4.100m commercial bill facility). The commercial bill facility was drawn to $3.700m (FY15: $3.100m) as at 31 October 2016 (overdraft undrawn).The maturity date is 31 December 2017 and the amount drawn at 31 October 2016 is classified as a non-current liability. This facility can be used as either an overdraft facility or a commercial bill facility. This facility is supported by a $4.500m guarantee provided by the Australian Football League.

Wouldn't be surprised to find most clubs this arrangement to get a lower interest rate.

Yeah that's pretty common amongst (a growing number of) cash strapped clubs. It would significantly lower the interest bill on such loans.

 

[Kwality]

True, but I point it out more because it's a 'hidden' loan that you only really pick up on if you dig through the notes (particularly the 'going concern' section).

Not unique to the Lions, just not understood by many, just look back ..
How are the Tiges ...

 

[telsor]

Not unique to the Lions, just not understood by many, just look back ..
How are the Tiges ...

St Kilda does similar, but I'm not sure about any other clubs doing so. (nb. ALL clubs would have some debts to the AFL...it's inherent in the relationship, I'm talking about significant trading debts to the AFL not being paid )

Feel free to point out any other clubs that have $5M+ owing to the AFL in such a way.

 

[telsor]

Yeah that's pretty common amongst (a growing number of) cash strapped clubs. It would significantly lower the interest bill on such loans.

You don't need to be cash strapped to take advantage of the lower interest rate such a guarantee would provide.

 

[Rob]

You don't need to be cash strapped to take advantage of the lower interest rate such a guarantee would provide.

If you've got the cash then you don't need to take out bank loans in the first place.

 

[Kwality]

You don't need to be cash strapped to take advantage of the lower interest rate such a guarantee would provide.

You do need an AFL guarantee if you are unable to meet your debts as and when they fall due - that's why the Bombers need the guarantee last year for the first time in the clubs history, that's why Benny Gale was smiling (only last year) when able to announce the Tiges no longer needed an AFL guarantee, its why the Pies don't have an AFL guarantee.

 

[The_Wookie]

The Geelong Football Club has announced a net profit of $2.3 million for the 2016 financial year.

The club’s net asset position improved by 28.6% to $9.9 million and revenue increased by 10% to $54.6 million.

The major factors in the financial outcome include:

* The club's continued investment in the football department, with total outlay rising by $1 million to $23.2 million.

* An increase in profit from the club's commercial operations, with profit rising by 3% to $20.1 million. This is largely due to increases in sponsorship and membership. The club achieved a 13% rise in membership to 52,195.

* Home attendance (including home games at the MCG and Etihad Stadium) increased from 29,127 to 30,497.

* The “Our Ambition’ fundraising campaign was a success, generating significant funds that will be applied now and into the future.

http://www.geelongcats.com.au/news/2016-11-28/cats-post-profit

annual report is here
http://s.afl.com.au/staticfile/AFL ...olidated Financial Statements - Signed_V2.pdf

 

[The_Wookie]

Statements

• Brisbane Football Club
  
• Collingwood Football Club
  
• Essendon Football Club
• Geelong Football Club
  
• Hawthorn Football Club
  
• Melbourne Football Club
  
• Richmond Football Club

Annual Reports

• Brisbane Football Club
  
• Essendon Football Club
• Geelong Football Club
  
• Hawthorn Football Club
  
• Melbourne Football Club
  
• Richmond Football Club

Consolidated Profit/Loss

• Hawthorn - $4,660,824
• Geelong - $2,255,116
  
• Melbourne - $720,218
  
• Richmond - ($80,257)
• Brisbane - ($1,783,506)
• Essendon - ($9,825,37)

Revenue

• Hawthorn - $69,779,234
• Geelong - $54,650,813
  
• Essendon - $53,499, 545
• Brisbane - $48,707,494
• Melbourne - $47,552,639
• Richmond - $47,538,233

AFL Revenue

• Brisbane - $16,753,407
• Melbourne - $12,758,742
• Richmond - $10,478,488
• Essendon - $9,824,470
• Hawthorn - $9,788,488
• Geelong - $9,512,533

Membership Revenue

• Geelong - $14,341,800 (includes gate reciepts)
  
• Hawthorn - $12,422,423
• Essendon - $10,100,110
• Melbourne - $7,578,057 (includes fundraising)
• Brisbane - $5,602,557 (includes Gate reciepts)

Membership Revenue per Member

• Geelong - $274.77 (includes gate reciepts)
  
• Brisbane - $240.59 (includes gate reciepts)
• Melbourne - $193.58 (includes fundraising)
  
• Essendon - $175.67
• Hawthorn - $164.86

Sponsorship Revenue

• Geelong - $16,079,494 (includes fundraising)
  
• Hawthorn - $14,947,662
• Essendon - $12 ,493 ,197
• Richmond - $10,575,059
• Brisbane - $9,599,634
• Melbourne - $8,916,023

Pokies and Hospitality Revenue

• Hawthorn - $18,338,797
• Brisbane - $15,192,965
• Essendon - $13,540,006
• Melbourne - $12,193,285
• Geelong - $9,060,375
  
• Richmond - $7,217,846

Pokies and Hospitality Profit

• Brisbane - $4,207,183
• Melbourne - $3,620,569
• Essendon - $2,456,768

Gate Reciepts and Match Returns

• Melbourne - $4,592,047
• Hawthorn - $4,372,640
• Essendon - $216 , 850

Merchandise

• Hawthorn - $4,020,932
• Essendon - $2,268,964
• Geelong - $1,742,436
  
• Merchandise - $986,269
• Brisbane - $817,849

Football Department Spend

• Geelong - $23,172,565
  
• Essendon - $22,981,249
• Richmond - $22,794,109
• Brisbane - $22,236,384
• Melbourne - $21,927,456
• Hawthorn - Not completely defined.

AFL Equalisation Levy

• Hawthorn - $1,301,588
• Geelong - $390,000
  
• Essendon - $350,004

Assets

• Hawthorn - $62,414,117
• Essendon - $47, 817, 356
• Geelong - $35,036,809
  
• Richmond - $29,521,323
• Melbourne - $17,484,015
• Brisbane - $8,195,809

Liabilities

• Geelong - $25,105,827
  
• Hawthorn - $20,814,863
• Essendon - $20,363,757
• Brisbane - $19,067,673
• Melbourne - $12,644,379
• Richmond - $5,430,252

Equity

• Hawthorn - $41,559,254
• Essendon - $27,453 , 599
• Richmond - $24,091,071
• Geelong - $9,930,982
  
• Melbourne - $4,839,636
• Brisbane - ($10,871,864)

 

[Muggs]

ou do need an AFL guarantee if you are unable to meet your debts as and when they fall due

That is why you need one, without this guarantee you cant obtain finance. .

However if you can also get one that results in a lower interest rate why not? Guarantees in the business world are often used between related parties,
(Parent company and subsidiaries, subsidiaries cross guaranteeing, Joint ventures etc) providing additional security to lower the cost of capital.

Looking at last years AFL report, they provided guarantees to 11 of the 18 clubs, and all clubs in respect of player payments.

Even if not a formal guarantee suspect the other 7 clubs all have letters of support from the AFL indicating the AFL is willing to provide cash if needed.

 

[Muggs]

The Geelong Football Club has announced a net profit of $2.3 million for the 2016 financial year.

The club’s net asset position improved by 28.6% to $9.9 million and revenue increased by 10% to $54.6 million.

The major factors in the financial outcome include:

* The club's continued investment in the football department, with total outlay rising by $1 million to $23.2 million.

* An increase in profit from the club's commercial operations, with profit rising by 3% to $20.1 million. This is largely due to increases in sponsorship and membership. The club achieved a 13% rise in membership to 52,195.

* Home attendance (including home games at the MCG and Etihad Stadium) increased from 29,127 to 30,497.

* The “Our Ambition’ fundraising campaign was a success, generating significant funds that will be applied now and into the future.

http://www.geelongcats.com.au/news/2016-11-28/cats-post-profit

annual report is here
http://s.afl.com.au/staticfile/AFL Tenant/GeelongCats/PDFs/2017/2016 GFC-Consolidated Financial Statements - Signed_V2.pdf

That is a nice turnaround for Geelong.

 

[telsor]

You do need an AFL guarantee if you are unable to meet your debts as and when they fall due - that's why the Bombers need the guarantee last year for the first time in the clubs history, that's why Benny Gale was smiling (only last year) when able to announce the Tiges no longer needed an AFL guarantee, its why the Pies don't have an AFL guarantee.

That is why you need one, without this guarantee you cant obtain finance. .

Clubs were getting finance long before the AFL started guaranteeing loans.

The difference is if the loan is far more likely to be about if the loan is at 6% or 3%.

Benny Gale was smiling because the club was debt free...Removing the guarantee was an incidental consequence of that, not least because, in effect, it's still there...As it is for all clubs. If a financially strong club like WCE went to the bank to help finance their new training facility, the AFL would guarantee it, and WCE would probably receive better terms as a result.

 

[telsor]

If you've got the cash then you don't need to take out bank loans in the first place.

So if you have a loan you're 'cash strapped'?

I suppose that means most large companies in the world are struggling....BHP must be practically at deaths door.