2019 Financial Results

[Kwality]

It's not 1989 anymore. We don't need it.

Big clubs should be ashamed.

Not having a go, but how dont you need it anymore? Good on you, I'm no fan of pokies either.

Full Profit/Loss 2018
Western Bulldogs - $18,094,333 (includes $16,085,000 in land contributions)

Operating Profit/Loss 2018
Western Bulldogs - $2,207,274

AFL distributions the key to profit/loss.

 

[Ned_Flanders]

Why did revenue and expenses for - Health, fitness and community groups - increase by $10.61m and $10.05m respectively?

Is this where Richmond account's for its community programs that it might get large government and corporate grants to carry out community work like with the Bachar Houli Foundation programs, the Aboriginal programs thru the Korin Gamadji Institute and the Diversity and Inclusion Action Plan, the Tigers do, as well as the work with the Alannah and Madeline Foundation?

On first reading of the report yesterday it appeared the club was saying its all as a result of health business - "Following the launch of Aligned Leisure in 2016, our health and fitness operation continues to facilitate non-traditional revenue sources for the Club. This venture continues to provide links with the community, assisting with further growth in membership numbers as well as providing additional corporate partnerships. The board and management are excited about the opportunity to expand and grow this non-football part of our business in the short, medium and long term." page 5.

But re reading the bold part especially and the stuff on page 2 and page 3 it seems to be more than just the leisure health and fitness business tied up in those revenue and expenditure items.

Its not a criticism, I'm just trying to get my head around it, as Port officials have told me Port spend about $3m on community programs involving work with Aboriginal communities in APY Lands and in NT, Aboriginal education programs across SA, The Aboriginal Power Cup, general school programs, stuff with defence forces families etc, from government grants and corporate funding, but they never make it clear where they account for the $3m in and $3m out.

A further note on this (someone on our board asked the question, and it touched on some of the stuff you were asking)

Putting the grant question aside, yes the growth in expenses has been tracking similar to revenue, but two things are a positive. Firstly the expenses includes our community programs, and we have had a big expansion in the costs around kgi, the school, and houlis program. Secondly even with this, the revenue has been growing faster than expenses. We don't have a number for Aligned Leisure as a stand alone, but even with the comm programs it is now generating profits similar to our pokies this year

2015
Revenue: $53,921
Expenses: $933,794
Profit: -$879,873

2016
Revenue: $2,473,589
Expenses: $2,917,060
Profit: -$443,471

2017
Revenue: $8,639,721
Expenses: $9,622,630
Profit: -$982,909

2018
Revenue: $14,237,718
Expenses: $14,160,181
Profit: $77,537

2019
Revenue: $24,847,040
Expenses: $24,208,745
Profit: $638,295

 

[AuntyBlindEye]

A further note on this (someone on our board asked the question, and it touched on some of the stuff you were asking)

Putting the grant question aside, yes the growth in expenses has been tracking similar to revenue, but two things are a positive. Firstly the expenses includes our community programs, and we have had a big expansion in the costs around kgi, the school, and houlis program. Secondly even with this, the revenue has been growing faster than expenses. We don't have a number for Aligned Leisure as a stand alone, but even with the comm programs it is now generating profits similar to our pokies this year

2015
Revenue: $53,921
Expenses: $933,794
Profit: -$879,873

2016
Revenue: $2,473,589
Expenses: $2,917,060
Profit: -$443,471

2017
Revenue: $8,639,721
Expenses: $9,622,630
Profit: -$982,909

2018
Revenue: $14,237,718
Expenses: $14,160,181
Profit: $77,537

2019
Revenue: $24,847,040
Expenses: $24,208,745
Profit: $638,295

We only had 50k revenue in 2015?

Far out, we have done alright to get ourselves in a better position.

 

[NoobPie]

A further note on this (someone on our board asked the question, and it touched on some of the stuff you were asking)

Putting the grant question aside, yes the growth in expenses has been tracking similar to revenue, but two things are a positive. Firstly the expenses includes our community programs, and we have had a big expansion in the costs around kgi, the school, and houlis program. Secondly even with this, the revenue has been growing faster than expenses. We don't have a number for Aligned Leisure as a stand alone, but even with the comm programs it is now generating profits similar to our pokies this year

2015
Revenue: $53,921
Expenses: $933,794
Profit: -$879,873

2016
Revenue: $2,473,589
Expenses: $2,917,060
Profit: -$443,471

2017
Revenue: $8,639,721
Expenses: $9,622,630
Profit: -$982,909

2018
Revenue: $14,237,718
Expenses: $14,160,181
Profit: $77,537

2019
Revenue: $24,847,040
Expenses: $24,208,745
Profit: $638,295

That's a fair observation and certainly suggests that the leisure centres line of business is becoming more lucrative

Obviously though it is not clear the extent any of the other expense lines are affected by the leisure centres such as:

Finance and administration (5,332,674) (4,424,570) (i.e. increase of ~900K from 2018 to 2019)
Facilities and maintenance (2,656,465) (2,192,130) (i.e. increase of ~460K)
Finance costs (interest expense on leased assets) (703,214) (-) (i.e. 703K increase from 2018 to 2019)

 

[Ned_Flanders]

That's a fair observation and certainly suggests that the leisure centres line of business is becoming more lucrative

Obviously though it is not clear the extent any of the other expense lines are affected by the leisure centres such as:

Finance and administration (5,332,674) (4,424,570) (i.e. increase of ~900K from 2018 to 2019)
Facilities and maintenance (2,656,465) (2,192,130) (i.e. increase of ~460K)
Finance costs (interest expense on leased assets) (703,214) (-) (i.e. 703K increase from 2018 to 2019)

My understanding is they are separate.

we have some AL staff based at punt road, but the majority are on location at the council facilities. We also run the facilities, not own and operate them, so most of the costs have been about getting the staffing and management infrastructure in place.

 

[Ned_Flanders]

We only had 50k revenue in 2015?

Far out, we have done alright to get ourselves in a better position.

Our contract started in 2016 with Cardinia, so I included 2015 to give an idea of how things looked prior to AL with just the kgi and other minor programs

 

[telsor]

That's a fair observation and certainly suggests that the leisure centres line of business is becoming more lucrative

Obviously though it is not clear the extent any of the other expense lines are affected by the leisure centres such as:

Finance and administration (5,332,674) (4,424,570) (i.e. increase of ~900K from 2018 to 2019)
Facilities and maintenance (2,656,465) (2,192,130) (i.e. increase of ~460K)
Finance costs (interest expense on leased assets) (703,214) (-) (i.e. 703K increase from 2018 to 2019)

Like all clubs, it's a bit fuzzy around the edges, but assuming that the revenue and expenses for the same area are related/comprehensive is about as good as we're likely to get.

In my ideal, standardised, reporting structure, commercial operations (such as this, pokies, etc) would be kept completely and clearly separate from football operations (Hawthorn does this already).

 

[blaisee]

Turnover not margin?

Does your club have room to absorb the loss of pokies?

Operating Profit/Loss 2018

• St Kilda – $10,414,960
• Melbourne – $6,005,532
• Hawthorn – $4,491,707
• Richmond – $4,210,003
• Geelong – $3,986,647
• Essendon – $2,321,871
• Carlton – $2,611,638
• Western Bulldogs – $2,207,274
• Collingwood – $112,052

operating profit for a nonprofit organisation is largely irrelevent

It is the most manipulated number created for lazy media and members alike

 

[blaisee]

huge growth

 

[Kwality]

operating profit for a nonprofit organisation is largely irrelevent

It is the most manipulated number created for lazy media and members alike

If you dont have a profit how do you pay the bills?
Paying your bills is important no matter who you are? You only have to look at White Ribbon Australia that took Australians for a $mil:

NoCookies | The Australian

www.theaustralian.com.au

I agree its manipulated in AFL club financial reporting, I've long advocated standard reporting standards.

In the current AFL environment clubs need $more year on year, a good example to 2 ovals at training centres first promoted by the Bombers at Tulla & $supported by the AFL - blood ridiculous IMHO.

Where do clubs go post pokies ?

 

[NoobPie]

My understanding is they are separate.

we have some AL staff based at punt road, but the majority are on location at the council facilities. We also run the facilities, not own and operate them, so most of the costs have been about getting the staffing and management infrastructure in place.

Fair enough. If the AL is not affecting any other expense line and that line is also carrying the community programs than that it suggests that the AL is a commercial bonanza. Even more so if, as you say, the contracts are largely for just service delivery

Well done to Richmond if that is the case

Like all clubs, it's a bit fuzzy around the edges, but assuming that the revenue and expenses for the same area are related/comprehensive is about as good as we're likely to get.

Sure but obviously all you can say ultimately is "according to the reporting revenue and expenditure lines in the financial statement....business line x had a surplus of y before any related corporate support functions or return of assets are attributed etc"

For instance Collingwood last year reported for "Function centres and gaming venue"

Revenue: 22,897,421
Expenses: 16,255,157

But clearly this didn't add $6.6M to our bottom line

For instance we know from the annual report that
-there is $500K for amortisation of the gaming licences / entitlements
-the implied depreciation of plant and equipment relating to the gaming venues being sold (based on identified as "held of sale") is over 600k

And then there is the glasshouse facility that is not for sale but is a responsibly for substantial share of the $2M a year return of leasehold improvements

We don't know how much if any of the $3.2M item "Operating lease rental expenses" relates to the gaming venues or how much if any they drive "other expenses" (which presumably include all the corporate services and administration)

I would say it is likely that the gaming venues are making a solid profit which is somewhat masking commercially weak outcomes from the glasshouse facility....we'll get a better idea of that after this years and next years annual reports are released but even then there is insufficient information to make a complete judgement

In my ideal, standardised, reporting structure, commercial operations (such as this, pokies, etc) would be kept completely and clearly separate from football operations (Hawthorn does this already).

I agree with you re standardisation, it would be a better basis on which to benchmark

What I find interesting about Hawthorn is that the "gaming" they report in their annual report (12,058,536 last year) is about half of what the age reported were the gambling losses at its venue. Also, they don't actually breakdown their expenditure at all by service lines. It is by generic expense type.

 

[NoobPie]

If you dont have a profit how do you pay the bills?

Hmmmmm

 

[Kwality]

Hmmmmm

Is that Latin for AFL distribution

 

[NoobPie]

Is that Latin for AFL distribution

No that's "there's no use he won't understand" for "profits are what is left over after all other expenses such as "the bills" have been paid"

 

[blaisee]

If you dont have a profit how do you pay the bills?

by getting an AFL handout .

If you take out AFL distributions , more than half the clubs would be insolvent .

Revenue and cash flow are much more important as they are much harder to manipulate

 

[telsor]

<stuff deleted>
But clearly this didn't add $6.6M to our bottom line

Well, it did really...If you want to get to the basics, every dollar earned adds to it, every dollar spent deducts from it.

More correct would be that it made a 6.6M contribution that went into general revenue and spent in other areas.

I agree with you re standardisation, it would be a better basis on which to benchmark

What I find interesting about Hawthorn is that the "gaming" they report in their annual report (12,058,536 last year) is about half of what the age reported were the gambling losses at its venue. Also, they don't actually breakdown their expenditure at all by service lines. It is by generic expense type.

I'm not sure any club has it 'right', just saying that Hawthorn's breakup is a good thing, although I'd take it further and just have 'non football operations' as a separate entity, with a note saying what financial transfers there were between that and the club (e.g. over the year, non football operations made a net profit of $792,564 and transferred $345,725 to the football club).

In part I say this because it's somewhat misleading when comparing football clubs to say Richmond had revenue of $92M when about a quarter of that is people buying memberships at a fitness club. IMO, only the net revenue from that has any real influence of the football club itself.

 

[telsor]

by getting an AFL handout .

If you take out AFL distributions , more than half the clubs would be insolvent .

Revenue and cash flow are much more important as they are much harder to manipulate

Most of AFL distributions is legit...
The base is the clubs share of media rights, which really belongs to the clubs anyway (the deal where they let the VFL do the deal says they have to give the money to the clubs).
There is also a sizeable slice that is money the AFL collects on behalf of the clubs in other way (merch licensing, AFL memberships, signage rights at docklands, etc etc etc).
Those are the largest elements of AFL distributions aren't they going anywhere...they really can't.

The other stuff....well, that's another matter (although they're unlikely to change greatly anytime soon).

 

[Kwality]

Most of AFL distributions is legit...
The base is the clubs share of media rights, which really belongs to the clubs anyway (the deal where they let the VFL do the deal says they have to give the money to the clubs).
There is also a sizeable slice that is money the AFL collects on behalf of the clubs in other way (merch licensing, AFL memberships, signage rights at docklands, etc etc etc).
Those are the largest elements of AFL distributions aren't they going anywhere...they really can't.

The other stuff....well, that's another matter (although they're unlikely to change greatly anytime soon).

A bit of transparency ....

 

[telsor]

A bit of transparency ....

It'd be nice for us, but it's unlikely to happen.

Breaking it all down would be nice for richer clubs by showing the legit reasons for the 'extra' money (especially Vic clubs, with ground deals and AFL memberships), but that would take away the cover for less well off clubs ('all clubs get extra') and more seriously, would expose just how much the AFL takes out of club's pockets...and the AFL wouldn't stand for that.

 

[Kwality]

It'd be nice for us, but it's unlikely to happen.

Breaking it all down would be nice for richer clubs by showing the legit reasons for the 'extra' money (especially Vic clubs, with ground deals and AFL memberships), but that would take away the cover for less well off clubs ('all clubs get extra') and more seriously, would expose just how much the AFL takes out of club's pockets...and the AFL wouldn't stand for that.

What prompted my comment was your earlier post:

There is also a sizeable slice that is money the AFL collects on behalf of the clubs in other way (merch licensing, AFL memberships, signage rights at docklands, etc etc etc).

Its the slush fund approach to distributions that peeve me.

 

[NoobPie]

What prompted my comment was your earlier post:


Its the slush fund approach to distributions that peeve me.

I think the AFL is quite transparent about how it distributes to clubs. This is from the Annual report...I'm sure the clubs themselves get greater transparency again as to the basis and breakdown of distributions

 

[NoobPie]

Well, it did really...If you want to get to the basics, every dollar earned adds to it, every dollar spent deducts from it.

More correct would be that it made a 6.6M contribution that went into general revenue and spent in other areas.

Not sure you are getting my point. The point is that, in terms of the impact on the bottom line, you can't just take the 6.6M in isolation. There are other expenditure items that exist to deliver the "function centres and gaming venues" that aren't captured in the "function centres and gaming venues expenses". Unambiguously this includes the expenditure and lease of assets required to deliver those services. They also likely impact on the size of corporate services and administration

I'm not sure any club has it 'right', just saying that Hawthorn's breakup is a good thing, although I'd take it further and just have 'non football operations' as a separate entity, with a note saying what financial transfers there were between that and the club (e.g. over the year, non football operations made a net profit of $792,564 and transferred $345,725 to the football club).

In part I say this because it's somewhat misleading when comparing football clubs to say Richmond had revenue of $92M when about a quarter of that is people buying memberships at a fitness club. IMO, only the net revenue from that has any real influence of the football club itself.

Yea, I agree that some standardised accounting approach including a separation of "non-football" operations is worthwhile, I just can't see how you think Hawthorn is doing this

They separate the "club" from the "consolidated" entity but they don't even breakdown employee expenses by "business areas"



Their revenue note has a better breakdown than most clubs, granted, but the gaming income for instance falls under both "the Club" and the other entities "consolidated"

 

[telsor]

Yea, I agree that some standardised accounting approach including a separation of "non-football" operations is worthwhile, I just can't see how you think Hawthorn is doing this

I don't think they're doing it well enough, but it's good enough to provide an example of the sort of thing I'm looking for (breaking football and non football).

In other areas they're definitely lacking. I don't think any club is 'perfect', but if we cherry pick the best from all of them, we'd have a good basis for what I'd like to see (but I'd probably want more than even that).

 

[telsor]

What prompted my comment was your earlier post:


Its the slush fund approach to distributions that peeve me.

I think it appearing that way is inevitable.

They're just not going to break down the X reasons they give clubs money, with full descriptions of what they are, and why some clubs get more or less, for every club, both because it'd be a pain in the arse for them, and because it'd add quite a few pages to the already long AFL report.

Failing that, it'll appear a bit 'slush fundish' and you'll complain about lack of transparency.

 

[jatz14]

People see unequal distributions as a negative. Like somehow, if all the clubs were run well, and the league was run well, then all of the clubs would be covering expenses, and wouldn't need extra from the AFL. However, sports leagues ALWAYS have teams at the bottom, struggling. This cannot be avoided, because if all clubs do well financially, then the amount the league spends as a whole goes up, until the clubs with the poorest financials cannot keep up.

Large overseas leagues deal with this a number of ways. Promotion/relegation, if you do not have the cash to play with the big boys, then you dont play with them. Or wholesale commercialism. Let the club go broke, or let it get sold, to however has the cash to buy it.

Neither of those are really options in the closed world of AFL. So that leaves equalisation strategies.