- Sep 28, 2016
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- 21,678
- AFL Club
- St Kilda
No B."derelict"? But it was reasonably foreseeable - that's the definition of an expense. Over a long enough period it always increases. If they were accounting correctly they should have had an annual provision for the amount of the average annual increase. The 20% bump would have been in line with that.
It’s not that simple.
A club’s employment cost exposure is driven by Salary Cap rules (plus AFL prescribed marketing benefits).
This is the summation of the employee contract costs.
So if Sydney committed to employment costs 20% higher in 2017 than 2016, and they did so three years prior, they would have needed to start that work in 2014 because of the way the player contracts roll over.
Bit embarrassing to arrive in 2017 with a contracted wages bill that is 20% more than 2016, then find out you don’t have the revenue (AFL fully funded) to pay it.
That’s independent of being blown out of the water wrt the Salary Cap.
Accruals/Provisions are not applicable here because: (1) we are talking actual $’s paid vs some theoretical value and (2) not consistent with Accounting Matching/Realization standards.
It’s much more likely/reasonable that the forecast 20% was spread over the five years of the CBA.
Hence, a 4% variation in that first year.
Much easier to manage.
If you want a boring accounting response, please PM me.
I guarantee you that it will be boring tho.