Official Club Stuff 2019 Financial Result - Debt Free!

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dave10

Club Legend
Apr 26, 2004
1,957
1,044
Melbourne
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Essendon
You need to look past the headline profit result for the true financial performance for the year which was quite poor. A profit of $60,000 on revenue of $69M.

Excluding donations, overall revenue gre by only $1.1M... That’s an ordinary performance.

Key impact being a -$500K revenue from merchandising.

Debt free thanks to donations is a great milestone however...

The concern moving forward is the need to grow revenue streams whilst membership growth may be pressured and playing out of a stadium where we are limited by capacity. What’s the business plan to grow revenue streams considerably outside of traditional football sources??


That’s a very mediocre result for a football club that is just that.
 

boncer34

Inaugural Steward
Jul 11, 2005
43,262
45,261
Baghdad
AFL Club
Essendon
Other Teams
Melbourne Storm
You need to look past the headline profit result for the true financial performance for the year which was quite poor. A profit of $60,000 on revenue of $69M.

Excluding donations, overall revenue gre by only $1.1M... That’s an ordinary performance.

Key impact being a -$500K revenue from merchandising.

Debt free thanks to donations is a great milestone however...

The concern moving forward is the need to grow revenue streams whilst membership growth may be pressured and playing out of a stadium where we are limited by capacity. What’s the business plan to grow revenue streams considerably outside of traditional football sources??


That’s a very mediocre result for a football club that is just that.
Yes but we paid down debt of $3.9m, if we were debt free (which we will be next year) then we'd have made a profit of $3.96m as opposed to $0.06m. The donations to the Hangar Expansion didn't pay down our debt.
 

dave10

Club Legend
Apr 26, 2004
1,957
1,044
Melbourne
AFL Club
Essendon
Yes but we paid down debt of $3.9m, if we were debt free (which we will be next year) then we'd have made a profit of $3.96m as opposed to $0.06m. The donations to the Hangar Expansion didn't pay down our debt.
Yes but that doesn’t change what was a poor operating result. Donations are a one off. Excluding one off donations we basically only broke even for the year. I think that’s a poor result.
 

boncer34

Inaugural Steward
Jul 11, 2005
43,262
45,261
Baghdad
AFL Club
Essendon
Other Teams
Melbourne Storm
Yes but that doesn’t change what was a poor operating result. Donations are a one off. Excluding one off donations we basically only broke even for the year. I think that’s a poor result.
So we're excluding donations but you don't want to exclude the debt reduction payments?

Are we going to be paying them again next year?
 

Lore

Moderator ❀
Dec 14, 2015
16,092
19,144
AFL Club
Essendon

Key points of the club’s 2019 financial result:

  • Net operating profit, excluding additional fundraising for The Hangar redevelopment, of $60,000 and operating cash surplus of $3.4 million.
  • Membership revenue increased by $500,000 as a result of the membership tally increasing from 79,318 to 84,567.
  • The club reduced its borrowings by $3.9 million to be debt-free at the end of the year, with cash reserves of $6 million.
  • Net assets of the club were $39.6 million, compared with $36.1 million in 2018.
  • An increase of $673,000 in match receipts/stadium revenue.
  • Increased investment of $500,000 in non-player-related football investment.


And at the bottom of the same article:
The 2019 annual report is available here. The Annual General Meeting (AGM) will be held on Thursday, December 5 at Marvel Stadium, commencing at 6:30pm.

Directors Andrew Muir and Simon Madden will be declared re-elected at the AGM as the pair were the only candidates to nominate for election to the Club’s Board by the closing date of October 31, 2019.
 

dave10

Club Legend
Apr 26, 2004
1,957
1,044
Melbourne
AFL Club
Essendon
So we're excluding donations but you don't want to exclude the debt reduction payments?

Are we going to be paying them again next year?
Im talking about the operating result which excludes one offs. For example, next year we may not have donations attributed to the expansion. Therefore unless we grow our operating revenue significantly wewill likely generate an operating loss.

At the end of the day we made $3.5M profit on one off receipts. Counteracting this was a strong cash surplus after excluding non cash depreciation. That means the clubs is still generating good positive cash flows Presently.

Even the club indicated it was a mixed result... That’s code for not great and they’re correct.

The watch out for me is our operating revenue growth has slowed significantly the last 2 years with donations largely driving the net profit. Membership growth may be challenged in 2020 in light of a more sober view of the supporter base approaching 2020. We sold out 4 games at Marvel this year and next years fixture isn’t great commercially so growth here looks tough. The club needs to find ways to grow revenue again in what now appears are challenging environment.

Other clubs are growing revenue and profits faster that Essendon which is important in the context of ongoing cost increases and capital works that will need to be invested in.
 

boncer34

Inaugural Steward
Jul 11, 2005
43,262
45,261
Baghdad
AFL Club
Essendon
Other Teams
Melbourne Storm
Im talking about the operating result which excludes one offs. For example, next year we may not have donations attributed to the expansion.
We won't. Which is why the club showed the profit including the hangar expansion donations and the one excluding.

What I'm suggesting is if you dive deeper and remove the debt reduction payments, which won't occur next year, you end up with a potential profit of near $4m.

Is that wrong?
 

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Rebellya

Premium Platinum
Oct 17, 2012
1,520
3,718
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Essendon
Im talking about the operating result which excludes one offs. For example, next year we may not have donations attributed to the expansion. Therefore unless we grow our operating revenue significantly wewill likely generate an operating loss.

At the end of the day we made $3.5M profit on one off receipts. Counteracting this was a strong cash surplus after excluding non cash depreciation. That means the clubs is still generating good positive cash flows Presently.

Even the club indicated it was a mixed result... That’s code for not great and they’re correct.

The watch out for me is our operating revenue growth has slowed significantly the last 2 years with donations largely driving the net profit. Membership growth may be challenged in 2020 in light of a more sober view of the supporter base approaching 2020. We sold out 4 games at Marvel this year and next years fixture isn’t great commercially so growth here looks tough. The club needs to find ways to grow revenue again in what now appears are challenging environment.

Other clubs are growing revenue and profits faster that Essendon which is important in the context of ongoing cost increases and capital works that will need to be invested in.
Eventually we were going to wring dry all the pokies players in the surrounding area. Once they are destitute we are exposed.

Having said that, I had a feeling that Hanger stage 2 had some revenue earning properties within it? Been a while since I looked.
 

Bombermania

Norm Smith Medallist
Dec 18, 2007
8,825
4,537
Counting premiership cups
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Non that play Essendon
I'm in agreement with Dave10 comment and considering record membership along with a number of new sponsorship deals this result is passable at best, of course a profit is better than a loss and paying down debt is a positive but this result looks thin as we enter a more challenging economic environment and this club is exposed more than most as many of this club's heartland areas in Melbourne's North-West are middle to lower income and would be impacted if the economy was to continue do fall and this club's onfield performances makes its membership fees look expensive.
 

dave10

Club Legend
Apr 26, 2004
1,957
1,044
Melbourne
AFL Club
Essendon
We won't. Which is why the club showed the profit including the hangar expansion donations and the one excluding.

What I'm suggesting is if you dive deeper and remove the debt reduction payments, which won't occur next year, you end up with a potential profit of near $4m.

Is that wrong?
I think so. These things offset each other. Without donations next year the club is ‘starting’ from a profit of $60k if revenue matched expenditure. Cash flows are different as this excludes depreciation and amortisation. The cash performance of the business will likely continue to be strong again in 2020.
 

dave10

Club Legend
Apr 26, 2004
1,957
1,044
Melbourne
AFL Club
Essendon
Eventually we were going to wring dry all the pokies players in the surrounding area. Once they are destitute we are exposed.

Having said that, I had a feeling that Hanger stage 2 had some revenue earning properties within it? Been a while since I looked.
I think so. A function venue in particular. Esports won’t be self sustaining for a while. So probably not a lot in the short term though.
 

Lore

Moderator ❀
Dec 14, 2015
16,092
19,144
AFL Club
Essendon
I'm no financial expert but getting rid of debt can only be a good thing, right?
It is a good thing and offers the club a solid foundation.
In layman's terms, yes. But I think in business (and in government when they're not trying to get elected), there's a different perspective, concerning "good" debt and "bad" debt. Good debt you borrow in order to invest and overall grow your assets when the interest rate is low. When things change you reverse the process to prevent it from biting you in the arse. That's typically why people have mortgages, though that can turn bad if you pay too much for the loan and/or the house ends up being worth less than what you paid for it.

Bad debt is more along the lines of a car loan where by the time you finish paying it off the car isn't worth anything anymore (assuming it's a regular sort of car and not some limited edition thing that becomes more valuable over time).
 

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