Official Club Stuff 2019 Financial Results

[S.Patrol.G]

And also a sponsor of sorts.

Port Adelaide and PwC announce landmark sponsorship

Port Adelaide Football Club has announced a landmark sponsorship agreement with PwC.

www.portadelaidefc.com.au

Not that I'm suggesting any conflict of interest.

I'm told this is a very wise relationship to have.

 

[RussellEbertHandball]

I should say here again I am not an accountant, and my accounting expertise is concentrated in a particular area, so I'm a little hesitant to say you are wrong. I hope I am not overstepping my knowledge haha.

DD&A as an accounting term is NOT a way of costing assets over their life. Depreciated assets incur capital costs which occur when the asset is purchased which is the negative net cash flow. Depreciation is merely a way of writing off tax in the form of lowering the book value of an asset in the form of expensing. It is certainly not a real expenditure - organisations do not pay depreciation as a bill on a yearly basis. Hence why it is not a useful measure when it comes to the ability of a football club to function. Our depreciation could way exceed our real cashflow for the year and we could still pay our players and staff. It would be bizarre, hard to explain and concerning, but it wouldn't have any real impact on our ability to function as a football club.

The other aspect of depreciation is that it the schedule is often set by the government. It often doesn't accurately describe the "actual" decline in value of an asset, but rather describes how the government wants us to decline the asset. For example, we could expect our Alter-G machine to last another 10 years, but the government wants us to depreciate it over the next 5 years. This would inflate the depreciation unrealistically.

Sorry but that has a lot of crap contained in it. Depreciation has nothing to do with tax. Port is a tax exempt entity so it doesn't depreciate to get a tax benefit.

Yes the government gives accelerated depreciation and instant asset write offs benefits, but companies of any decent size will have depreciation for tax purposes records/schedules as well as depreciation for accounting in their accounts.

It's all about the matching principle of accounting. The whole reason accounting was invented was to reflect that there is a timing difference in conducting business, and you try and match revenues and expenses to the periods that these apply to.

If you buy a piece of machinery that is going to produce a good over an 8 year period, that you can sell, then you are going to write it off, over 8 years, to match the revenue stream you receive from it over those 8 years.

If governments say you can write it off over 4 years then happy days from a tax point of view. If you are a large mining company or heavy industry company and have $10 billion of capital equipment you write it off over its useful life and report it that way and you don't tell shareholders don't worry about the depreciation write off its not part of real profit. Sure you take advantage of accelerated tax write offs, but you don't report the tax depreciation figure you report the accounting depreciation figure in your accounts and media releases to shareholders.

Port Adelaide has had annual depreciation of around $1 million for about 7 or 8 years now.

Port Adelaide has spent around $1 million a year on property plant and equipment each year for that 7 or 8 years, and the majority of that is IT equipment and software which is written off over 3 years, as we are always buying the latest and greatest to replace old stuff, as well as new equipment for new staff in the ever expanding football department.

So in a very simplistic sense, the $1m depreciation figure is reflective of the $1m cash out flow to buy new property plant and equipment, especially IT stuff, the last 7 or 8 years. So yes depreciation matters.

 

[Onward To Victory]

Have we decreased debt by mil?

If we reduce the AFL debt by a mil but lose 650k havent we reduced our debt by 350k and moved 650k of debt from the AFL to whoever we borrow money from (and who presumably charges more interest than the AFL)?

On SM-G960F using BigFooty.com mobile app

This seems like a really important question. I assume the club would pay off the debts that attract the highest interest first?

 

[RussellEbertHandball]

The Bulldogs have received millions from white knights who have kept the wolves at bay.

Their Prez has donated well over $1,000,000 over the journey, and Susan Alberti is said to have donated north of $4,000,000.

Last year I did this spreadsheet after the Bulldogs showed an $18m+ profit after the Vic government transferred land around Whitten Oval to them and the valued it at over $16m and a $2m grant to redevelop some of it for women's footy purposes. I updated for 2019 a few days ago.

This is the government grants and private donations the Bulldogs have received since Johnny Howard gave them $10m in 2004 to build their facility with a decent community component. They didn't easily split private donations but the Vic government threw in some funding as well after they got monies from the feds.

The Net Assets of the Bulldogs basically have been established with these funds and the accumulated profits and losses over 14 years has been about $4m.

 

[tribey]

Last year I did this spreadsheet after the Bulldogs showed an $18m+ profit after the Vic government transferred land around Whitten Oval to them and the valued it at over $16m and a $2m grant to redevelop some of it for women's footy purposes. I updated for 2019 a few days ago.

This is the government grants and private donations the Bulldogs have received since Johnny Howard gave them $10m in 2004 to build their facility with a decent community component. They didn't easily split private donations but the Vic government threw in some funding as well after they got monies from the feds.

The Net Assets of the Bulldogs basically have been established with these funds and the accumulated profits and losses over 14 years has been about $4m.

View attachment 796325

Did you see Geelong took the bold moral stand to get out of pokies?

After well over $100,000,000 of taxpayer and AFL funds has been spent converting Kardinia Park into a multipurpose money engine, of course.

 

[RussellEbertHandball]

Did you see Geelong took the bold moral stand to get out of pokies?

After well over $100,000,000 of taxpayer and AFL funds has been spent converting Kardinia Park into a multipurpose money engine, of course.

Yeah there is a pokies thread on the Footy Industry board and last year I put up an article where 5 clubs said they would depart Pokies or it might have been 4 to join North and make it 5 Vic clubs with no pokies. Melbourne got out last year, Collingwood this year and Geelong and Bulldogs said they would transition out.

Ok thinking about who is left with Pokies;
Hawthorn and Carlton have huge venues, Essendon mid size, and Richmond and Saints small operations.

Five AFL clubs awarded new 20-year licenses to operate pokies

Carlton, Hawthorn, Essendon, Richmond and St Kilda have all been handed 20 year licenses to continue operating pokies at venues around the state.

www.theage.com.au

 

[JakeNeadeFan]

Sorry but that has a lot of crap contained in it. Depreciation has nothing to do with tax. Port is a tax exempt entity so it doesn't depreciate to get a tax benefit.

OK I'll defer to your expertise in this area. However for the sake of education can you explain to me this situation in the 2017 annual report.

Basically what you are saying is depreciation should match (or be very close to?) the actual expenditure.

Looking at the statement of cashflows for the year of 2016 (first column), the expenditure for property, plant and equipment is 747,950.



The depreciation in that year is 970,853 for buildings (==property?), plant and equipment.



So a discrepancy of around 220,000. So did we pay 747,950 that year or 970,853?

 

[RussellEbertHandball]

OK I'll defer to your expertise in this area. However for the sake of education can you explain to me this situation in the 2017 annual report.

Basically what you are saying is depreciation should match (or be very close to?) the actual expenditure.

Looking at the statement of cashflows for the year of 2016 (first column), the expenditure for property, plant and equipment is 747,950.

View attachment 796347

The depreciation in that year is 970,853 for buildings (==property?), plant and equipment.

View attachment 796348

So a discrepancy of around 220,000. So did we pay 747,950 that year or 970,853?

We spent real cash and bought $747k of capital equipment and we had depreciation of $970k.

However when the 2018 accounts were released there was a prior period adjustment and the 2017 depreciation was adjusted to $1,020,853 and the 2017 profit of $28,611 became a loss of $(21,389). It was related to the Leasehold of The Prince.

 

[RussellEbertHandball]

Did you see Geelong took the bold moral stand to get out of pokies?

After well over $100,000,000 of taxpayer and AFL funds has been spent converting Kardinia Park into a multipurpose money engine, of course.

Looks like the Bulldogs are trying to get a mini Kardinia Park up. From May 2019 article in the local paper.

Western Bulldogs' Whitten Oval revamp paves way for AFL return - Star Weekly

Footscray’s Whitten Oval could once again host AFL matches under …

www.starweekly.com.au

Footscray’s Whitten Oval could once again host AFL matches under plans for a $40-45 million redevelopment.

The Western Bulldogs have released a master plan developed by architecture firm Populous for the oval precinct, due to be completed over a number of stages. The first stage, now completed via a $5 million state government grant, included an upgrade to women’s change rooms, toilets and a scoreboard.

The ambitious second stage, expected to cost between $40 and$45 million will include upgrade of the playing surface, rebuilding the Whitten Stand to help increase spectator capacity to 18,000, upgrades to administration and football department facilities and broadcast quality lighting upgrade.

A new entry plaza and running track will also be built along with development of a secondary training venue elsewhere in Footscray. Later stages – tipped to take the overall project total close to $150 million – will include residential redevelopment of a large parcel of land to the south of the oval that was last year gifted to the club by the state government.

The area could also include childcare, eateries and a medical and fitness health hub. Maribyrnong Council is currently investigating the potential realignment of Cross Street to accommodate the works.....

Western Bulldogs' Whitten Oval revamp paves way for AFL return - Star Weekly

Footscray’s Whitten Oval could once again host AFL matches under …

www.starweekly.com.au

 

[tribey]

Looks like the Bulldogs are trying to get a mini Kardinia Park up. From May 2019 article in the local paper.

Western Bulldogs' Whitten Oval revamp paves way for AFL return - Star Weekly

Footscray’s Whitten Oval could once again host AFL matches under …

www.starweekly.com.au

Footscray’s Whitten Oval could once again host AFL matches under plans for a $40-45 million redevelopment.

The Western Bulldogs have released a master plan developed by architecture firm Populous for the oval precinct, due to be completed over a number of stages. The first stage, now completed via a $5 million state government grant, included an upgrade to women’s change rooms, toilets and a scoreboard.

The ambitious second stage, expected to cost between $40 and$45 million will include upgrade of the playing surface, rebuilding the Whitten Stand to help increase spectator capacity to 18,000, upgrades to administration and football department facilities and broadcast quality lighting upgrade.

A new entry plaza and running track will also be built along with development of a secondary training venue elsewhere in Footscray. Later stages – tipped to take the overall project total close to $150 million – will include residential redevelopment of a large parcel of land to the south of the oval that was last year gifted to the club by the state government.

The area could also include childcare, eateries and a medical and fitness health hub. Maribyrnong Council is currently investigating the potential realignment of Cross Street to accommodate the works.....

Western Bulldogs' Whitten Oval revamp paves way for AFL return - Star Weekly

Footscray’s Whitten Oval could once again host AFL matches under …

www.starweekly.com.au

Must be nice...

 

[JakeNeadeFan]

We spent real cash and bought $747k of capital equipment and we had depreciation of $970k.

However when the 2018 accounts were released there was a prior period adjustment and the 2017 depreciation was adjusted to $1,020,853 and the 2017 profit of $28,611 became a loss of $(21,389). It was related to the Leasehold of The Prince.

So in lay terms, which one of these statements is correct at the time the report was published?

a) "In 2016, 747k was spent on property, plant and equipment"
b) "In 2016, 970k was spent on property, plant and equipment"
c) "In 2016, 1717k was spent on property, plant and equipment"

 

[RussellEbertHandball]

So in lay terms, which one of these statements is correct at the time the report was published?

a) "In 2016, 747k was spent on property, plant and equipment"
b) "In 2016, 970k was spent on property, plant and equipment"
c) "In 2016, 1717k was spent on property, plant and equipment"

How the hell do you get that depreciation = cash spent on property plant and equipment?

Whatever is in the cash flow statement as " Payments for property, Plant and equipment" is what was spent in cash.

 

[TeeKray]

So in lay terms, which one of these statements is correct at the time the report was published?

a) "In 2016, 747k was spent on property, plant and equipment"
b) "In 2016, 970k was spent on property, plant and equipment"
c) "In 2016, 1717k was spent on property, plant and equipment"

I'm not an accountant either but as I understand it:

$747k was spent on property, plant and equipment. This forms part of the cash flow statement.

A depreciation of $970k was recorded on all property, plant and equipment (not just property, plant and equipment purchased in that financial year). This affects the asset position in the balance sheet.

 

[tribey]

I'm not an accountant either but as I understand it:

$747k was spent on property, plant and equipment. This forms part of the cash flow statement.

A depreciation of $970k was recorded on all property, plant and equipment (not just property, plant and equipment purchased in that financial year). This affects the asset position in the balance sheet.

2014: “with a bit of luck we could win the flag here”

2019: “property, plant and equipment”

 

[JakeNeadeFan]

I'm not an accountant either but as I understand it:

$747k was spent on property, plant and equipment. This forms part of the cash flow statement.

A depreciation of $970k was recorded on all property, plant and equipment (not just property, plant and equipment purchased in that financial year). This affects the asset position in the balance sheet.

Earlier REH said that the depreciation is reflective of the cash outflow for these areas. In order of magnitude terms I guess it is, but I think its worth distinguishing the two. I was just clearing that up.

Earlier you said that depreciation is a legitimate expense. In accounting terms I think this is true, but in laymans terms it gets a bit confusing as an expense is often associated with the loss of real cash. As you correctly stated it here, depreciation is the reduction in the asset position in the balance sheet and not a real cashflow. It can also be used to write-off tax, but as has been stated has no relevance here due to the club not being subject to income tax.

As a fan of the club I'm of the opinion that the real net cashflow is the key, as it indicates whether we can operate to the maximum salary cap and the soft cap. The balance sheet I guess has some importance in that indicates the functional state of equipment and buildings. But as the club is not going to be sold, I can't see why valuing the equipment on a dollars level (and associated depreciation) is really noteworthy when the cashflow statement exists.

 

[TeeKray]

Earlier REH said that the depreciation is reflective of the cash outflow for these areas. In order of magnitude terms I guess it is, but I think its worth distinguishing the two. I was just clearing that up.

Earlier you said that depreciation is a legitimate expense. In accounting terms I think this is true, but in laymans terms it gets a bit confusing as an expense is often associated with the loss of real cash. As you correctly stated it here, depreciation is the reduction in the asset position in the balance sheet and not a real cashflow. It can also be used to write-off tax, but as has been stated has no relevance here due to the club not being subject to income tax.

As a fan of the club I'm of the opinion that the real net cashflow is the key, as it indicates whether we can operate to the maximum salary cap and the soft cap. The balance sheet I guess has some importance in that indicates the functional state of equipment and buildings. But as the club is not going to be sold, I can't see why valuing the equipment on a dollars level (and associated depreciation) is really noteworthy when the cashflow statement exists.

Depreciation is also recorded in the P&L statement. So the expense is recorded in total on the cash flow statement but as a depreciating item in the P&L statement. That's why the pre depreciation profit or loss figure is utter crap - it's totally ignoring a key expense item.

 

[JakeNeadeFan]

Depreciation is also recorded in the P&L statement. So the expense is recorded in total on the cash flow statement but as a depreciating item in the P&L statement. That's why the pre depreciation profit or loss figure is utter crap - it's totally ignoring a key expense item.

Its not recorded in the cashflow statement unless the expense is incurred in the year of reporting. Unless something is leased, you pay for it once at purchase, not every year that you use it.

 

[Schulzenfest]

Well it's nice to know that our memorabilia has a higher valuation, but unless we're planning on going full Crows and selling off our history to start a new life as Southern Power, it really does three fifths of * all worth of good for us, doesn't it? Ups the premiums on our contents insurance, that's about it.

Maybe the idea is that Ken, Koch and KT will literally burn the club down on their way out at the end of 2020, as opposed to just figuratively burning it down like they have the last few years.

 

[raptalia]

So where is the additional 31M for the Alberton upgrade going to come from? According to KT in this morning's press all but 4m of the estimated 35M has 'yet to be found'. The plans are on the table but thus far the money is not.

Thomas said the club was in “ongoing discussion” with multiple funding partners. Of course we hear this every time we need to find a major sponsor.

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www.adelaidenow.com.au

31,000,000 is a lot of money and it is one thing for hot shots like Waypoint to find the bulk of 60M for the most profitable club in the AFL but quite another to find money for a club on the AFL's financial watch list. This is particularly concerning when the club on the watchlist has the worst stadium deal in creation and has to shuffle it's assets around to make an on paper profit each year. It is also a matter for concern that the CEO of that watchlist club has foreshadowed his departure in 2020.

Maybe there is some Chinese money in the pipeline?

 

[TheFVK]

So where is the additional 31M for the Alberton upgrade going to come from? According to KT in this morning's press all but 4m of the estimated 35M has 'yet to be found'. The plans are on the table but thus far the money is not.

Thomas said the club was in “ongoing discussion” with multiple funding partners. Of course we hear this every time we need to find a major sponsor.

No Cookies | The Advertiser

No Cookies

www.adelaidenow.com.au

31,000,000 is a lot of money and it is one thing for hot shots like Waypoint to find the bulk of 60M for the most profitable club in the AFL but quite another to find money for a club on the AFL's financial watch list.

Paywall. Can you post the article please

 

[*PAF]

Earlier REH said that the depreciation is reflective of the cash outflow for these areas. In order of magnitude terms I guess it is, but I think its worth distinguishing the two. I was just clearing that up.

Earlier you said that depreciation is a legitimate expense. In accounting terms I think this is true, but in laymans terms it gets a bit confusing as an expense is often associated with the loss of real cash. As you correctly stated it here, depreciation is the reduction in the asset position in the balance sheet and not a real cashflow. It can also be used to write-off tax, but as has been stated has no relevance here due to the club not being subject to income tax.

As a fan of the club I'm of the opinion that the real net cashflow is the key, as it indicates whether we can operate to the maximum salary cap and the soft cap. The balance sheet I guess has some importance in that indicates the functional state of equipment and buildings. But as the club is not going to be sold, I can't see why valuing the equipment on a dollars level (and associated depreciation) is really noteworthy when the cashflow statement exists.

Yeah nah.
If money out is > money in for too long chances are we will end up in Tasmania.
However once you start analysing where the money out goes then you also need to look at depreciation.

We cannot spend $500k on some equipment that we have to purchase every 3 years and say we have 1M in assets the second time around.

So yeah nah even if it doesn't impact taxes.

I'm not an accountant either so when these things come out I glance at money in and money out, then wait for posters like REH to explain it further.

 

[Grave Danger]

So where is the additional 31M for the Alberton upgrade going to come from? According to KT in this morning's press all but 4m of the estimated 35M has 'yet to be found'. The plans are on the table but thus far the money is not.

Thomas said the club was in “ongoing discussion” with multiple funding partners. Of course we hear this every time we need to find a major sponsor.

No Cookies | The Advertiser

No Cookies

www.adelaidenow.com.au

31,000,000 is a lot of money and it is one thing for hot shots like Waypoint to find the bulk of 60M for the most profitable club in the AFL but quite another to find money for a club on the AFL's financial watch list. This is particularly concerning when the club on the watchlist has the worst stadium deal in creation and has to shuffle it's assets around to make an on paper profit each year. It is also a matter for concern that the CEO of that watchlist club has foreshadowed his departure in 2020.

Maybe there is some Chinese money in the pipeline?

Apart from the TDU and the athletics stadium, Santos seems to put most of their sponsorship $$$ into 'community' stuff - maybe they could cover off both with our centre of excellence and/or AFLW team.

 

[RussellEbertHandball]

So where is the additional 31M for the Alberton upgrade going to come from? According to KT in this morning's press all but 4m of the estimated 35M has 'yet to be found'. The plans are on the table but thus far the money is not.

Thomas said the club was in “ongoing discussion” with multiple funding partners. Of course we hear this every time we need to find a major sponsor.

No Cookies | The Advertiser

No Cookies

www.adelaidenow.com.au

31,000,000 is a lot of money and it is one thing for hot shots like Waypoint to find the bulk of 60M for the most profitable club in the AFL but quite another to find money for a club on the AFL's financial watch list. This is particularly concerning when the club on the watchlist has the worst stadium deal in creation and has to shuffle it's assets around to make an on paper profit each year. It is also a matter for concern that the CEO of that watchlist club has foreshadowed his departure in 2020.

Maybe there is some Chinese money in the pipeline?

Tirath Khemlani and associates.

 

[JakeNeadeFan]

Yeah nah.
If money out is > money in for too long chances are we will end up in Tasmania.
However once you start analysing where the money out goes then you also need to look at depreciation.

We cannot spend $500k on some equipment that we have to purchase every 3 years and say we have 1M in assets the second time around.

So yeah nah even if it doesn't impact taxes.

I'm not an accountant either so when these things come out I glance at money in and money out, then wait for posters like REH to explain it further.

Of course we can't lie about the value of our assets. That wasn't my point. What I said was that determining the clubs financial performance based on P&L doesn't really make sense to me. Does depreciation, increases in property value, increasing value of memoribillia, unsold merch etc. directly effect our ability to pay our players and staff or invest in new projects?

As I mentioned before depreciation gives some (very limited) insight into the functional life of our equipment so that's something I guess. Beyond that I can't really see its purpose unless they plan on selling the club!

 

[chiwigi]

Well it's nice to know that our memorabilia has a higher valuation, but unless we're planning on going full Crows and selling off our history to start a new life as Southern Power, it really does three fifths of fu** all worth of good for us, doesn't it? Ups the premiums on our contents insurance, that's about it.

Maybe the idea is that Ken, Koch and KT will literally burn the club down on their way out at the end of 2020, as opposed to just figuratively burning it down like they have the last few years.

Probably to do with the museum plan.