2020 Financials Thread

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RussellEbertHandball

Flick pass expert
Nov 16, 2004
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the Aligned Leisure stuff is pretty easy to tag. Other than Aligned Leisure, the Community and Stuff section is the KGI, our indigenous school, and the Swinburne Institute. KGI and the school are not revenue earning (so pure costs). Swinburne is, BUT its very new.

If you look at the annual reports over recent years, you can see the progression of how AL has impacted upon revenue, costs, and profits:


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

2016 **started AL with Cardinia contract**
Revenue: $2,473,589
Expenses: $2,917,060
Profit: -$443,471

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

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

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

2020
Revenue: $17,849,104
Expenses: $24,322,020
Profit: -$6,472,916
So what activities does this set up entail that makes Richmond pay income tax on profits, when it's a 100% owned subsidiary according to the Aligned Leisure website, yet other clubs have business operations that make profits, including pokies venues and they don't pay tax on these profits, yet non members attend these venues??

From Note 3
Income tax expense for the prior year comprises of $13,016 relating to the operations of Aligned Leisure and has been recognised in 2020. There is no provision for income tax in 2020.
 

Ned_Flanders

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So what activities does this set up entail that makes Richmond pay income tax on profits, when it's a 100% owned subsidiary according to the Aligned Leisure website, yet other clubs have business operations that make profits, including pokies venues and they don't pay tax on these profits, yet non members attend attend these venues??

From Note 3
Income tax expense for the prior year comprises of $13,016 relating to the operations of Aligned Leisure and has been recognised in 2020. There is no provision for income tax in 2020.
tax law and how it applies is 100% not my thing, so apologies im out of my depth there.

Aligned Leisure is involved in running aquatic centres and gyms, and also started offering sports leadership training up in Wodonga . I dont know if the latter is 100% us, or jointly done with Swinburne as part of our JV with them

the only other thing i can think of is the club were using the facilities in conjunction with our NGA, and graduates of Swinburne Institute could get some gigs with AL (no idea if relevant, im just trying to think of possible revenue streams)
 

RussellEbertHandball

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tax law and how it applies is 100% not my thing, so apologies im out of my depth there.

Aligned Leisure is involved in running aquatic centres and gyms, and also started offering sports leadership training up in Wodonga . I dont know if the latter is 100% us, or jointly done with Swinburne as part of our JV with them

the only other thing i can think of is the club were using the facilities in conjunction with our NGA, and graduates of Swinburne Institute could get some gigs with AL (no idea if relevant, im just trying to think of possible revenue streams)
No worries. Just thought there is something very different to what other clubs must do, that might stand out and the club has made a comment about.

All clubs are subject to state taxes like payroll tax, gambling taxes, stamp duties etc and federal GST, on their footy and non footy activities, but I can't recall any member owned clubs or those owned by state associations having to pay income tax.

What makes clubs exempt from income tax is that they fall under the sports category, but also they can't pay dividends to individuals or organisations, to maintain an income tax exemption.

I think the way the Swans and Bears were set up in the 80's and 90's they had to pay income tax as they were privately owned.
 
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Rob

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So what activities does this set up entail that makes Richmond pay income tax on profits, when it's a 100% owned subsidiary according to the Aligned Leisure website, yet other clubs have business operations that make profits, including pokies venues and they don't pay tax on these profits, yet non members attend these venues??

From Note 3
Income tax expense for the prior year comprises of $13,016 relating to the operations of Aligned Leisure and has been recognised in 2020. There is no provision for income tax in 2020.
I suspect it's a separate company. Whilst it would retain NFP status, it would not have income tax exemption like the footy club does.

If it was all done under the footy club it would probably be income tax exempt, but then the club risks losing income tax exemption as a whole if the leisure business gets too big.
 

RussellEbertHandball

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I suspect it's a separate company. Whilst it would retain NFP status, it would not have income tax exemption like the footy club does.

If it was all done under the footy club it would probably be income tax exempt, but then the club risks losing income tax exemption as a whole if the leisure business gets too big.
The majority of clubs have subsidiary companies and trusts set ups that run their non footy businesses, especially their pubs and pokies businesses, yet they don't pay income tax. As I said in my post above the Aligned Leisure on their website, state they are a 100% owned subsidiary of the Richmond FC.

Hawthorn declare their pokies venue set up in their annual report each year as;
"The Club is the sole unit holder of CSFT, which in turn, owns a 73% interest in a Caroline Springs Joint Venture (CSJV), the nominee for which is CSJV Nominees Pty Ltd. CSJV is the leasehold operator of the WestWaters Hotel & Entertainment Complex."

Hawthorn consolidate all of CSJV's activities yet show no income tax is payable on the profits that commercial business derives.

Its hard to see how one has to pay tax on their non footy business profits yet the other one maintains their tax exempt status. There has to be something about the structure of the subsidiary that Richmond didn't follow like the Hawks and other clubs have.
 

Rob

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The majority of clubs have subsidiary companies and trusts set ups that run their non footy businesses, especially their pubs and pokies businesses, yet they don't pay income tax. As I said in my post above the Aligned Leisure on their website, state they are a 100% owned subsidiary of the Richmond FC.

Hawthorn declare their pokies venue set up in their annual report each year as;
"The Club is the sole unit holder of CSFT, which in turn, owns a 73% interest in a Caroline Springs Joint Venture (CSJV), the nominee for which is CSJV Nominees Pty Ltd. CSJV is the leasehold operator of the WestWaters Hotel & Entertainment Complex."

Hawthorn consolidate all of CSJV's activities yet show no income tax is payable on the profits that commercial business derives.

Its hard to see how one has to pay tax on their non footy business profits yet the other one maintains their tax exempt status. There has to be something about the structure of the subsidiary that Richmond didn't follow like the Hawks and other clubs have.
Trusts don't pay tax on their profits. Not unless they retain them anyway (which they rarely do). I suspect the CSFT distributes all profits to HFC, which (of course) is income tax exempt.
 

RussellEbertHandball

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Trusts don't pay tax on their profits. Not unless they retain them anyway (which they rarely do). I suspect the CSFT distributes all profits to HFC, which (of course) is income tax exempt.
I knew you would say.

The business entity is CSJV, that entity is the unknown structure. HFC owns one unit in the unit trust CSTF and that trust owns a 73% interest in CSJV. That structure would be critical to how the tax liability is assessed. Is it a paper JV ie an agreement but not a legal entity ( an unincorporated joint venture ), or a legal entity JV and JV is just a term used when in fact it is another legal structure.

The fact its a 73% / 27% split suggests a legal entity but it could just be a paper structure to facilitate he Hawks tax exempt status.
 

Rob

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I knew you would say.

The business entity is CSJV, that entity is the unknown structure. HFC owns one unit in the unit trust CSTF and that trust owns a 73% interest in CSJV. That structure would be critical to how the tax liability is assessed. Is it a paper JV ie an agreement but not a legal entity ( an unincorporated joint venture ), or a legal entity JV and JV is just a term used when in fact it is another legal structure.

The fact its a 73% / 27% split suggests a legal entity but it could just be a paper structure to facilitate he Hawks tax exempt status.
Joint ventures are generally taxed in each entity that's part of the joint venture, very similar to a partnership. They're rarely taxed as a separate entity, because legally they aren't one (as you say).

But I'm not familiar with Hawthorn's structure other than what you've posted - who owns the 27%?
 

The_Wookie

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$1,801,370 profit not including the sale of our gaming businesses or the gov funding for WO. Sounds great without looking too deeply yet!
Gov funding was 900k for Whitten Oval and is included in the comprehensive figure. The gaming business is listed as pending in the report and wont be included until next financial report.
 

RussellEbertHandball

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Joint ventures are generally taxed in each entity that's part of the joint venture, very similar to a partnership. They're rarely taxed as a separate entity, because legally they aren't one (as you say).

But I'm not familiar with Hawthorn's structure other than what you've posted - who owns the 27%?
I don't recall them ever revealing who the 27% is. Their share started at 50% - non controlling interest, went to 66.67% in 2010 when they were preparing to buy their pokie licences, after Vic government broke up the pokie duopoly and then moved to 73% a few years later. They paid $2m for the 16.67% according to note 5 of their 2010 accounts.

Total consideration paid for the 16.67% interest was $2.08m with the associated net assets approximating $80k,
resulting in the effective acquisition by the consolidated group of approximately $2m in goodwill.


And in 2011 year they borrowed monies for the pokies and fitouts at Caroline Springs hotel.
 

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Prince Imperial

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Gov funding was 900k for Whitten Oval and is included in the comprehensive figure.
True, though it should also be said this was all expended for design and Masterplan work and that including costs related to acquiring planning permits there were redevelopment expenses of $936k and therefore a reduction of $36k to the overall financial result. The $36.6m funding the club is poised to receive will of course more than cover this.

All in all, the financial result is a stunning outcome in the circumstances.
 

dave10

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Gov funding was 900k for Whitten Oval and is included in the comprehensive figure. The gaming business is listed as pending in the report and wont be included until next financial report.
There is also an amount of $3.468M as a ‘government subsidy’ included in its revenue which props up the result.

A common theme emerging this year. Some clubs expected poor financial results this year have been assisted greatly by grants / donations. A good year to report them!
 

Prince Imperial

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There is also an amount of $3.468M as a ‘government subsidy’ included in its revenue which props up the result.

A common theme emerging this year. Some clubs expected poor financial results this year have been assisted greatly by grants / donations. A good year to report them!
This is the Jobkeeper subsidy that all AFL clubs and many businesses in Australia have received. Essendon received $4.4m, Hawthorn $5.4m and Richmond a massive $10.8m according to their reports.
 

Rob

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I don't recall them ever revealing who the 27% is. Their share started at 50% - non controlling interest, went to 66.67% in 2010 when they were preparing to buy their pokie licences, after Vic government broke up the pokie duopoly and then moved to 73% a few years later. They paid $2m for the 16.67% according to note 5 of their 2010 accounts.

Total consideration paid for the 16.67% interest was $2.08m with the associated net assets approximating $80k,
resulting in the effective acquisition by the consolidated group of approximately $2m in goodwill.


And in 2011 year they borrowed monies for the pokies and fitouts at Caroline Springs hotel.
I have to say a JV is a weird way to run a business. Usually it's for one off developments and the like.
 

RussellEbertHandball

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I have to say a JV is a weird way to run a business. Usually it's for one off developments and the like.
Yep for over a decade, and that's why I have been a little bit pedantic about it.

They do say - The Club is the sole unit holder of CSFT, which in turn, owns a 73% interest in a Caroline Springs Joint Venture (CSJV), the nominee for which is CSJV Nominees Pty Ltd.

That suggests the JV is some sort of trust structure, and the trustee is the above named nominee company. Or it could be poorly written and CSJV Nominees Pty Ltd is the trustee of CSFT.

However under Controlled Entities in the 2009 accounts it is a bit clearer and it said -
....... the HFC CS Fixed Trust (CSFT Trustees Pty Ltd) .....
The Club is the only member of CSFT Trustees Pty Ltd, and the sole unit holder of the Trust, which in turn, owns a 50% interest in a Caroline Springs joint venture entity the nominee for which is CSJV Nominees Pty Ltd.
 

Prince Imperial

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This is the Jobkeeper subsidy that all AFL clubs and many businesses in Australia have received. Essendon received $4.4m, Hawthorn $5.4m and Richmond a massive $10.8m according to their reports.
I should also say that these wage subsidy amounts did not enhance these club's bottom line to the full extent of these figures as a lot of it would have been passed onto staff who were not working and who otherwise would have been stood down without pay due to a lack of available work.

I note that Essendon state that they received a "net inflow" of $2.1m from JobSeeker which I would assume is the amount of the wage subsidy for staff who continued to work.
 

big_e

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the Aligned Leisure stuff is pretty easy to tag. Other than Aligned Leisure, the Community and Stuff section is the KGI, our indigenous school, and the Swinburne Institute. KGI and the school are not revenue earning (so pure costs). Swinburne is, BUT its very new.

If you look at the annual reports over recent years, you can see the progression of how AL has impacted upon revenue, costs, and profits:


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

2016 **started AL with Cardinia contract**
Revenue: $2,473,589
Expenses: $2,917,060
Profit: -$443,471

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

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

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

2020
Revenue: $17,849,104
Expenses: $24,322,020
Profit: -$6,472,916
Net loss of $8,063,337 in six years.

That's one hell of a business you've got there, Richmond....
 

Ned_Flanders

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Aug 22, 2009
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Net loss of $8,063,337 in six years.

That's one hell of a business you've got there, Richmond....
$6m of that is covid losses, which our $10m jobkeeper covered much of. The balance was start up costs, and has been profitable last two years

It's what will get us out of pokies
 

NoobPie

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$6m of that is covid losses, which our $10m jobkeeper covered much of. The balance was start up costs, and has been profitable last two years

It's what will get us out of pokies

Well, it won't really achieve the profits of the pokies printing press but really, the fact that Richmond is still in the pokies game is not out of necessity anyway.

It is a choice.
 

Ned_Flanders

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Well, it won't really achieve the profits of the pokies printing press but really, the fact that Richmond is still in the pokies game is not out of necessity anyway.

It is a choice.
Yes, it's a choice we don't want to go into debt again unless absolutely necessary.

My club has nearly gone bust twice in my lifetime. I don't want to push for a third.
 

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