AFC Post 88k Profit!!!!!!!!

[Geoffa32]

Well after a $1.6m write off of the old training facility.............

The Adelaide Football Club’s net 2008 profit before write off was $1,675,376, reduced to $88,405 after allowing for a write off of the existing training facility..........................

http://www.afc.com.au/tabid/4417/Default.aspx?newsid=70735

The same stadium deal that is publicly shown up in Ports result, holds us back too.

 

[Cap]

well in reality

as long as the club is losing massive amounts of money, it really doesn't matter

 

[WALL-e]

Not to mention if the club has any shares, and they have lowered in 'significant' amount, they must be registered as a loss in the P&L under accounting legislation.

Just ask Brisbane who had a 100K odd gain turn into a + 2 Mil loss because of it.

 

[*PAF]

Surprising.
Safe to assume that is after paying the SANFL and does not include any grants towards facilities?

 

[Stinger...]

Surprising.
Safe to assume that is after paying the SANFL and does not include any grants towards facilities?

Surprising...?

To post a $1.6m net profit is a surprise given that two clubs in the space of a day recorded record losses...?

Interesting...

 

[macca23]

That's an excellent result for the club.

Forget the writedown of the existing training facility. That's a book entry only which while it reduces the net assets of the club, has no effect on the cash generated by the operating profit for the year, and cash is king.

We're in good shape.

 

[Crow-mo]

That's an excellent result for the club.

Forget the writedown of the existing training facility. That's a book entry only which while it reduces the net assets of the club, has no effect on the cash generated by the operating profit for the year, and cash is king.

We're in good shape.

very true, but its more significant than that.

it also highlights a fundamental issue of what net assets are to a footy club. the concept has no meaning for a footy club, as most of them can never be realised for a cash value - which brings into question whether they should ever really be considered net assets, or at best how to value them.

you show the training facilities or grandstand say at $5M in the books, there is little chance if any, of realising $5M should you ever try and flog them. in fact, not only would they realisable value be close to jack shit, but if they have been by grants, then there will likely be covenants on whether you can actually dispose of it anyway. i.e. you ain't selling something that the govt paid for.

this is all pretty obvious, so why is it relevant?

because whilst our cross town neighbours point at these infrastructure assets as proof of stability - we have actually valued some of infrastructure assets downwards, reflecting that we feel the true value of these things is less that what we carried in the books.

clearly this demonstrates that net assets for a footy club is a very murky business, particularly when a club really only has 2 types of assets - future cash flows, and fixed assets than can readily realisable for cash. there are plenty of things included in the definition of net assets that do not fall into either bucket for a footy club.

anyone want to by a used grandstand? lol.

Ps. my feeling is that the club decided to write down an asset, as a precautionary measure to not attract too much attention to how much money its making given the current environment. just a feeling though. its what I would do

 

[Mego Red]

Ps. my feeling is that the club decided to write down an asset, as a precautionary measure to not attract too much attention to how much money its making given the current environment. just a feeling though. its what I would do

No you wouldn't - on the last day of the tax year you would buy a $1.6m shirt made of baby hair and kitten fur and wear it while you announced "we broke even".

 

[Hondo]

In theory these days the net assets reported by footy clubs should be at current market values. You are required to get regular, independent valuations of your fixed assets.

The problem is, as Crow-mo points out, how accurately you can value something like a grandstand that isn't normally bought and sold regularly.

Chances are that the values shown on sporting club balance sheets would be higher than their cash-sale values.

I also agree with Crow-mo (twice ) that the AFC have used a good profit year to write off the training facility, but still show a profit. If the cash flows are still strong we are very well placed as the country heads is a difficult 2009.

 

[Crow-mo]

No you wouldn't - on the last day of the tax year you would buy a $1.6m shirt made of baby hair and kitten fur and wear it while you announced "we broke even".

it was on sale, what do you expect me to do!?!

besides the kitten had it coming.

 

[beartoo]

Do the Crows own any grandstands? I thought the SANFL owned AAMI Stadium. Unless of course Craig has one parked in his backyard or something.

 

[that_dood]

Do the Crows own any grandstands? I thought the SANFL owned AAMI Stadium. Unless of course Craig has one parked in his backyard or something.

Yeah Neil keeps a few grandstands in his back shed and brings them out every five weeks to be dusted.

Good result for the club which shows that we are financially one of the or even the strongest club in the AFL.

 

[KingsCrow]

Well if a stadium costs a billion bucks to build I think a grand stand would be worth a bit haha.

 

[dogs105]

Well after a $1.6m write off of the old training facility.............

Hmm. Wonder why they didn't choose to write off $1.7m.

 

[johnnypanther]

i'm wondering what we get extra for the $585,000 annual licence fee to SANFL
compared to Port Adelaide's fee of $335,000?

do we pay any other amounts to SANFL? eg for rent of land, shed, anything?

 

[relapse]

i'm wondering what we get extra for the $585,000 annual licence fee to SANFL
compared to Port Adelaide's fee of $335,000?

do we pay any other amounts to SANFL? eg for rent of land, shed, anything?

I agree, I get sick of hearing Port supporters whining about their deal being unfair, but we have to pay almost double of what Port pay to the SANFL each year.

 

[Alex99]

I agree, I get sick of hearing Port supporters whining about their deal being unfair, but we have to pay almost double of what Port pay to the SANFL each year.

Yeah but they would whinge if they only had to pay $1 to use AAMI Stadium, in fact some Port members believe the SANFL should be paying them to use AAMI Stadium.

 

[malph]

I agree, I get sick of hearing Port supporters whining about their deal being unfair, but we have to pay almost double of what Port pay to the SANFL each year.

Is there any need to get into a debate, economical or philosophical, as to who owes the SANFL more than the other? Port Adelaide is allowed to use the stadium. The Crows are allowed to build their home on it. Whatever.

I whine about both deals being unfair. This is one area I would rather there not be a competition over . . .

 

[Geoffa32]

Is there any need to get into a debate, economical or philosophical, as to who owes the SANFL more than the other? Port Adelaide is allowed to use the stadium. The Crows are allowed to build their home on it. Whatever.

I whine about both deals being unfair. This is one area I would rather there not be a competition over . . .

Port were offered some land to build facilities on at Footy Park. Port chose to build the HQ at Alberton. Well Allan Scott told em too.

 

[johnnypanther]

Is there any need to get into a debate, economical or philosophical, as to who owes the SANFL more than the other? Port Adelaide is allowed to use the stadium. The Crows are allowed to build their home on it. Whatever.

I whine about both deals being unfair. This is one area I would rather there not be a competition over . . .

i initially raised the question of why Crows pay $585,000 and Port $335,000
in order to find out why the difference and what the extras are that the Crows get in return. I'm just trying to ascertain exactly what type of deals both clubs have with the SANFL.

FWIW my personal opinion corresponds with Dyertribes well-expressed summary: "At the moment the Power and Crows are treated like whores and the SANFL is no better than a pimp ruling with an iron fist and gobbling up the income provided while offering very little in return other than the use of an archaic stadium in a poor location (or to stay with the analogy, the love-stained mattress in a poorly-lit caravan where the 'Johns' are serviced).

It's a golden goose mentality. If the SANFL provides the Power and Crows with a fairer deal Port's bottom line looks far healthier and Adelaide becomes a behemoth.

We couldn't have that now though, could we? Good old smalltime dickswinging SA politics"

 

[Zvim]

very true, but its more significant than that.

it also highlights a fundamental issue of what net assets are to a footy club. the concept has no meaning for a footy club, as most of them can never be realised for a cash value - which brings into question whether they should ever really be considered net assets, or at best how to value them.

you show the training facilities or grandstand say at $5M in the books, there is little chance if any, of realising $5M should you ever try and flog them. in fact, not only would they realisable value be close to jack shit, but if they have been by grants, then there will likely be covenants on whether you can actually dispose of it anyway. i.e. you ain't selling something that the govt paid for.

this is all pretty obvious, so why is it relevant?

because whilst our cross town neighbours point at these infrastructure assets as proof of stability - we have actually valued some of infrastructure assets downwards, reflecting that we feel the true value of these things is less that what we carried in the books.

clearly this demonstrates that net assets for a footy club is a very murky business, particularly when a club really only has 2 types of assets - future cash flows, and fixed assets than can readily realisable for cash. there are plenty of things included in the definition of net assets that do not fall into either bucket for a footy club.

anyone want to by a used grandstand? lol.

Ps. my feeling is that the club decided to write down an asset, as a precautionary measure to not attract too much attention to how much money its making given the current environment. just a feeling though. its what I would do

I'm not sure what the situation is like over there given your slightly more complex arrangement given the link between AFC and SANFL. There is also ties to the state governments.

For example, North has a state government lease on our land at Arden Street, basically, the land is ours for ever as long as we are a community based football club, but, we do not own the land. If we go balls up the government will reclaim the land (and it will likely be given to Cricket Victoria who were circling like buzzards last year).

Any assets we put on that land would have a dubious value. It should at best have a fire sale value, ie anything that can be liquidised. Your reporting obligations for assets is to show what true value you have which can offset any liabilities and thus get a qualified auditor statement if in their opinion you lack the means to repay your debts should you cease as a going concern.

This was a major issue for Richmond a few years ago when their realistic asset value was insufficient and their cash flow was poor, had they not got a guarantee from the AFL for future revenue they would have had to stop trading as they were techinically insolvent.

Reporting requirements are quite lax when it comes to non-profit organisations but generally speaking a lot is dependant on your cash flow. Auditors will start to get nervous if you look like you will struggle to meet your debts as they fall due.

 

[Geoffa32]

History of the sub licence agreement. Some interesting reading as to the make up and relationship with SANFL of both clubs in this link....

http://www.sanfl.com.au/the_sanfl/about_the_sanfl/the_2_sa_afl_clubs/

Sub Licence Agreements

In the case of each of Adelaide Football Club and Port Adelaide Football Club there is a sub-licence Agreement in existence with the SANFL. Under each of these sub-licence Agreements the right to conduct a team in the AFL Competition is sub-licensed to each of them respectively, in return for which each must pay to the SANFL a sub-licence fee.

Under the original sub-licence Agreement between the Adelaide Football Club and the SANFL the sub-licence fee payable to the SANFL was the greater of $400,000.00 or 80% of its operating surplus in each year.

In 1995, as a result of the negotiations with Port Adelaide Football Club Inc, the sub-licence fee payable by Port Adelaide Football Club Ltd was to be calculated on a sliding scale so that as the operating surplus of the Club increased, the percentage of such operating surplus which was payable through the sub-licence fee decreased.

In terms of equity as between the Adelaide Crows and Port Power, the SANFL altered the Crows sub-licence agreement so that the sub-licence fee payable from the 1996 year onwards was calculated in the same way as it was for Port Power.

In late 2002, in separate negotiations with each Club, the SANFL agreed on the payment of a fixed licence fee in each year, in the case of Adelaide Football Club for the years 2003 to 2005 inclusive and in the case of the Port Adelaide Football Club for the years 2003 to 2006 inclusive. The fixed sub-licence fee arrangements with the two Clubs, was a result of their requests and was agreed to by the SANFL so as to give each of the Clubs the opportunity to accumulate working capital which the existing sub-licence fee arrangement made it difficult to do.
In late 2006, a new 5 year fixed licence agreement was negotiated with each club.

 

[Niximus]

i'm wondering what we get extra for the $585,000 annual licence fee to SANFL
compared to Port Adelaide's fee of $335,000?

do we pay any other amounts to SANFL? eg for rent of land, shed, anything?

We don't get anything extra, Port pay less because they use their centrelink concession.