Docklands contract buyout speculation

[telsor]

I just don't see the financial sense in purchasing the stadium for $150m now when they'll own it in 10 years.

If you're going to make $160m* over those 10 years, it makes perfect sense.


* - after inflation, interest, etc.

 

[Kwality]

Fair point mate, gut geez, surely you can pick up I am just throwing loose figures around off top of head and not trying to be exact to the detail. Not filling in a tax form declaration here. he he he. The thrust of my post is to remove games from Docklands ,especially day games and add more to the MCG. The exact number cannot be worked out until AFL work around the issues of whatever the minimum is now and removing that.

Here is another "off the top of your head":
I would think it is only suitable for North Melbourne, St.Kilda and Bulldogs to play there as the distance from their suburbs is close enough to make sense.

You aren't fair dinkum?

 

[Kwality]

If you're going to make $160m* over those 10 years, it makes perfect sense.


* - after inflation, interest, etc.

Factor in the compensation paid by the AFL.

 

[Demonic Ascent]

If you're going to make $160m* over those 10 years, it makes perfect sense.


* - after inflation, interest, etc.

Would they make that much extra though? And how much will the stadium upgrades cost? That would probably knock off $30-50m?

 

[Kwality]

For the historical purpose of this thread the pourage dispute of 2009 is relevant:

The pourage rights issue is critical to unlocking a rich revenue stream the AFL believes has been due to the league since the Docklands stadium opened as a league venue in 2000.

Club officials were told that the AFL has not received one cent from the pourage deal -- the rights to income from alcohol, soft drink and food sales at the ground.
http://www.news.com.au/news/barrister-predicts-afl-win/story-fna7dq6e-1225740179047

Not sure about the veracity of the claimed resolution:
http://www.austadiums.com/news/news.php?id=404

 

[The_Wookie]

For the historical purpose of this thread the pourage dispute of 2009 is relevant:

The pourage rights issue is critical to unlocking a rich revenue stream the AFL believes has been due to the league since the Docklands stadium opened as a league venue in 2000.

Club officials were told that the AFL has not received one cent from the pourage deal -- the rights to income from alcohol, soft drink and food sales at the ground.
http://www.news.com.au/news/barrister-predicts-afl-win/story-fna7dq6e-1225740179047

Not sure about the veracity of the claimed resolution:
http://www.austadiums.com/news/news.php?id=404

Totally forgot about the pourage rights dispute. The resolution is linked to this article -
http://www.theage.com.au/news/rfnew...ith-a-handshake/2009/09/23/1253385038131.html

and appears to form the basis of the 100,000 per game claim that the AFL made in 2009 as part of the renegotiation announcement - its attested in the 2009 Annual Report, although it makes no mention of the pourage rights in the resolution.

 

[Kwality]

Totally forgot about the pourage rights dispute. The resolution is linked to this article -
http://www.theage.com.au/news/rfnew...ith-a-handshake/2009/09/23/1253385038131.html

and appears to form the basis of the 100,000 per game claim that the AFL made in 2009 as part of the renegotiation announcement - its attested in the 2009 Annual Report, although it makes no mention of the pourage rights in the resolution.

Wookie. That there is no mention of the pourage rights in the resolution encourages my cynicism. Perhaps Andy & Collo needed a win/win .

 

[The_Wookie]

Further on this - the preliminary discovery case in questions details can be found here - https://jade.io/article/95563

Much of the dispute revolves around the exercise of particular rights. Specifically, naming rights relating to the naming of the stadium; signage rights relating to signage around the stadium and arena; pouring and supply rights relating to the provision of catering, beverage and souvenir sales within the stadium; and comparative rights relating to other sporting codes’ use of the stadium.

and concluded with

It follows the application is granted in part. The AFL is entitled to an order for discovery of each of the agreements of which SOL is not a party, with the exception of the Melbourne Victory Agreements and the agreement between NVM, CUB and Coca- Cola. For convenience, and in the interests of certainty, a list of the agreements to be discovered is set out in the appendix to these reasons.

I cant find the August hearing results anywhere, which may indicate it went to negotiation, and thus the outcomes revealed by the AFL where an extra 100k a game was paid to the clubs.

 

[The_Wookie]

Wookie. That there is no mention of the pourage rights in the resolution encourages my cynicism. Perhaps Andy & Collo needed a win/win .

Essentially, the pourage rights stayed as negotiated i think, but the AFL actually started to get a cut. The discovery case indicates the AFL hadnt even tried to get negotiate its pourage rights before 2008 which is a little bizarre.

 

[Demonoid]

$20m apart is still pretty significant...

By itself its a biggish number, but in the greater scheme of things, its a divide that should be bridged soon. Of course, every day in theory the asking price would be falling. They'll get the deal done.

 

[Our Game]

There are some of the smartest bussines brains in the counrty on the AFL Commission so I dont think they will move untill they get the best deal.

 

[Garlic muncher]

It is a good discussion, you would hope that this in some way will bullet proof the clubs and league, but clubs have a habit of short term planning, and wages, costs etc will not go down.

Personally I would like to see more filter down to grass roots and perhaps even O/S if the profits from owning the stadium prove to be decent.

 

[Furn2]

Buying or not buying it isnt going to make a big difference financially either way in the long term I wouldnt think.

Its more about letting teams make their own money rather than being compensated for paying off the stadium.

Interesting that the AFL taking ownership wasnt the original plan.

I wonder how much that effects the deals clubs got.

 

[Kwality]

Buying or not buying it isnt going to make a big difference financially either way in the long term I wouldnt think.

Its more about letting teams make their own money rather than being compensated for paying off the stadium.

Interesting that the AFL taking ownership wasnt the original plan.

I wonder how much that effects the deals clubs got.

So who do you believe is footing the bill - are the AFL paying for the stadium (thru compensation) or are the clubs?

 

[Kwality]

By itself its a biggish number, but in the greater scheme of things, its a divide that should be bridged soon. Of course, every day in theory the asking price would be falling. They'll get the deal done.

That theory is not gospel - the seller is potentially after a share of the potential savings for the AFL by settling early.

 

[telsor]

Factor in the compensation paid by the AFL.

Exactly, the AFL would save a LOT from not having to pay nearly as much of that.

 

[telsor]

So who do you believe is footing the bill - are the AFL paying for the stadium (thru compensation) or are the clubs?

Both.

If stadium management if paying ~16M in interest and $20M in principle repayments, that's $36M they're using to pay for the ground.

If the AFL compensation (either directly for the games there or as 'future fund' money because clubs are struggling after paying the extra costs) is $20M, then the clubs must be putting in the other $16M.

 

[Kwality]

Exactly, the AFL would save a LOT from not having to pay nearly as much of that.

What premium do you expect the AFL to have to pay for early settlement ?

 

[Kwality]

Both.

If stadium management if paying ~16M in interest and $20M in principle repayments, that's $36M they're using to pay for the ground.

If the AFL compensation (either directly for the games there or as 'future fund' money because clubs are struggling after paying the extra costs) is $20M, then the clubs must be putting in the other $16M.

So of that $16m what is (regarded as) a fair rent ? 45 games last year?

 

[telsor]

So of that $16m what is (regarded as) a fair rent ? 45 games last year?

Depends what you call fair.

Currently, for the owners, what they're charging is fair, as it's what they need to cover their costs and pay their debts before they hand the ground over.

Eventually (i.e. when handed over to the AFL for $0 debt), neither interest or repayments would apply, so the costs would 'only' be operating expenses + maintenance (including upgrades). So costs would be roughly $750K per AFL game lower (assuming the AFL gets the same non-AFL events/revenue streams and charges similar amounts). I imagine the AFL wouldn't pass all that along, but even half would eliminate the need for 'future funding' of Docklands tenants (and I would hope for more than half).

If the AFL buys it out (and borrows money to do so) then presumably something between those would be required as the debt is paid down. (or they might work something out so the whole league gets to pay for something the league owns).


Personally, I'd like the final situation to be a similar cost structure for all clubs, regardless of ground, but can't really see that happening, both due to the complexity of what qualifies as similar and because the AFL would have a harder time fudging things. (BTW, the financials after the stadium is AFL owned will probably show Vic clubs getting MUCH bigger amounts from the AFL in what is now the 'other' column, which would just be an expansion of the current situation where the AFL puts money there that the AFL collects before handing it over to the clubs that earn it).


Mind you, I think the biggest losers of the AFL owning Docklands would be the MCG trust...Significantly lower costs there would put a lot of pressure on them to cut their own charges.

 

[Gigantor]

Mind you, I think the biggest losers of the AFL owning Docklands would be the MCG trust...Significantly lower costs there would put a lot of pressure on them to cut their own charges.

One of the attractive aspects of owning docklands outright.

In fact, that on it's own almost makes it all worthwhile.

 

[telsor]

One of the attractive aspects of owning docklands outright.

In fact, that on it's own almost makes it all worthwhile.

Yes and no...Most of their costs are due to upgrades to the ground, and I tend to think that when you've agreed to help pay for them (as the AFL has) then there is a certain moral obligation to do so, especially when the situation there is heavily symbiotic (We're talking MCG trust here, not 'just' the MCC).

 

[Gigantor]

Yes and no...Most of their costs are due to upgrades to the ground, and I tend to think that when you've agreed to help pay for them (as the AFL has) then there is a certain moral obligation to do so, especially when the situation there is heavily symbiotic (We're talking MCG trust here, not 'just' the MCC).

Of course we should fulfill our obligations....which hopefully have been negotiated from a position of strength.

 

[Rob]

Both.

If stadium management if paying ~16M in interest and $20M in principle repayments, that's $36M they're using to pay for the ground.

If the AFL compensation (either directly for the games there or as 'future fund' money because clubs are struggling after paying the extra costs) is $20M, then the clubs must be putting in the other $16M.

Are you saying categorically that clubs that play there will definitely not require AFL special funding anymore?

 

[telsor]

Are you saying categorically that clubs that play there will definitely not require AFL special funding anymore?

Of course I'm not 'saying categorically'.

There are many factors involved, such as how many games, how much of the reduced costs are passed on to those clubs (and how). Not to mention that a great any things could change between now and then (or after then).

There is also the not insubstantial detail, that whatever we can work out through the various sources we use, none of us know the entire financial picture.

It does make sense however that when special funding for the home teams there is ~$10-15M (rough top of the head guestimate) and ground expenses will be reduced by ~$30-40M per year, then the need for special funding SHOULD be significantly reduced at the very least.