Docklands (Etihad) stadium new AFL tenant club agreements

[NoobPie]

Just goes to prove how poorly the AFL dealt with exiting Waverly, Docklands cherry picked the Bombers with a good deal based on more bums on seats & then along came the AFL and sat back as Docklands management offered a take it or leave it deal for the rest of the clubs.
The A- League deal came later, the private owners of Victory were far more canny with their own money & got a better deal potentially marginally costed
(http://smallbusiness.chron.com/diff...st-marginalcost-pricing-strategies-66005.html)

It's interesting that you posted that link but but completely unable to grasp the implications. Roughly, the afl, as part of the contract to build the thing, were required to play 45ish games a year at Etihad. This is why the afl games were subjected to the "full cost" if you like of the investment. This also gave the afl priority access to the venue between February and September. The deal with victory, and presumably all other minor tenants, would be at some mark up on marginal cost. It's not really about "savviness"

This is what made the ffa's behaviour around the World Cup bid as well as the soccer shoulder chippers whining about not getting access to Etihad for the gf without significant compensation so obnoxious, by the way

 

[carnthedons]

Most clubs dont get food or parking

Etihad is not a low cost stadium

It was never meant to be profitable for small crowds, otherwise it wouldnt be in docklands, have a roof that opens, have massive turf rotation, or a moveable stand

Increase your crowds like the dons do, and that solves your problems

If you need a small suburban ground to be profitable, go to the vfl

If only there was a large, suburban, vfl/afl owned ground that hadn't already been sold to Mirvac.

FWIW, it's probably worth more as land value to private developers than it is as a stadium. If they could work out somewhere to build a new ground in a lower cost location, designed properly (E-W not N-S if you have a roof for a start), which has good transport links, that might be the best approach long term but I can't see them doing that, not the right optics.

 

[Kwality]

I don't think you understand how the stadium deals work.
It's not about just getting numbers through the gates. Smaller clubs should be able to operate comfortably out of Etihad - the main problem is (under the old deal) tenants are only getting gate receipts. Food, parking etc went to Etihad under the Collins deal.
Therefore north would only make profit after 28000 had passed through the gates whilst the operator took / takes cash from other streams as payment for the AFLs debt on the stadium.
Clubs that deal with the MCC can negotiate on their own terms, helped by the fact they can draw larger crowds (and Melbourne FC being a permanent tenant) - there's no Afl debt to pay on that stadium.

Just saying "get more than 30k to games" doesn't add anything to the debate on stadium deals. There's a place for medium / small clubs in Victoria - not everyone club can be a powerhouse 70k+ member force.
The problem is the tenants at Etihad are not in control of their own destiny due to the leverage of the stadium the AFL has over them. The setup isn't wrong but it's the distribution of funds that needs tweaking.

The tenants are paying for Etihad because it's a new stadium - just because other clubs are playing at (relatively) clean stadiums owned by trusts or otherwise isn't argument to say that Etihad tenants are being subsidised by the AFL.

It's like paying off the mortgage of a house you might not necessarily want. Whereas other people have the option to rent elsewhere.
Richmond shut the door on Etihad about 5 years ago? Because they weren't locked in to the Etihad deal and had the ability to negotiate a decent deal (not as good as Collingwood) at the MCG through their larger supporter base

Bums on seats is an issue like it or not.

 

[Ned_Flanders]

If only there was a large, suburban, vfl/afl owned ground that hadn't already been sold to Mirvac.

FWIW, it's probably worth more as land value to private developers than it is as a stadium. If they could work out somewhere to build a new ground in a lower cost location, designed properly (E-W not N-S if you have a roof for a start), which has good transport links, that might be the best approach long term but I can't see them doing that, not the right optics.

Thats your issue though. Good transport links means expensive land. People dont want another waverley, so.it means a.massive chunk of.land in central melbourne

I dont love docklands, but the alternatives arent much better

 

[carnthedons]

Thats your issue though. Good transport links means expensive land. People dont want another waverley, so.it means a.massive chunk of.land in central melbourne

I dont love docklands, but the alternatives arent much better

I'm not disagreeing with you and given I live in the NW suburbs, I sure as s**t don't want Waverley back. Given I've been to over 100 docklands games, it's not perfect and I realize my club has done well financially but it has to be better than Waverley/Princess park et al

As I see it, there are 3 solutions:
- increase crowds/improve contracts at docklands but given how expensive it is to run, not sure what the delta required to really affect things is
- build a new stadium and sell off docklands, this is costly, time consuming and dependent on finding a better location
- reduce the number of games needing to be played in Melbourne, either via relocation or rationalization of clubs (impacts broadcasting deal and other things)

 

[LoungeLizard]

next tv deal.
Afl allocate an equal amount of prime time games to all clubs, let the clubs negotiate their own media deal.

No more AFL hand outs, let all clubs pay equal until Etihad is payed off.

Get people through the gate to your home games or pay the consequences.

 

[Rob]

It's as if small crowds paying cheap prices doesn't result in millions of dollars flowing in.

The injustice of it.

 

[Ned_Flanders]

It's as if small crowds paying cheap prices doesn't result in millions of dollars flowing in.

The injustice of it.

But but but why isnt there a place for small clubs???

 

[Sector 7G]

It's as if small crowds paying cheap prices doesn't result in millions of dollars flowing in.

The injustice of it.

The problem is that the tenant clubs have effectively bought the AFL (and the rest of the clubs) a billion dollar asset by being forced into a crap stadium arrangements that don't break even unless there are more than 30K at the game. What was the point of buying the stadium early if the stadium agreements aren't going to improve for the tenants, who apart from EFC are the clubs that can least afford it. If the AFL own the Stadium outright there is no reason to play unnecessary games there. Should be 3 games at the MCG each week and 1-2 at Etihad.

The fact that Pies and Tigers struggle to draw a crowd there shows no teams supporters wants to play there. All Melbourne clubs should have to play their share of games there.

 

[Rob]

The problem is that the tenant clubs have effectively bought the AFL (and the rest of the clubs) a billion dollar asset by being forced into a crap stadium arrangements that don't break even unless there are more than 30K at the game. What was the point of buying the stadium early if the stadium agreements aren't going to improve for the tenants, who apart from EFC are the clubs that can least afford it. If the AFL own the Stadium outright there is no reason to play unnecessary games there. Should be 3 games at the MCG each week and 1-2 at Etihad.

The fact that Pies and Tigers struggle to draw a crowd there shows no teams supporters wants to play there. All Melbourne clubs should have to play their share of games there.

You don't know what the stadium arrangements are. Unlikely anyone on this forum does. How do you know they're crap?
Is it possible they weren't that crap in the first place and the problem was revenue coming in the door? In which case that's not going to improve no matter who owns it.

But I agree, the AFL should not have bought the stadium. They have no business owning stadiums and providing them to some clubs and not others. Massive conflict of interest.

 

[Great8]

Essendon has a clause in it's contract which guarantees it receives the best deal.

As it should.
We have been doing the bulk of the heavy lifting at Etihad and without us as agreeing to move there who knows how things would of ended up. They really should be begging us to stay there

 

[Sector 7G]

You don't know what the stadium arrangements are. Unlikely anyone on this forum does. How do you know they're crap?
Is it possible they weren't that crap in the first place and the problem was revenue coming in the door? In which case that's not going to improve no matter who owns it.

But I agree, the AFL should not have bought the stadium. They have no business owning stadiums and providing them to some clubs and not others. Massive conflict of interest.

Any stadium agreement that results in the AFL owning the stadium after 25yrs without putting in significant amounts of money is always going to be bad for the tenants. Somebody is paying off the developers investment and it is not the AFL. They AFL should have had to buy the Stadium at a fair Valuation at the end of the 25yr term and the clubs given a better arrangements with all clubs on the same deal.

The ownership of the Stadium makes a massive difference. The unlike the previous owners the AFL is not for profit and doesn't need to get returns on investment significantly higher that the cost of the debt. This should result in better stadium deals and subsequently less handouts.

It will be interesting to see how the WA clubs go in there new stadium and whether it is as profitable for Freo playing in an expensive new stadium as it is playing in the crappy old one. The SA clubs were shocked to find that despite filling the new ground, the new stadium deal wasn't as profitable as anticipated.

 

[Great8]

The only way Essendon are going to be able to play more home games at the mcg is if Collingwood, Richmond and Melbourne play more home games at Etihad which ain't going to happen as it is Melbourne, Richmond and Collingwood play 9 home games at the mcg. Melbourne play two home games at the Northern Territory so they don't play at Etihad and Collingwood and Richmond want to play no games at Etihad at all. At the present time I cannot see Essendon's home games reduced from 7. My guess is that Essendon is trying to go for a 7 home game deal at the mcg and 4 home game deal at Etihad.

the afl should just increase the capacity of Etihad to 70,000 not sure if it can be done but then Essendon would be able to play 10 home games at the ground except when they play a home game on Anzac Day one year and dream time the next year. Collingwood and Richmond fans would start to go to the stadium as their will be plenty of ga walk ups and will not have to worry about booking a ticket.

Disagree with the last part. Etihad could hold 100k and Richmond and Collingwood supporters would still boycott it. MCG is there home and that's fine

 

[Sector 7G]

Disagree with the last part. Etihad could hold 100k and Richmond and Collingwood supporters would still boycott it. MCG is there home and that's fine

The MCG is not their home it is just where they have played for the last 20-40 years. All clubs needs to take there turn at the unpopular venue.

 

[LoungeLizard]

The MCG is not their home it is just where they have played for the last 20-40 years. All clubs needs to take there turn at the unpopular venue.

So West Coast should have a turn at Etihad?

 

[Sector 7G]

So West Coast should have a turn at Etihad?

Given interstate clubs play more games at Etihad than the G, I would say they take their turn.

 

[carnthedons]

Given interstate clubs play more games at Etihad than the G, I would say they take their turn.

Didn't turn up for our game there

 

[LoungeLizard]

Given interstate clubs play more games at Etihad than the G, I would say they take their turn.

And who plays 11 home games in the west?

 

[Sector 7G]

And who plays 11 home games in the west?

Whoever wants to. Kudos for focusing on the big issues.

 

[LoungeLizard]

Whoever wants to. Kudos for focusing on the big issues.

I'm sorry, is it that big an issue that all clubs should share different grounds?
If so, i ask why is it fair for some and not others?
Just because your club signed a stupid ground agreement, doesn't mean other clubs pay for your stupid mistake.

 

[Sector 7G]

I'm sorry, is it that big an issue that all clubs should share different grounds?
If so, i ask why is it fair for some and not others?
Just because your club signed a stupid ground agreement, doesn't mean other clubs pay for your stupid mistake.

So the AFL signs a contract to play 40 odd games a year at a ground they get for free after 25yrs, then tells certain clubs they have to play there and it is the clubs the fault the deals they are forced to sign are shitty (Except for EFC that had their ex president making sure they got a better deal while sorting out the catering contract for the company he managed). Is this an example of clubs being stupid or just being screwed over by the AFL?

All teams have been playing home games away from home at the competition owned stadium since VFL Park opened in the 70s. This is just more of the same, just now having a fairer allocation of resources

 

[LoungeLizard]

So the AFL signs a contract to play 40 odd games a year at a ground they get for free after 25yrs, then tells certain clubs they have to play there and it is the clubs the fault the deals they are forced to sign are shitty (Except for EFC that had their ex president making sure they got a better deal while sorting out the catering contract for the company he managed). Is this an example of clubs being stupid or just being screwed over by the AFL?

All teams have been playing home games away from home at the competition owned stadium since VFL Park opened in the 70s. This is just more of the same, just now having a fairer allocation of resources

How did the EFC get a good deal and you didn't?
You know how? they negotiated.
How much did you spend at PP just prior to moving?
Were your hands tied, so you had to sign the deal?

No, you stuffed up and now you are whinging about it and want all other clubs to fix up the mess you made.

 

[Rob]

Any stadium agreement that results in the AFL owning the stadium after 25yrs without putting in significant amounts of money is always going to be bad for the tenants. Somebody is paying off the developers investment and it is not the AFL. They AFL should have had to buy the Stadium at a fair Valuation at the end of the 25yr term and the clubs given a better arrangements with all clubs on the same deal.

Why? 25 years is the majority of a stadium's effective life, and with the AFL putting in $30m and the government donating the land (and that's a fair whack) as well as proving a no extra competition clause, there's no reason why the owners couldn't make a reasonable return when you take into account all the other events it can attract as well.
But most importantly, if it was such a rip you would have heard every affected club complaining from the rooftops about it before they even played a game. They didn't - the opposite happened.
The reason is that they got sucked in thinking they could sell a lot more expensive tickets than what actually happened. Essendon could, but most of the rest had a fickle, small fanbase. They ended up opening up the top level for GA, which killed any demand for premium seats on the 2nd level. You still see it today - the 2nd level can be virtually empty. Why pay $70 for a seat there when you can pay $25 for a seat not much worse? 20k crowds @ $70 would be highly profitable. @ $25 it's a whole different ballgame. That's $900k difference per game - or a whopping $10 million difference over a year. That's why it's likely the problem wasn't the stadium deal, it was that the revenue coming in was bugger all. So it's no surprise that a change of owner, even if it is the AFL, doesn't result in rivers of gold for the clubs. Because the gold was never there in the first place.

The ownership of the Stadium makes a massive difference. The unlike the previous owners the AFL is not for profit and doesn't need to get returns on investment significantly higher that the cost of the debt. This should result in better stadium deals and subsequently less handouts.

The other clubs will have something to say about that. It's their asset as well.

It will be interesting to see how the WA clubs go in there new stadium and whether it is as profitable for Freo playing in an expensive new stadium as it is playing in the crappy old one. The SA clubs were shocked to find that despite filling the new ground, the new stadium deal wasn't as profitable as anticipated.

It will be interesting, but at least whatever happens has nothing to do with any other clubs. But one thing I will pretty much guarantee you - if either club gets just 20k a game then financially it's going to be a disaster.

 

[gopies1981]

Can't

Im assuming the purchase they'll attempt to shunt Hawthorn/Demons to have more games at Ethiad and give essendon 3-4 home games at the G

I think Essendon as of next year are going to try and play 7 home games at the mcg and 4 home games against interstates at Etihad. Again for this to happen Richmond and Collingwood will have to play 3 home games at Etihad and m melbourne 1 home game at Etihad. Think Essendon are going to struggle till 2024 to change the deal and will remain at Etihad playing 7 home Games. Hopefully by then the afl will have a new stadium with a capacity of 70,000 (which it will need for a winning Essendon and Carlton) as 55,000 is just too small.

 

[BringBackTorps]

For those interested in the financials of Etihad in y/e 2016 for the former owners, the AFR reported it had total revenues of c.$72,000,000 -& made a net profit of c. $3,000,000.
Even with the same financial arrangements in place for the AFL, my understanding is that the AFL's net profit will automatically be much higher.
The AFL is a Not-For-Profit org., so (unlike the previous owners) will not have to pay State Commercial Land Tax (& Docklands land values are, of course, rising considerably cf. 2000).

The AFL is in advanced negotiations with the Vic. Govt., & wants it to spend $300,000,000 - to revive the general Docklands for tourists & events, reconfigure the harbourside of the stadium, concourse areas etc. The AFL offices will need to be relocated elsewhere in Melb.
The AFL will be keen to have many more events there now -& for it to be reconfigured into a 365 day per year venue (with night clubs, restaurants, convention rooms, large events/marquees on the turf etc.).