Financial survival of the AFL and its' 18 clubs

[Sttew]

Didnt it borrow $180 mil at that time?

No, the AFL just printed more AFL dollars

 

[Geoffa32]

Maybe the players can take a paycut to keep their business going. Many others in the real world may need to, why are 20somethings on half a mill plus a year immune to this?

This event could force a paradigm shift on the real value of sport and athletes.

In no way should Government money be used to prop up any professional league when Govt expenditure is going to be stretched so far in the foreseeable future.



Sent from my SM-G965F using Tapatalk

 

[Kwality]

If worst comes to worst then cut the fat (which there is plenty of) borrow half a billion dollars that will probably come with 2-3% interest ($15mil PA) and accept that people employed in in the game will have to take less $ in the future.

Who is going to loan $0.5bil to the AFL in this climate plus the ongoing uncertainty over media rights. Not good timing.

FYI,
https://www.brisbanetimes.com.au/sp...ml?ref=rss&utm_medium=rss&utm_source=rss_feed

 

[HavUEvaSeenTheRain]

Who is going to loan $0.5bil to the AFL in this climate plus the ongoing uncertainty over media rights. Not good timing.

Marvel is apparently worth close to a billion so that’s fair collateral and if they show they are going to make cost cuts I think they could probably find it easily enough. Possibly even the government?

 

[jatz14]

Marvel is apparently worth close to a billion so that’s fair collateral and if they show they are going to make cost cuts I think they could probably find it easily enough. Possibly even the government?

It's an asset on the books for under 300 mill. During this crises it will generate nothing but cost.

The AFL would have to take bargain basement price, and sign a deal giving guaranteed games and income to the new owners.

It would be a disastrous outcome.

On moto g(6) plus using BigFooty.com mobile app

 

[telsor]

Marvel is apparently worth close to a billion so that’s fair collateral and if they show they are going to make cost cuts I think they could probably find it easily enough. Possibly even the government?

Assets are worth what somebody will pay for them.

Do you see a queue of people offering a billion for a stadium that wont get much use (in terms of revenue anyway) for quite some time?

 

[HavUEvaSeenTheRain]

It's an asset on the books for under 300 mill. During this crises it will generate nothing but cost.

The AFL would have to take bargain basement price, and sign a deal giving guaranteed games and income to the new owners.

It would be a disastrous outcome.

On moto g(6) plus using BigFooty.com mobile app

You don’t sell the asset it’s just collateral.

Assets are worth what somebody will pay for them.

Do you see a queue of people offering a billion for a stadium that wont get much use (in terms of revenue anyway) for quite some time?

The property market hasn’t crashed and even if it did it’s more then enough for a $500mil loan from an organisation that can constantly make huge profits without even trying to watch their money.

 

[Kwality]

It's an asset on the books for under 300 mill. During this crises it will generate nothing but cost.

The AFL would have to take bargain basement price, and sign a deal giving guaranteed games and income to the new owners.

It would be a disastrous outcome.

On moto g(6) plus using BigFooty.com mobile app

Its performance on these measures is about to be shredded.

 

[big_e]

The Eagles have cash reserves of about $45m so we'll be right. Hell, maybe we'll go into the loan business for other clubs.

This money will be called on by the WAFC, who will use it to prop up the WAFL and several of its clubs. Never thought I'd say this, but thank God the Eagles have been successful recently.

 

[Kwality]

This money will be called on by the WAFC, who will use it to prop up the WAFL and several of its clubs. Never thought I'd say this, but thank God the Eagles have been successful recently.

Do they have the right to the money under the terms of the AFL sub licence:
- IPL uses the football assets of the WAFC under a sub-licence arrangement whereby a football team participates in the Australian Football League Competition.
- IPL is to pay the WAFC a royalty each year determined on a basis relating to the results of the Consolidated Entity’s operating activities.

I'm not suggesting the Eagles would unreasonably withhold the money, but IPL is a legal entity & its directors have a responsibility to it.

 

[big_e]

Do they have the right to the money under the terms of the AFL sub licence:
- IPL uses the football assets of the WAFC under a sub-licence arrangement whereby a football team participates in the Australian Football League Competition.
- IPL is to pay the WAFC a royalty each year determined on a basis relating to the results of the Consolidated Entity’s operating activities.

I'm not suggesting the Eagles would unreasonably withhold the money, but IPL is a legal entity & its directors have a responsibility to it.

"AFL's richest club sits on massive cash balance while the WAFL dies" is not a headline any of those directors will want to be party to.

In all seriousness, that's the whole point of this structure - Eagles and Dockers make money and it gets used to fund grassroots footy.

 

[Kappa]

if a club or two fall (even 3) and the draft is a mess this year, AFL may go into expansion mode.

New SA team, New WA team, Tas team
Let them pilfer the draft, hand them licences that are collapsing....

If money is tight then Tasmania has no chance of getting a license...

 

[Kappa]

Maybe the players can take a paycut to keep their business going. Many others in the real world may need to, why are 20somethings on half a mill plus a year immune to this?

This event could force a paradigm shift on the real value of sport and athletes.

In no way should Government money be used to prop up any professional league when Govt expenditure is going to be stretched so far in the foreseeable future.



Sent from my SM-G965F using Tapatalk

The vast majority of players are earning far far less than 500k,and their careers only last a few years most of the time.

 

[Kwality]

"AFL's richest club sits on massive cash balance while the WAFL dies" is not a headline any of those directors will want to be party to.

In all seriousness, that's the whole point of this structure - Eagles and Dockers make money and it gets used to fund grassroots footy.

IPL directors need to look after IPL by law. Can they pay the expenses if the worst case scenario occurs? Thats what they are required to do.

I understand/applaud the structure, its the best business model in the game imho & given personal bias - regardless the directors have legal requirements.
My point is that it is not as simple as stripping the bank account.

 

[telsor]

You don’t sell the asset it’s just collateral.

and what is collateral?

It's something the bank can take and sell to make good their money.
If they don't think they can make that much money off it, it wont be accepted.

The property market hasn’t crashed and even if it did it’s more then enough for a $500mil loan from an organisation that can constantly make huge profits without even trying to watch their money.

The property market hasn't crashed YET.

It tends to be slow to move, so that's understandable...but the share market, which reacts much more quickly, has fallen by about 1/3 in the past month...Do you really think that wont flow through into other forms of investment?

As for the AFL making huge profits...they're not THAT big, and they'll almost certainly drop too....the effects of this will echo for years.

 

[jatz14]

"AFL's richest club sits on massive cash balance while the WAFL dies" is not a headline any of those directors will want to be party to.

In all seriousness, that's the whole point of this structure - Eagles and Dockers make money and it gets used to fund grassroots footy.

I'm thinking the AFL would want that money before the WAFC.

They cannot take it of course, but taking loans of clubs with positive balance sheets may be a way forward.

On moto g(6) plus using BigFooty.com mobile app

 

[telsor]

IPL directors need to look after IPL by law. Can they pay the expenses if the worst case scenario occurs? Thats what they are required to do.

I understand/applaud the structure, its the best business model in the game imho & given personal bias - regardless the directors have legal requirements.
My point is that it is not as simple as stripping the bank account.

It kinda is...

When a company is 100% owned, then yes, the owners can strip the assets.

There are some issues if you take so much that the stripped company can't meet it's obligations (cue lawyers/accountants...), but 'excess' funds are pretty much fair game.

 

[jatz14]

The vast majority of players are earning far far less than 500k,and their careers only last a few years most of the time.

They may negotiate deferred pay rather than a pay cut.

On moto g(6) plus using BigFooty.com mobile app

 

[Kwality]

It kinda is...

When a company is 100% owned, then yes, the owners can strip the assets.

There are some issues if you take so much that the stripped company can't meet it's obligations (cue lawyers/accountants...), but 'excess' funds are pretty much fair game.

If you were short changed as a result of that action, i'd put my money on you getting an injunction to stop proceedings.

Its not as hard as it may seem.

 

[Kwality]

I'm thinking the AFL would want that money before the WAFC.

They cannot take it of course, but taking loans of clubs with positive balance sheets may be a way forward.

On moto g(6) plus using BigFooty.com mobile app

The directors of IPL would be very careful running down their cash reserves, its not as if all the money spent at Lathlain is readily redeemed.

 

[big_e]

IPL directors need to look after IPL by law. Can they pay the expenses if the worst case scenario occurs? Thats what they are required to do.

I understand/applaud the structure, its the best business model in the game imho & given personal bias - regardless the directors have legal requirements.
My point is that it is not as simple as stripping the bank account.

IPL directors do not fail the best interests duty by prioritising the interests of their shareholder.

Corps Act s187:
A director of a corporation that is a wholly-owned subsidiary of a body corporate is taken to act in good faith in the best interests of the subsidiary if:

(a) the constitution of the subsidiary expressly authorises the director to act in the best interests of the holding company; and

(b) the director acts in good faith in the best interests of the holding company; and

(c) the subsidiary is not insolvent at the time the director acts and does not become insolvent because of the director's act.

Bottom line, though, is these are extraordinary times and we truly don't know what he outcome will be. Governments could step in or the AFL could step in, in which case this is all a moot point. But if the point of a huge cash balance is to save it for a rainy day, well this is a ******* big downpour.

 

[madmug]

If money is tight then Tasmania has no chance of getting a license...

Everything would be on the back burner. The game as we know it is suffering a possible existential threat.

No or few games. No paying crowds, sponsors falling over or shrinking. Some clubs in a poor financial position. Limited AFL support. Geez, even Ch7 was under financial pressure before this.

Pablo Cassals perhaps said it best, "the situation is hopeless, we must take the next step"

I guess We dont know the future but whatever it is, things must/will be different.

 

[Geoffa32]

The vast majority of players are earning far far less than 500k,and their careers only last a few years most of the time.

Most still earn more than most employees of businesses who will also struggle through this.

AFL does not deserve government assistance to stay afloat.

Sent from my SM-G965F using Tapatalk

 

[big_e]

Everything would be on the back burner. The game as we know it is suffering a possible existential threat.

No or few games. No paying crowds, sponsors falling over or shrinking. Some clubs in a poor financial position. Limited AFL support. Geez, even Ch7 was under financial pressure before this.

Pablo Cassals perhaps said it best, "the situation is hopeless, we must take the next step"

I guess We dont know the future but whatever it is, things must/will be different.

Channel Seven will be stoked - they'll get some of their money back.

 

[telsor]

If you were short changed as a result of that action, i'd put my money on you getting an injunction to stop proceedings.

Its not as hard as it may seem.

As I said, there are questions if so much is taken that they can't meet obligations (in the short/medium term anyway), but if there are tens of millions sitting around that were intended for a use (Lathlain), but not committed to it, then WAFC would have nothing stopping it from taking them.

Even money that is 'committed' under various contracts can be renegotiated.


I'm not saying this will happen (WAFC wont want to kill the golden goose after all), just that it can, and I wouldn't be surprised if *some* funds were redirected.