Discussion Let's talk about our debt

[dct66]

We have talked about our debt previously and while there was footy we could service that debt while waiting for the success that would allow us to do something about reducing it. Now without footy our debt is hanging over our heads like the Sword of Damocles. Other team's supporters and some in the media are using it to question the existence of our club. At this stage the AFL are not talking about losing, merging or relocating any clubs but one thing is certain, it won't be the teams in the black or the expansion clubs that will be sacrificed if it comes to that.

We don't know what this will look like by the end of the year. Our debt will increase no doubt, as will most other clubs but in my opinion it is clear that when the dust settles we need to take extraordinary measures to reduce our debt. While I would dearly love to see that second premiership I see little benefit if, in the years after our next successful period, we remain in debt to the extent we are now.

I believe we have the best administration we have had for a long time. We have a loyal and hopeful supporter base. When we all start to get back on our feet when this Special Period is over, let's make sure we bring St Kilda F C with us.

 

[StFly]

It's not untenable debt, and that's the crux of the matter as it was in the 90's and why Fitzroy got the lemon.

So long as the AFL commission have money to assist with bankrolling clubs as licensed entities of said commission, clubs will exist. The very moment the AFL commission go "we have to kill someone" in conjunction with those that hold the debt saying "you must pay this amount, by this date", then that debt becomes a problem.

Until such a time, people are talking from their arses about which clubs die and why debt is bad or good.

 

[goodie23]

In terms of our debt all this has hit us at just about the worst possible time this millennia. We're still smarting from the Seaford debacle and that awful stadium deal that got shoved down our throats, we've had some unsuccessful years after the Pelican's grand strategy went kerplunk and we've just sunk however much into redeveloping Moorabbin and the AFLW team.

Look at the clubs that don't have to worry about debt. Richmond, Collingwood, Hawthorn and West Coast. Three of the last four grand finalists with strong supporter bases and Hawthorn is still riding their success over the last decade. West Coast's management in particular has been brilliant, they've posted profits without pokies and redeveloped their training base over the last few years. Notice none of the clubs who play home games at Marvel are among the financially secure four either.

It's also worth looking at how the Saints fortunes have compared with our former co-tenants at Waverley. This article sums up just how the Hawks have become profitable while the Saints have become indebted.

A lot of things have to happen for us to become profitable. We've got to find a way to capitalise profits from smaller games (this is where the Hawks taking such teams to Tassie has been genius). We need MCG home games to get in crowds. We need to get sponsorship dollars up. We need to sell merch. We need matches at times that capitalise crowds (none of this Sunday twilight ****). For any and all of the above to happen, we need onfield success.

 

[MUFKilda]

This should be an informative thread for some of us. Obviously I'm not an expert on the financial situation of all the AFL clubs. Couple of quick questions about the fundamentals:
How much is St Kilda's debt?
Is it substantially different from most/all other AFL clubs?

 

[70s sainter]

Debt like everything else in this competition is relative. We had more debt than the other Melbourne clubs before all of this kicked off and still will have after they find a vaccine.
It’s just that everyone will be 10-15 mill worse off .
looking forward we have the administration, we seem to have some identity back and most importantly we have the passionate supporters who will never let this club fade away . There’s too much history there to simply let this club die forever.
Someone else mentioned the interest rates at the moment of 2%
On 20 mill that’s only $400 grand a year before we start paying it off
The AFL knows it can give us blockbuster games , mcg home games , more profitable fixtures for free to air tv , to help us out . This won’t happen of course as we don’t have 80 thousand supporters like the big clubs , but then they have to realize if they can’t help us that way they have to compensate us like they have been .
The best thing the club can do is win games of footy when we play again to demand all of those things .
10 more years on the bottom will be disastrous .
We were on track before so it’s important to accept even more debt and stay on track . Being forced to pay too much off early won’t help.

 

[StFly]

This should be an informative thread for some of us. Obviously I'm not an expert on the financial situation of all the AFL clubs. Couple of quick questions about the fundamentals:
How much is St Kilda's debt?
Is it substantially different from most/all other AFL clubs?

As at last AGM 10.4 with the AFL, 6.7 with Westpac, the AFL loan grew by a little over 1m hence why media are saying "about 12" when reality is "roughly 11.5ish". AFL by comparison gave 20m through equalisation over the same period, so that loan can be paid even if you remove the "got more than 4m extra than anybody else" argument. Cash flow wise, there's just not much there to cover if, as has happened, shit hits the fan.

Ultimately though, all we have to worry about is that Westpac loan if we want to be retained as the Saints, of which we could pay if we had to.

So it's all a "would be great to not be in this position" but at present a "nothing to really talk about here" since no one is calling for heads to roll and it's no worse a situation than say the Dees were in before their Deemolition under Stynes for example.

 

[plugger66]

This should be an informative thread for some of us. Obviously I'm not an expert on the financial situation of all the AFL clubs. Couple of quick questions about the fundamentals:
How much is St Kilda's debt?
Is it substantially different from most/all other AFL clubs?

Not sure who has the second highest debt but we do have the highest and I think by some margin. Around 12 million before this season. Normally wouldn't natter that much except we probably have to do things the AFL want us to do like the China game but the debt may matter after this virus. There is no doubt we will be in the AFL next year but the future for us and probably a couple of other clubs would be uncertain.

 

[gringo2011]

Not sure who has the second highest debt but we do have the highest and I think by some margin. Around 12 million before this season. Normally wouldn't natter that much except we probably have to do things the AFL want us to do like the China game but the debt may matter after this virus. There is no doubt we will be in the AFL next year but the future for us and probably a couple of other clubs would be uncertain.

One of the guys I was working with last week is a VFL footballer. Sounds like he's not sure if he'll still be playing next year. They haven't heard much but there are a lot of clubs shedding everything that looks like a liability. Heaps of community clubs are likely to have to shut down too. Women's footy might not last either.

 

[plugger66]

One of the guys I was working with last week is a VFL footballer. Sounds like he's not sure if he'll still be playing next year. They haven't heard much but there are a lot of clubs shedding everything that looks like a liability. Heaps of community clubs are likely to have to shut down too. Women's footy might not last either.

If he is at sandy he maybe in real trouble. The good thing is my local club will get 2 good players back

 

[Diehard Saint]

Not sure who has the second highest debt but we do have the highest and I think by some margin. Around 12 million before this season. Normally wouldn't natter that much except we probably have to do things the AFL want us to do like the China game but the debt may matter after this virus. There is no doubt we will be in the AFL next year but the future for us and probably a couple of other clubs would be uncertain.

Fair to say I doubt a China game will be on the agenda again any time soon.
One bad bout of gastro, one pandemic .... isn’t that just so St.Kilda?

 

[Diehard Saint]

Women's footy might not last either.

Looking very likely, sadly.
Such a shame. I wasn’t really interested till we had our own team and I think they really captured us. Terribly sad for the girls and those who have put so much into it if that does happen.

 

[St Neil]

AFL clubs will be restructured with football departments pruned back to essential core tasks and the current soft cap becoming a hard cap. I read somewhere that next year expenses for all clubs could be reduced by a third, which also includes administrations.

Very sad for the people who have lost their livelihoods but a financial imperative for the viability of the competition. Costs have risen enormously over the years. Almost an arms race to keep up with the trend setters.

As long as the club can maintain/improve membership and corporate support then it becomes more sustainable going forward. Trouble is there will be less staff working to generate this support. Catch 22.

The clever clubs will be those who identify the essential staff to best improve the football and commercial side of operations. Lots of good people will be available because of financial circumstances.

In addition the AFL will reduce playing lists (possibly to as few as 32 according to The Age) and this will almost certainly mean a reduced salary cap. More savings. This will flow through to the draft where the lack of exposed form from feeder competitions will lead to more player churn at the draft and during the trading period.

This crisis is one our club should not waste. As Allan Jeans used to say, crisis creates opportunity. Use it best to our advantage to help us restructure our finances, pick the eyes out of reduced playing lists (considering we don’t have 2nd & 3rd RDPs this year) and adapt to a world where the core function of football is king.

We’ll find out how good our leaders are to take advantage of what is a terrible situation for everyone. If we’re smart we could become even stronger.

 

[St Neil]

One of the guys I was working with last week is a VFL footballer. Sounds like he's not sure if he'll still be playing next year. They haven't heard much but there are a lot of clubs shedding everything that looks like a liability. Heaps of community clubs are likely to have to shut down too. Women's footy might not last either.

I would be very surprised if the AFLW doesn’t continue. It is imperative for the growth of the sport and for the clubs to keep it going.

Let’s hope we keep our team going.

 

[jwikked]

I would be very surprised if the AFLW doesn’t continue. It is imperative for the growth of the sport and for the clubs to keep it going.

Let’s hope we keep our team going.

One of the Governments would step in with money if it was the difference between the AFLW disappearing or not. I'm optimistic, I think this is all going to work out fine. I think the clubs (and the AFL) will go back to their wasteful ways a year after the next media rights deal is signed, too.

There's too much money to be made in the industry to wind parts of it up. How much money does the AFL bring into Victoria? Victorian Government has an easy excuse to prop up the AFL, not that I think they'll need to.

It's not good times, and people will lose their jobs, but beyond that I don't think there will be any medium - long term changes.

 

[Keg on legs]

Maybe as part of the model going forward the clubs playing in blockbusters don't get to split the gates anymore. Maybe all gate takings go back to the AFL to be distributed equally across all clubs so outside of media exposure no clubs benefit to the detriment of others

I reckon that'll happen.




I also reckon pigs fly, the world is flat and Trump is a brilliant president.

 

[gringo2011]

If he is at sandy he maybe in real trouble. The good thing is my local club will get 2 good players back

Caulfield Bears reckon they had $35k in the kitty and will walk away with a $10k debt if the footy doesn't play. They reckon there are others who won't make it because they are already starting behind.

 

[Groater]

As at last AGM 10.4 with the AFL, 6.7 with Westpac, the AFL loan grew by a little over 1m hence why media are saying "about 12" when reality is "roughly 11.5ish". AFL by comparison gave 20m through equalisation over the same period, so that loan can be paid even if you remove the "got more than 4m extra than anybody else" argument. Cash flow wise, there's just not much there to cover if, as has happened, shit hits the fan.

Ultimately though, all we have to worry about is that Westpac loan if we want to be retained as the Saints, of which we could pay if we had to.

So it's all a "would be great to not be in this position" but at present a "nothing to really talk about here" since no one is calling for heads to roll and it's no worse a situation than say the Dees were in before their Deemolition under Stynes for example.

That 11.5 mil figure includes the Westpac amount (6.5) that the AFL is guarantor for, right?

Im not an accountant, so feel free to chime in if you have a better idea. Numbers below have been sourced from last years financial report, and I've rounded numbers in calculations.

Looking at the revenue last year we had $20mil from the AFL, $9 mil from members and $7.5 mil in sponserships and events. Assuming sponsership revenue declines by 80%, memberships only decline by 20% and there are no merch sales, non-AFL revenue would become ~$9 mil.

On the other side, total operating costs not including finance costs came to $46 mil. The staff wages and player payments were $30mil. Assuming that the wage bill can be reduced by 30% but everything else can only be reduced by 20%, then the total costs not including finance would be $34 mil.

So as a ballpark figure, we may potentially need somewhere around $25 mil from the AFL. Now it all comes down to how nice the AFL are. Assuming the AFL says they will pay 80% of last years distrbutions as a sign of goodwill (works out to $16 mil), this would mean that the rest ($9 mil) would be an additional loan. So our total debt would increase to $20 mil.

What do others think?

 

[gringo2011]

I would be very surprised if the AFLW doesn’t continue. It is imperative for the growth of the sport and for the clubs to keep it going.

Let’s hope we keep our team going.

I hope so, it's a negative drain on resources so might be lowest priority. How we operate with out affiliated VFL sides I don't know.

 

[gringo2011]

One of the Governments would step in with money if it was the difference between the AFLW disappearing or not. I'm optimistic, I think this is all going to work out fine. I think the clubs (and the AFL) will go back to their wasteful ways a year after the next media rights deal is signed, too.

There's too much money to be made in the industry to wind parts of it up. How much money does the AFL bring into Victoria? Victorian Government has an easy excuse to prop up the AFL, not that I think they'll need to.

It's not good times, and people will lose their jobs, but beyond that I don't think there will be any medium - long term changes.

I'd say it costs much more than it generates still.

 

[Saintos The ITK]

I was half thinking about giving home brew a shot but everyone I know who has brewed well their gut size doubled in about four months.

 

[plugger66]

Caulfield Bears reckon they had $35k in the kitty and will walk away with a $10k debt if the footy doesn't play. They reckon there are others who won't make it because they are already starting behind.

I don’t get that. Surely in local footy you only pay players if they play. The only expenses should be minimum affiliation fees which would be really small. The southern league only has one or two full time employees. The council will surely shelve local fees. I just don’t get the costs. Maybe I’m missing something

 

[Saintos The ITK]

Oh sorry I’m in the wrong thread with the home brew thing.
Well about debt there is no way I’m asking for my membership back and I’m even in for $200 for a chance to win a trip to the China game. Good luck with that Saintos. Keep it Saints and feel free to hit us up if you need a bit of a dip. **** that we can’t even contemplate letting the Saints go down. I love them.

 

[hoovinha]

Call me an optimist but I am not worried at all about the debt, or any clubs in debt. Disclosure I am an accountant but to me this is about the business of AFL.

The AFL make a massive amount of funds from the TV rights which includes 18 teams. By extension, if one or two teams folded, then the rights would be worth less, so it's in no-ones interest that this happens.

The same goes for relocations or mergers. It simply doesn't make any business sense to jettison 40k+ members plus a tv audience for 10k member team and no interest. All clubs know this now which is why you do not get any clubs complaining about keeping all clubs around. It was different back in the 80's early 90's before the tv rights took off.

Secondly, the debt for the most part is not 'bad debt' but based on value assets at Moorabbin. What we do have is a massive cash flow problem as many clubs do but this is not insurmountable. This may put us back but can be opened fire and overcome.

It's really only big footy nuff nuffs that bang on about clubs folding because most of them haven't the intellectual nous to understand that the AFL would be devaluing their product and lessening the value of they let any club fold.

It ain't gonna happen.

Go Saints!!!

 

[plugger66]

Call me an optimist but I am not worried at all about the debt, or any clubs in debt. Disclosure I am an accountant but to me this is about the business of AFL.

The AFL make a massive amount of funds from the TV rights which includes 18 teams. By extension, if one or two teams folded, then the rights would be worth less, so it's in no-ones interest that this happens.

The same goes for relocations or mergers. It simply doesn't make any business sense to jettison 40k+ members plus a tv audience for 10k member team and no interest. All clubs know this now which is why you do not get any clubs complaining about keeping all clubs around. It was different back in the 80's early 90's before the tv rights took off.

Secondly, the debt for the most part is not 'bad debt' but based on value assets at Moorabbin. What we do have is a massive cash flow problem as many clubs do but this is not insurmountable. This may put us back but can be opened fire and overcome.

It's really only big footy nuff nuffs that bang on about clubs folding because most of them haven't the intellectual nous to understand that the AFL would be devaluing their product and lessening the value of they let any club fold.

It ain't gonna happen.

Go Saints!!!

Normally agree but h they aren’t normally 600 million in debt.

 

[jwikked]

Call me an optimist but I am not worried at all about the debt, or any clubs in debt. Disclosure I am an accountant but to me this is about the business of AFL.

The AFL make a massive amount of funds from the TV rights which includes 18 teams. By extension, if one or two teams folded, then the rights would be worth less, so it's in no-ones interest that this happens.

The same goes for relocations or mergers. It simply doesn't make any business sense to jettison 40k+ members plus a tv audience for 10k member team and no interest. All clubs know this now which is why you do not get any clubs complaining about keeping all clubs around. It was different back in the 80's early 90's before the tv rights took off.

Secondly, the debt for the most part is not 'bad debt' but based on value assets at Moorabbin. What we do have is a massive cash flow problem as many clubs do but this is not insurmountable. This may put us back but can be opened fire and overcome.

It's really only big footy nuff nuffs that bang on about clubs folding because most of them haven't the intellectual nous to understand that the AFL would be devaluing their product and lessening the value of they let any club fold.

It ain't gonna happen.

Go Saints!!!

I did 7/8ths of the most basic of accounting courses, so its vindicating to see your opinion matches mine. I hope you are right, and I think you are. Things aren't as bad as the media suggest, and our value extends far beyond what we bring through the front door.

Normally agree but h they aren’t normally 600 million in debt.

The AFL aren't suddenly $600mil in debt. They have a line of credit worth $600 mil. There's a difference. $600 mil is the worst case scenario, and that hasn't played out yet.