News Lions record a loss for 2012

[Pancho Gonzales]

Success on the field = success off the field.

Its that simple.

How about don't spend money you haven't made yet?

 

[Cousin Jed]

Got to spend money to make money

 

[POBT]

How about don't spend money you haven't made yet?

Who abides by this rule?

I have a home loan and have just paid off a car loan. In both instances, I couldn't afford to pay cash at time of purchase.

We had to pay some massive medical bills recently. We didn't have the cash so put them on the credit card and paid them off over a couple of months.

 

[Jorgo]

Maybe the club should pay more attention to their blood pressure then.

I think you'll find I'm as annoyed at the way our club has treated it's supporters as most

 

[Fatcat08]

any word when they'll post the full financials? Would have thought it would be available at the same time as the press release or is it after the AGM. Can't remember how it happened last year

 

[POBT]

Success on the field = success off the field.

Its that simple.

Yep. But investing to reduce our reliance on footballing success makes a lot of sense. Ideally, on field success will make the difference between a small profit and a massive profit, as opposed to the difference between a large loss and break-even.

A few things I'd be interested in when the full financials are released:

1. How does our football department spend compare to the rest of the comp?
2. What is our return on merchandise?
3. What is our financial situation if you took out the Springwood debt?

 

[Last of the Roys]

Okay...so help me work past the spin and get to the numbers. Based on the numbers in the article (assuming they're right), we've made losses of $9.6M over the past 5 seasons? How is it possible that the Club is still trying to placate members with those type of results? I'd like to believe that it's due to 'aggressively repaid debt', but how the Hell are we going to be competitive if it's only the AFL that's propping us up? Any other 'normal' business would be long gone with those type of results.

You are right with this post Pancho:
- 5 years of consecutive large losses
- almost $10m in total accumulated losses over the period 2008 to 2012
- you can't hope to be a successful club with the AFL propping you up

I do agree with others though that in business you have to invest (spend money) to get a pay off (make money). But have we invested wisely?
- most of those losses were not about successful investments, but were merely large operating deficits (or unsuccessful investments such as those lost in the GFC)
- the Springwood investment seems the big exception
- perhaps investment in the football department over recent years might be in the same vein

Like others I want to see the full financials:
- I still don't understand why paying off debt aggressively should lead to a larger loss. From an old school accounting perspective I would have thought paying off your debt aggressively reduces interest payments on your debt and therefore is a positive for the profit/loss, although it may impact negatively on your cash balance

Anyway you look at it, things definitely don't look good for the Club financially. We are reliant on:
- the AFL to prop us up over the next 2-3+ years - that will happen but it is definitely not the situation to build a good platform off or control your Club's destiny
- our list turning us into a finals team, with repeated success over a number of years (not necessarilly premierships, but hope they might come) - this may or may not happen
- renegotiating the deal with the GABBA - again this may or may not happen

 

[dlanod]

Like others I want to see the full financials:
- I still don't understand why paying off debt aggressively should lead to a larger loss. From an old school accounting perspective I would have thought paying off your debt aggressively reduces interest payments on your debt and therefore is a positive for the profit/loss, although it may impact negatively on your cash balance

I generally agree with the rest, so just want to comment on this part. The reason paying off debt aggressively leads to a larger loss is because you're effectively trading cash currently on hand in for increased cash flows in future years. So it will negatively impact the current year (or years, if it's an on-going attempt) but will positively impact the forecast for future years. A negative impact on your cash balance is, in effect, a loss, as that cash balance is an asset you account for. That's how it can contribute to make this year's loss larger.

 

[Fatcat08]

Not sure how the lions are taxed but for a company to repay a capital amount off a debt you have to pay tax on those repayments, while interest repayments are tax deductible. Therefore if you want to pay $1 million off debt it will usually cost a company approximately $1.43 million in real dollars to repay the million.

as dlanod said you take a hit now for benefits down the track.

 

[Last of the Roys]

Those two explanations still don't make sense to me from an accounting perspective. I am not sure what I am missing, but I did do accounting at uni (and then went on to do / work in something else):

I am not sure how paying debt off feeds into a profit and loss - I don't think it ever used to. It doesn't represent an operating expense; it is the depreciation and the interest that are the expenses.

As for tax issue - the Lions are not-for-profit and don't pay tax. I assume Springwood is the same, except of course the relevant tax on pokies.

Any current accountants want to try to explain?

 

[Cousin Jed]

Lions don't pay tax

 

[Happy_Neale]

Yep. But investing to reduce our reliance on footballing success makes a lot of sense. Ideally, on field success will make the difference between a small profit and a massive profit, as opposed to the difference between a large loss and break-even.

A few things I'd be interested in when the full financials are released:

1. How does our football department spend compare to the rest of the comp?
2. What is our return on merchandise?
3. What is our financial situation if you took out the Springwood debt?

We spent ~$17 on our football department, I think I remember hearing Collingwood spent ~20m (in 2011) so I would guess that's where most of the losses have come from outside of L@s facility. I think we'd be somewhere in the middle of the table for FD spending. I suppose if you're going to make a loss you might as well spend the cash on something worthwhile like improving our FD.

 

[POBT]

We spent ~$17 on our football department, I think I remember hearing Collingwood spent ~20m (in 2011) so I would guess that's where most of the losses have come from outside of L@s facility. I think we'd be somewhere in the middle of the table for FD spending. I suppose if you're going to make a loss you might as well spend the cash on something worthwhile like improving our FD.

The AFL used to apply a handbrake on football dept spending when clubs received financial assistance. They eventually realised that this was emphasising the gap between the haves and have nots and significantly restricting the ability of bottom clubs to recover on field.

I would just be interested in whether our financial state has meant that we've chosen to restrict our football dept spend. The rhetoric out of the club a couple of years ago was that they would give Voss the resources he needed. Be interesting if they stuck to that.

 

[Happy_Neale]

The AFL used to apply a handbrake on football dept spending when clubs received financial assistance. They eventually realised that this was emphasising the gap between the haves and have nots and significantly restricting the ability of bottom clubs to recover on field.

I would just be interested in whether our financial state has meant that we've chosen to restrict our football dept spend. The rhetoric out of the club a couple of years ago was that they would give Voss the resources he needed. Be interesting if they stuck to that.

I think it is the opposite. I think our debts have increased due to increased spending on our FD. We've increased our resources significantly with new assistant coaches and newly created positions to improve our on field competitiveness.

As for going forward, I have no idea if we're going to cut spending but my guess is we're going to try and spend smarter as evidenced by the streamlining of our coaching panel. IE cut out any unnecessary or outdated positions and spread the extra work between competent staff who can handle it. I'm curious as to what model we use to run our club TBH because I can't think of another club that functions like we do.

 

[dlanod]

We spent ~$17 on our football department, I think I remember hearing Collingwood spent ~20m (in 2011) so I would guess that's where most of the losses have come from outside of L@s facility. I think we'd be somewhere in the middle of the table for FD spending. I suppose if you're going to make a loss you might as well spend the cash on something worthwhile like improving our FD.

And that $17 spent on our football department was all spent on a meal for Vossy at the Lions@Springwood!

(Someone had to do it.)

 

[Happy_Neale]

And that $17 spent on our football department was all spent on a meal for Vossy at the Lions@Springwood!

(Someone had to do it.)

To be fair, I think we got Joel Patfull a new haircut with the change from that $17.

 

[Pancho Gonzales]

So is the Club basically operating now on the basis that the AFL won't let us fail? Reasons / rationales are fine, but surely people aren't defending a fifth consecutive loss?

Who abides by this rule?

I have a home loan and have just paid off a car loan. In both instances, I couldn't afford to pay cash at time of purchase.

We had to pay some massive medical bills recently. We didn't have the cash so put them on the credit card and paid them off over a couple of months.

When you were approved for these loans, your bank would have checked your financials to ensure you could pay the debts back. If you presented a bank with financials showing a history of losses - losses that are not decreasing - then I highly doubt you'd have your lovely home today.

 

[notting18]

When you were approved for these loans, your bank would have checked your financials to ensure you could pay the debts back. If you presented a bank with financials showing a history of losses - losses that are not decreasing - then I highly doubt you'd have your lovely home today.

If an very well off organisation guaranteed your loan you would.

 

[POBT]

On a side issue, there is a stigma attached to getting handouts from the AFL.....and fair enough too. But for some reason, it is seen as OK to get enormous donations from rich benefactors to help clear debt or build infrastructure. Not sure a Pratt legacy is that much different from an Andy D handout.

 

[Last of the Roys]

On a side issue, there is a stigma attached to getting handouts from the AFL.....and fair enough too. But for some reason, it is seen as OK to get enormous donations from rich benefactors to help clear debt or build infrastructure. Not sure a Pratt legacy is that much different from an Andy D handout.

I think there are big differences. One of the difference is this - passionate wealthy club supporters want to do everything to see their club be as successful as possible. On the other hand the AFL are just trying to ensure the competition as a whole is sucessful - what they are more worried about is that clubs don't turn into basket cases.

There is also the issue that pervades governments and big organisations - people closer to the problem (and people with their own money) are more likely to make better decisions than those that are not. That is why micromanagement from the likes of the Commonwealth Government or the AFL rarely works. It is the incentives they need to get right, not the particular on-the-ground decisions on how to run things.

You can the see the influence AFL micromanagement is starting to have with the Lions (big admin cuts ordered by the AFL; cuts to football departments spending a year after we announced the opposite approach; and perhaps a forced moved to Springfield). It is not to say all of these things are necessarily wrong - but surely a Lions administration is in a better place to make those decisions than the AFL HQ based in Melbourne.

Unfortunately the way the AFL structures their fixture and compensation means it hard for small poor clubs to get out of the welfare cycle - just like it can be for some people in life in general. The salary cap and the draft is meant to over come that to a degree, but things like blockbusters, the TV coverage, free agency and third party payments work in the opposite direction. Of course it is extremely hard for the AFL to get all of the incentives right - but I am just stating the problems that are faced, I am not saying there are easy solutions.

Anyway, all of that means we are hardly starting from a great basis. Most footy fans think it is becomining increasingly difficult for poorer clubs to be successful. The one great untapped asset we have is the big latent support in the QLD population that is just waiting for us to have onfield success again. It might be a bit of a chicken and an egg problem - but hopefully our list can break through the barriers and repeatedly make the finals.

We then have to find a way to make the support that will come / and the Club in general more sustainable.

 

[jackess]

It was clever of the club to announce this yesterday so it could be buried under all the draft news.

 

[POBT]

I think there are big differences. One of the difference is this - passionate wealthy club supporters want to do everything to see their club be as successful as possible. On the other hand the AFL are just trying to ensure the competition as a whole is sucessful - what they are more worried about is that clubs don't turn into basket cases.

There is also the issue that pervades governments and big organisations - people closer to the problem (and people with their own money) are more likely to make better decisions than those that are not. That is why micromanagement from the likes of the Commonwealth Government or the AFL rarely works. It is the incentives they need to get right, not the particular on-the-ground decisions on how to run things.

You can the see the influence AFL micromanagement is starting to have with the Lions (big admin cuts ordered by the AFL; cuts to football departments spending a year after we announced the opposite approach; and perhaps a forced moved to Springfield). It is not to say all of these things are necessarily wrong - but surely a Lions administration is in a better place to make those decisions than the AFL HQ based in Melbourne.

Unfortunately the way the AFL structures their fixture and compensation means it hard for small poor clubs to get out of the welfare cycle - just like it can be for some people in life in general. The salary cap and the draft is meant to over come that to a degree, but things like blockbusters, the TV coverage, free agency and third party payments work in the opposite direction. Of course it is extremely hard for the AFL to get all of the incentives right - but I am just stating the problems that are faced, I am not saying there are easy solutions.

Anyway, all of that means we are hardly starting from a great basis. Most footy fans think it is becomining increasingly difficult for poorer clubs to be successful. The one great untapped asset we have is the big latent support in the QLD population that is just waiting for us to have onfield success again. It might be a bit of a chicken and an egg problem - but hopefully our list can break through the barriers and repeatedly make the finals.

We then have to find a way to make the support that will come / and the Club in general more sustainable.

I tend to think that the influence that Pratt/Elliot had on Carlton is far greater than that of the AFL on us. In the instance of the wealthy benefactor, you are completely and utterly subject to their whims. You might be lucky to get someone who is happy just to hand over the cash and have no direct role in the running of the club but generally speaking, these guys want influence and therefore their donations come with just as many strings attached as the AFL.

But that's not my point - my point is that footy clubs should be self sufficient and shouldn't rely on handouts. I just don't see any difference in being lucky enough to have the Pratt family as supporters compared to being propped up by the AFL due to your strategic importance to the comp. In both instances, the clubs involved are reliant on the largesse of a 3rd party and don't generate enough income under their own steam to pay for their costs.

 

[Last of the Roys]

I tend to think that the influence that Pratt/Elliot had on Carlton is far greater than that of the AFL on us. In the instance of the wealthy benefactor, you are completely and utterly subject to their whims. You might be lucky to get someone who is happy just to hand over the cash and have no direct role in the running of the club but generally speaking, these guys want influence and therefore their donations come with just as many strings attached as the AFL.

But that's not my point - my point is that footy clubs should be self sufficient and shouldn't rely on handouts. I just don't see any difference in being lucky enough to have the Pratt family as supporters compared to being propped up by the AFL due to your strategic importance to the comp. In both instances, the clubs involved are reliant on the largesse of a 3rd party and don't generate enough income under their own steam to pay for their costs.

I agree Clubs need to be sustainable in their own right. However, if that is not the case personally I would much prefer to have wealthy benefactors that love the Club than be reliant on the whims of the AFL.

 

[POBT]

I agree Clubs need to be sustainable in their own right. However, if that is not the case personally I would much prefer to have wealthy benefactors that love the Club than be reliant on the whims of the AFL.

Wonder if Pixie Skase has any of Christopher's fortune left?

 

[patfullfankezz]

Who says it has to be "a" benefactor?

I bet us fans could think of some brilliant ways to raise funds for the Club. Fun runs, "biggest loser" contests, car washes, fun nights...

As long as it was all kept PG (and this is where I've lost everyone lol).