You guys have to read the story not just the headlines
It's Pokies related.
From the notes to Melbourne's 2018 accounts
2. Summary of significant accounting policies
(a) Basis of Preparation of Accounts
This financial report is a general purpose financial report.......
.....
The Club reported a Statutory Profit for the year of $6,906,468. Contained within this amount is the gain
on sale of the Leighoak Club ($7,029,311), fixed asset write offs of $401,897 and expenditure on the new
facilities project of $227,222. When these amounts are excluded, the club recorded an operating profit
from core activities of $506,276.
...........
16. Discontinued Operations
On 4 April 2018, the Club announced its decision to sell the Leighoak Club gaming venue as part of the
Club’s exit from the poker machine industry. Settlement of the transaction occurred on 31 July 2018,
with all assets of the business transferring to Moonee Valley Racing Club on that date. The results of
the Leighoak Club for the year are presented below:
........................................................................................2018.......2017
Profit for the period from Discontinued Operation.................. 900,936 1,350,580
Gain on disposal of the discontinued operation................... 7,029,311 ......-
Net Profit for the period from a discontinued operation........ 7,930,247 1,350,580
They sold their pokies for $10,650,000 and that's why at the end of the year they $10,429,677 cash in the bank at end of 2018 and only $2.68m in debt after being $4.16m in 2017 and $5.72m in 2014.
Melbourne had 80 pokies at their Bentleigh Club venue and then when the Vic government broke up the Tattersalls-Tabcorp duopoly in 2010, they were able to do the following (along with the other Vic clubs)
Pokies deal sparks AFL clubs feud
Victoria's multi-million-dollar poker machine auction has sparked a bitter feud between rival AFL clubs.www.theage.com.au
Melbourne's board allocated $4 million for 92 machines at the Mathieson-owned Leighoak club, but ended up paying just $370,000.
and I wrote about how this break up of the duopoly in Victoria will affect Port back in this post, about our Financial Stability in late 2010, as all Vic clubs bar North bought up big;
PAFC Financial Stability
Reported that Choco is likely to be offered a position at GWS. I assume this will save us some $. http://www.heraldsun.com.au/sport/afl/mark-williamss-greater-western-sydney-talks/story-e6frf9jf-1225949111805www.bigfooty.com
below is Melbourne's 2018 P&L and they have restated their 2017 comparison to take into account the sale of the 92 pokies. Their 2017 accounts said they had revenue of $51.988m and $11.641m revenue from their 2 pokies venues, and 2016 they had revenue of $47.988m and $12.641m from their 2 pokies revenues. Those amounts include pokie losses by punters plus food and beverage revenue. In 2018 they only had $4.192m revenue from their Bentleigh club which has 80 machines.
Melbourne, are selling off all of their pokies but I don't know if it will happen before their 2019 financial year ends at the end of October, but they could have another multi-million dollar profit in 2019 from pokies sold.
This article from October last year shows Collingwood, Geelong and Western Bulldogs are joining Melbourne and getting out of pokies and joining North Melbourne who haven't had any for at least a dozen years. The other 5 clubs got 20 year licenses for 2022 to 2042 extended as this article explains.
Five AFL clubs awarded new 20-year licenses to operate pokies
Carlton, Hawthorn, Essendon, Richmond and St Kilda have all been handed 20 year licenses to continue operating pokies at venues around the state.
So as per the Melbourne 2018 P&L this is how the sale of these 92 pokies effected their financials.
View attachment 768117
In 2018 Melbourne got a bigger Harry Handout than Port from the AFL by approx $2m extra over and above the base distribution and the AFL Members - Club support distribution ( ie when you buy an AFL Membership if you tick a box for a club, the AFL gives that club about $150 of the $625 adult membership fee and less for lesser memberships).
That $2m is net - ie no costs involved, compared to $2m say from membership sales which might cost 25%-35% of the membership fee to generate and service.
Port's $10m more revenue than Melbourne would be made up mainly due to
1. Around $3m is from government grants and corporate grants to run our community programs, these are run to break even, not generate a profit, and Melbourne's community stuff is very small, and
2. Port's 2 venues generate $7m in revenue from pokies and food and beverage sales but only makes a profit of about $300k as we now have only about 55 machines (may be less) down from 73 (at the 2010 merger) and in SA you can only use coins whereas in Vic its notes, think $20 is the limit, whereas Qld you can stick in $100, and its why Brisbane's pokies do so well, and Southport Sharks venue partnered up with the GC Suns rather than go into competition with them. My best guestimate is $4m of that $7m is generated from pokies loss based on the club handing out The Port Club's financials at the AGM but not that of the The Prince hotel's and
3. The China game costs about $4.5m to put on, it breaks even, and we are in a JV with the AFL, so then $2.25m would be shown as both revenue and expenses in our books.
So there is $10m of extra revenue with virtually no margin in it, and Melbourne get that extra $2m distribution from the AFL, with no costs associated with it.
Edit part of that extra $2m Melbourne get would be to assist run their Women's program. I don't know how much that is, but the base distribution + variable distribution that have no costs associated with out them in 2018 was, Melbourne $15.636m and Port $14.660m.
The other distribution that covered - "The AFL made the following other distributions to the clubs throughout the 2018 season, including but not limited to AFLW, travel subsidies, prizemoney, AFL membership-related distributions, AFL commercial partner payments, AFL-facilitated stadium payments and licensing distributions."
Melbourne $2.540m vs Port $1.051m. The AFL members club support component of that would be approx Melb $240k vs Port $30k.
REH+R Block
