Strategy Should the West Coast Eagles buy the Melbourne FC?

[paran]

Champ, I also hasten to add that the road from Perth airport to the CBD (as I will call it) is one of the great boulevards of the world and really does the township proud. And when I was there last, I was astounded to note that a production of Gilbert and Sullivan was in town - and John Kizon was getting quite excited by it. Wonders will not cease. Perhaps one day there'll be a Perth Festival down at the old Brewery where Perth's "nobility" ("I loooooove Lang") can make a grand appearance on a jet-ski.

It's thinking like this that leads to Jack Watts getting drafted over Naitanui!

 

[TheDarkDwarf]

I voted jack watts because I thibk hhe is the answer to all of our problems and will win us many many premierships

I voted Jack Watts because I want to be rid of him.

 

[TheDarkDwarf]

Melbourne has absolutely jack shit going for them. Surely there's something else worth investing in.

Don't you mean Jack Watts?

 

[TheDarkDwarf]

To be fair the MFC was started as a branch of the MCC so the clubs history was immediately tied to the history of the MCC and the foundations they set with the creation of Aussie Rules Football. The MCC played Football during the cricket off-season to keep the players fit. In regards to other victorian clubs, most clubs had been established long before the creation of the VFL and many clubs earned their place in the league after playing in lower leagues before hand.

All that being said, it was over a hundred years ago for most clubs, and in a multi-billion dollar national competition it makes more sense to create teams in the way that West Coast was.

And yeah, the whole 'no history' argument is rubbish. West Coast has history now.

Six clubs, Melbourne being one of them broke away from the VFA to help form the VFL in the late 1890's, so there is a long established history.

 

[QS]

If we did speculatively acquire Melbourne, at least... in theory... we would have two teams owned in WA that have won premierships.

 

[Beutbrute]

What an arrogant idea!

 

[the harry]

Would rather have money in Tesla. Good choice to avoid .

 

[Bluke]

This is great and should be re posted on the main board.

Can someone financy recut and update the numbers and provide with underlying financial model including NPV?

 

[HoneyBadger35]

Wonderfully arrogant thread.

Also completely needless as, after we eviscerate the Demons on Sunday, I assume they’ll hand their licence over out of shame.

 

[JinmboJones]

Haha love this thread. But in all seriousness is the club looking at buying into other sports (esports, for example with Adelaide) and diversifying it's finances that way?

 

[garlic munchers]

Feel free as long as you don't steal our players. Would love to have the power of West Coast's bank account in our corner

Taking a Heeney dividend for our investment won’t be stealing!

 

[Proper Gander]

This is possibly my favourite thread ever.

 

[Pedals23]

I'm so glad that the Eagles currently own Melbourne.

 

[Rowan18]

Ha ha - I was waiting for this to be bumped.

 

[garlic munchers]

This is possibly my favourite thread ever.

Going cheap, battered and over hyped.

Will take any offer!

 

[Macpotata]

Lol

 

[Bluengold91]

The Facts.
Last year we recorded a profit after tax of $4.68 million, up from $4.4 million the previous year. This is after paying $5.2 million during that same period in royalties. Our revenue increased to over $57 million in a year that was pretty ordinary in terms of on field achievements, ultimately failing to make the finals, again.

The end result of all this is that we have we have around $45 million in cash and equivalents sitting in the bank, not doing a whole lot.*

To make better use of these funds, should we look to acquire smaller football clubs, such as Melbourne FC?

Melboune’s Situation.
With Paul Roos in charge the on field performance improved slightly, with less significant defeats and generally being “more competitive” than in previous years.

They turned a profit of almost $285,000 after a loss of more than $3 million the previous year. Total equity for the club currently sits at about $3.56 million (we have almost $40 million). They have total assets of just over $16 million (we have over $50 million)


The Case For.
It was a very poor year on field for Melbourne last year, albeit better than previous years, yet they still managed to turn a profit. They have a playing list now that has some of the best young talent in the country having traded away some of the worst (Morton….) and a coach that is widely regarded as one of the best. They are, as their fans will no doubt remind you should the opportunity arise, one of the oldest clubs in the competition and have the best ground in the world as their home.

This all combines for significant upside and growth in profitability in the coming years as their notoriously wealthy, but fair weather, supporter base returns form the slopes to support their once great team.

The extra sway this would give our club in terms of voting matters (an increase of 100%) with the AFL could also prove beneficial. There may also be upside in terms of economies of scale, by employing only one lot of recruiters, and one membership department. It may also result in a greater number of Melbourne memberships held by WA residents and West Coast ones held in Vic because of the connections the clubs would share.

The Case Against.
This would likely cause some serious friction throughout the broader sporting community as takeovers are generally not the done thing.

They are Melbourne and they have baggage. Ex-players such as Gary Lyon and the Ox are not the sort of people that we would generally want associated with our club. They bring very little to the table in terms of positive image having been all but found guilty of throwing games for the purpose of a better player to fail to develop. This may have a negative impact on us and drag us down to the level of lesser clubs.

Currently our own on field performance is not up to scratch and it may be best if we focussed on rectifying that before taking on more challenging tasks, which making Melbourne financially successful would no doubt be.

The Cost?
I suggest, in light of a profit of less than $300,000 last year, a price of $5.5 million would be seriously considered by those who currently own Melbourne.

This would represent a significant premium on the net assets (assets less liabilities) of Melbourne of roughly $2 million, or roughly 55% increase.

The price would represent a multiple of about 18.5 of the 2014 earnings, resulting in a return of around 5.4% annually if currently profitability was maintained (higher than we are currently getting on the cash in bank) but with the potentially for significant growth.

This would be funded entirely by idle cash and still leave the club with over $40 million in the bank and in a very strong state financially.

Thoughts?

All infor used has been acquired from the 2014 annual reports: http://footyindustry.com/files/2014 Reports/AFL/Melbourne 2014 annual Report.pdf

http://footyindustry.com/files/2014 Reports/AFL/West Coast Eagles 2014 Annual Report.pdf



*likely to be used when we move training facilities.

Wtf

 

[the harry]

Wtf

Which bit don't you get?

Quietly pretty relieved we got the win.

 

[Bluengold91]

Which bit don't you get?

Quietly pretty relieved we got the win.

Just seems like u wasted a lot of time on this idea that will never happen

 

[the harry]

Just seems like u wasted a lot of time on this idea that will never happen

Have you ever posted in a trade or draft thread?

 

[Bluengold91]

Have you ever posted in a trade or draft thread?

At least there is a possibility of a trade, no will one club ever buy another club

 

[the harry]

At least there is a possibility of a trade, no will one club ever buy another club

Not with that attitude they wont

 

[Patron]

I think you’ve understated their brand value in the purchase. It would be a Significant intangible asset probably valued around $20million


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