Analysis Stadium deals - what, how, when - why we need a new one and the SA footy paradigm shift happening

[RussellEbertHandball]

West Coast have made bucket loads of cash from three decades worth of a sweet heart stadium deal and a supply shortage of seating at their games that has allowed them to drive prices up year on year for probably a good half of that time. They've got cash but they've absolutely fleeced their supporters for it.

West Coast have only been making mega profits since 2005, that's $4mil+ per year after paying rent and WAFC licence fee royalty. I think one year post 2005 it was $2.7mil. They had 3 or 4 s**t years at the bottom of the table and they still made $4mil+. 2005 was their GF year and 2004 was about when the mining boom really kicked in.

The first 7 years of the Eagles they didn't make much money as they were laden with the huge debt to set them up when interest rates were between 12% and 19%. The WA government and WAFC stepped in when Subi was redeveloped and Freo given the 2nd licence and restructured their debt. The next 10 years or so they did well, posting profits in the $200k to $900k range. The WAFC has taken a huge chunk of that "fleecing" of their members since that restructuring around 1993-1994 period.

 

[bomberclifford]

But they wrote off their 15 year licence payment in 2014 as a $8.44mil expense - ie discounted the $11.3mil payable back to a 2014 $$ value - and as the licence fee in 2013 was $650k and my calculation is it increases by 1.5% per year, that expense wasn't in their 2015 and 2016 profit and loss. The other side of this $8.44m is a trade creditors payable amount that sits as a liability account in the balance sheet, so when when they paid $669k in 2016 it reduced their cash balance and their trade creditors payable balance by $669k and bypassed their profit and loss.

The $694K AO underwrite payment has been there for 3 years - I think it relates to the upkeep of Footy Park as the SANFL talked about taking $1.2mil per year out of any AO deal to maintain Footy Park. The $400k to play in the SANFL has been there for 3 years, it was $409k in 2015 and was probably $415k in 2016. The depreciation of $1.3mil a year has been there since they started depreciating their facility at West Lakes since end of 2010 when it was finished and which has added $502k to their annual depreciation expense, so there is over $800k of other depreciation. They have been announcing their results pre depreciation in media releases since that $502k depreciation first hit their accounts in 2011. Before that it was operating result with depreciation included.

I don't think its about preparing for a major asset acquisition. Its just spin to say look how great we are we aren't poor like the other mob. Plus they have to pay an equalisation tax. They should be jumping up and down saying we have made several years of losses, so why do we have to pay the tax? Spin it as we are making profits, its then easy meat for the AFL to publicly say you are making plenty of $$$ so you can pay the tax.

Thanks for the clarification.

The equalisation tax thing has always got me. Surely the AFL has a formula based on actual profitability, not just 'announced' profit.

 

[RussellEbertHandball]

Thanks for the clarification.

The equalisation tax thing has always got me. Surely the AFL has a formula based on actual profitability, not just 'announced' profit.

You would think so, but maybe the AFL just says you keep announcing how well you are doing and you are a big club so you can pay it. Also knowing the politics of the AFL, this could be another wedge they are driving between them and the SANFL

 

[tribey]

West Coast have only been making mega profits since 2005, that's $4mil+ per year after paying rent and WAFC licence fee royalty. I think one year post 2005 it was $2.7mil. They had 3 or 4 s**t years at the bottom of the table and they still made $4mil+. 2005 was their GF year and 2004 was about when the mining boom really kicked in.

The first 7 years of the Eagles they didn't make much money as they were laden with the huge debt to set them up when interest rates were between 12% and 19%. The WA government and WAFC stepped in when Subi was redeveloped and Freo given the 2nd licence and restructured their debt. The next 10 years or so they did well, posting profits in the $200k to $900k range. The WAFC has taken a huge chunk of that "fleecing" of their members since that restructuring around 1993-1994 period.

Competitiveness onfield aside, West Coast were a joke in the early years.

1987 - 24434 avg attendance
1988 - 21008
1989 - 18691
1990 - 24448

In fact, their underwhelming crowds and revenues were largely responsible for the SANFL going balls deep on the first licence's unashamed surrogate state team branding as the alternative seemingly hadn't worked for the Generic Name Not State Colours.

 

[Zakk Wylde]

My read on why the Crows do this is that they have a plan for a major acquisition in the future, their losses over the past few years are what I would call, 'controlled' which gives you an indication that they are doing this for the long term benefit of the organisation, nothing wrong with that.

The other tell is that they've been running with this 'operational' profit announcement since they started this strategy, purely and simply because they know the vast majority of their supporters wouldn't understand that what they call 'statutory losses' are not always indicative of the performance of the organisation.

They're also giving the impression that they made a $1.3m profit and THEN gave it all to SANFL, SA Gvt, AFL and GrassRoots™ development. When in reality the payment to SANFL is their agreed payment for the purchase of their license and should be considered an operating cost.

They'll be moving to Uni Oval... Park #10

Uni will be moving to the new grounds opposite Harbour town on Tapley's Hill Rd.

 

[RussellEbertHandball]

They'll be moving to Uni Oval... Park #10

Uni will be moving to the new grounds opposite Harbour town on Tapley's Hill Rd.

Haha that was Triggy's dream legacy.

 

[Zakk Wylde]

Haha that was Triggy's dream legacy.

It's well under way.

 

[RussellEbertHandball]

It's well under way.

There is a relationship between the crows and Adelaide Uni - as a VP of the club until this year's AGM I was kept somewhat in the loop. They can't build on the parklands without massive legislative change. To kick the BlacK's off Park 10 will take some wheeling and dealing. Triggy thought he could get the main oval.

 

[Papa G]

They'll be moving to Uni Oval... Park #10

Uni will be moving to the new grounds opposite Harbour town on Tapley's Hill Rd.

I played SAPSSA hockey there back in the 80's.

I had no idea how to play hockey but we got Friday Arvos off.

 

[Grave Danger]

From The Advertiser's 'Off the Record' column...

Off the Record: Adelaide Oval set to shift goalposts

IT’S not yet three years since an AFL Showdown opened the $535 million Adelaide Oval redevelopment, but another multimillion-dollar upgrade is about to be revealed.

Keen to retain its reputation as the nation’s finest sporting venue amid tight competition – Perth’s $1 billion stadium opens next year – the Oval’s management will invest to grow revenue.

Precisely how is not yet clear, but Adelaide Oval Stadium Management Authority chairman John Olsenhas said an announcement would be made soon and the SMA would take on debt.

http://www.adelaidenow.com.au/news/...k=fbd4ff13f29d765c76f0f9ad20af2a12-1488684943

 

[RussellEbertHandball]

So the SMA is going to take on debt for these upgrades, which means new events have to be won otherwise the SANFL and SACA are going to have to contribute to financing the debt repayments and/or the 2 AFL clubs.

 

[bomberclifford]

Demetriou proposed another meeting in a month. “(SANFL chairman) Rod Payze said that is too fast, can we make it in six months. And I though ‘geez, things move slowly in South Australia’.’’

His mate Foley was keen to spread the love – even as far as The Advertiser. He recalled a meeting involving former Premier Mike Rann, then Tiser managing director Michael Millerand editorial director Melvin Mansell, who outlined a vision for the Oval.

“I remember walking back. I remember saying (to Rann) how Mickey Mouse and how ‘Adelaide’ is it that rebuilding a footy stadium could somehow inject life into Adelaide,” Foley said. “They (The Tiser) were about six or seven years ahead of where Rann and I were.’’

The two bolded bits say so much about the problems that are hard wired into this state.

The fact that the Chairman of the SANFL couldn't see the wood for the trees and wanted to stall the process, and that an editor of a daily newspaper had more insight and vision into the obvious benefits of the move than the incumbent Premier and Treasurer had, is a bloody disgrace.

Essay Farken Grate.

 

[Forzaport]

So the SMA is going to take on debt for these upgrades, which means new events have to be won otherwise the SANFL and SACA are going to have to contribute to financing the debt repayments and/or the 2 AFL clubs.

I don't see why the AFL clubs would have to guarantee the SMA's debt. If they screw it up, it's a perfect opportunity to boot the SANFL as well as SACA from control of the stadium.

 

[RussellEbertHandball]

I don't see why the AFL clubs would have to guarantee the SMA's debt. If they screw it up, it's a perfect opportunity to boot the SANFL as well as SACA from control of the stadium.

I didn't say guarantee their debt, but if they make capital improvements which the clubs use, then they will charge the clubs for that use.The stadium deal is up for review at end of 2017 season so I'm sure it will look at things like additional facilities and factor that in to any deal review. The more others pay for the new facilities the less the SMA will charge the 2 AFL clubs

 

[RussellEbertHandball]

Do people remember Rucci banging on for over 2 years that the SMA had to find $2.8 mil (sic) each year to put into the Sinking Fund. Olsen was spinning that it was an annual payment and that's why they had to take so much of the revenue streams on game day from the 2 clubs. I have dispelled this, saying its $2.7mil by September 2016 as per the Auditor General's 6 monthly report, and further proof from the Auditor General's latest 6 monthly report covering 1st July to 31st December 2016.

https://www.audit.sa.gov.au/LinkClick.aspx?fileticket=Qi18gFx5Zog=&tabid=366&portalid=0&mid=963&forcedownload=true

6.2 Establishment of a sinking fund
The Act provides for the establishment and operation of a sinking fund by AOSMA to receive and disburse monies to meet non-recurrent expenditure associated with the lease of the Oval.

The Act also provides for the:

 * Treasurer, after consulting with AOSMA, to approve or determine the amount of
money to be paid into the sinking fund during each financial year by AOSMA

 * Auditor-General to audit the accounts of the sinking fund and examine certain matters
provided for in the Act.

Our fourth Report indicated that AOSMA advised it had obtained a report from the project ost consultant that provides an estimate of the total forecast capital expenditure, over 20 years, and the required annual sinking fund contribution. AOSMA further advised that it had established a bank account to hold sinking fund monies.

Our fifth Report provided an update on the status of the sinking fund. It communicated that in November 2013 the Minister wrote to the Treasurer seeking approval for proposed arrangements for the Adelaide Oval Redevelopment sinking fund. It further conveyed that in
January 2014 the Treasurer responded to the Minister’s request and advised that he:

 * considered the proposed arrangements for the sinking fund to be satisfactory at the present time

 * authorised DPTI to inform AOSMA that it should budget for the proposed arrangements in its forward program

 *noted that AOSMA proposed to make its first contribution of approximately $2.7 million to the sinking fund in 2016-17 and AOSMA will notify him of this proposed contribution for approval before 1 September 2016

 *will approve or make a determination of the amount to be paid into the sinking fund at that time.

In preparing this Report we enquired about the status of the sinking fund with DPTI and DTF.

At the time of this Report DTF advised us that the Treasurer had not made a determination or approval for the sinking fund under the Act. DPTI advised that it was:

 * preparing a minute to the Treasurer seeking approval for the amount proposed by AOSMA to be paid into the sinking fund

 *in the process of developing policies and procedures for administering the Minister’s responsibilities relating to the sinking fund.

We recommended that DPTI complete the policies and procedures for the sinking fund and establish a mechanism to ensure the Minister’s responsibilities for the sinking fund are fulfilled. We also noted that this may require liaising with DTF and AOSMA. We were advised that DPTI plans to finalise the sinking fund policies and procedures as soon as practicable.

https://www.audit.sa.gov.au/LinkClick.aspx?fileticket=Qi18gFx5Zog=&tabid=366&portalid=0&mid=963&forcedownload=true

 

[RussellEbertHandball]

The government spending on AO was capped at $535mil and according to the AG - "The Act limits the appropriation of money made available and expended on the project to $535 million during the period from 1 December 2009 to 1 December 2019." As at 31 December 2016 $7.428m remains unexpended according the latest AG 6 monthly report. The government is under no obligation to spend it. I wonder if Olsen's announcement they will go into debt for a multi-million dollar upgrade includes getting access to some or all of this $7+million. There is an election in 12 months time so the government knows there would be some votes in backing monies being spent on AO, provided they don't ignore electricity generation.

 

[chiwigi]

I want to know what these upgrades are going to be? Making it more comfortable for the fat cats no doubt.

 

[NTRabbit]

Improved corporate facilities are pretty much the only thing that increase the value of existing stadiums, money sunk into improvements beyond the acceptable minimum for the rank and file don't even rate a mention with the people who do those valuations.

 

[Grave Danger]

"There won't be a roof"

 

[Steve Dore]

I want to know what these upgrades are going to be? Making it more comfortable for the fat cats no doubt.

The "John Olsen" pavilion on Oval 2.

 

[StrappingTape]

REH I might fight with you in other threads time to time but your work on all this stuff is 2nd to none, we are lucky to have you on here.

I am very uncomfortable with the taking on debt talk from the SMA as to me it feels like we are heading straight back down the AAMI stadium SANFL stadium deal noose.

 

[RussellEbertHandball]

Rucci has written an article about the crows making a million dollar "operating profit" has made it harder for the clubs to get more out of AO when the review occurs after 2017 season. I will put the full link up later, when I'm on my computer, but the crows made $300k out of the AO final which suggests to me the SMA/SANFL probably made $700k.

Last time, it took 211 days to come up with arrangements that delivered more cash to the AFL clubs, such as the $300,000 the Crows collected for hosting an AFL final at the Oval last season.

 

[RussellEbertHandball]

If Port's accountants are as dumb as Rucci then we deserve to be screwed on any AO Stadium deal at the end of the season.

http://www.adelaidenow.com.au/sport...l/news-story/5417cf8552b824de38c1b410ba158a4b
QUESTION 7 at the Adelaide Football Club members’ information meeting was more of a statement.“Thank you, thank you, thank you for making a profit,” said the man who was effusive in his praise of the Crows’ board and executive. This delight could have been matched - even surpassed - by only one other gathering at Adelaide Oval, those in the Stadium Management Authority board room.

Soon, the Crows - and Port Adelaide Football Club - will start with the SMA another review of the stadium deal at Adelaide Oval. Last time, it took 211 days to come up with arrangements that delivered more cash to the AFL clubs, such as the $300,000 the Crows collected for hosting an AFL final at the Oval last season.

Neither Adelaide nor the Power are on strong ground to ask for more this time. Not when both AFL clubs have made profits in the past two years - Adelaide with seven-figure sums - and have record spends in their football departments. By contrast, the SMA has not been posting major returns - and is about to embark on increasing debt to deliver new facilities at the Oval’s Riverbank Stand. This work will ensure the stadium (unlike Football Park) does not fall behind modern arenas, such as the new multi-sports complex being built in Perth and to open next year.

http://www.adelaidenow.com.au/sport...l/news-story/5417cf8552b824de38c1b410ba158a4b

 

[RussellEbertHandball]

Haha and the Rooch must have noted the Wookie's good work. Its $38 not $39 to download from Asic Rooch.

http://www.adelaidenow.com.au/sport...l/news-story/5417cf8552b824de38c1b410ba158a4b
Adelaide’s announcement last week of a cash operating profit of $1.46 million profit - and a statutory loss after depreciation of $1.3 million - has certainly left many confused. Are the Crows doing well or not financially? It is 14 years since the Institute of Chartered Accountants blasted the AFL and its clubs for not being consistent nor transparent with their financial reports.

Today, the annual financial accounts are not only more difficult to interpret, particularly on a club-by-club basis as the 18 clubs use differing processes, but also more difficult to secure for analysis.Crows members are needing to spend $39 with the Australian Securities and Investment Commission - and some do - to get the Adelaide Football Club accounts after being turned away from the club’s front desk at West Lakes. And it is no better at Port Adelaide even though the Power does at least offer some financial paperwork at its members’ meetings at Alberton. Try finding the full financials on the club website.
http://www.adelaidenow.com.au/sport...l/news-story/5417cf8552b824de38c1b410ba158a4b

 

[RussellEbertHandball]

They'll be moving to Uni Oval... Park #10

Uni will be moving to the new grounds opposite Harbour town on Tapley's Hill Rd.

Zakk did you get Park 10 mixed up with Park 2?? Rucci wrote the following on Saturday.

http://www.goldcoastbulletin.com.au...a/news-story/c200c777526722ff941e50db5fb630e2
ANE Lomax-Smith and Anne Moran may find more and more invites from the Adelaide Football Club in their letter boxes. There is growing speculation that the Crows will soon change their home address from West Lakes to Barton Tce West at Moran’s territory in North Adelaide.

This is the site of the Adelaide Aquatic Centre at North Adelaide and Park No. 2 (where the football ground runs inconveniently east-west rather than north-south to mirror the Adelaide Oval).

Despite a long-term lease (at very favourable terms with the SANFL) at Football Park, the Crows are expected to vacate West Lakes to move to the city with a new home on the corner of Barton Tce and Jeffcott St. Of course, closed training sessions will be difficult to arrange in parklands that must remain open — a point that will make guaranteed access to Adelaide Oval for at least one weekly training session an imperative for the Crows in talks with the Oval’s SMA on a new stadium deal. Also interesting will be the prospect of the AFL being asked to contribute $5 million to the Crows’ plans for a new training and administrative block in North Adelaide.
http://www.goldcoastbulletin.com.au...a/news-story/c200c777526722ff941e50db5fb630e2

and this morning the ABC reported

http://www.abc.net.au/news/2017-03-13/adelaide-aquatic-centre-drowning-council-in-debt/8348342
The Adelaide Aquatic Centre may need to close as soon as next month because it operates at a loss and is a poor use of rates, according to one Adelaide City councillor. Councillor Anne Moran told ABC Radio Adelaide the facility lost as much as $700,000 each year and the council could not afford the urgent upgrades the centre requires. She said the State Government abandoned the North Adelaide facility when it built the state aquatic centre at Marion. "We've been left holding the enormous debt-making business when only just under 7 per cent of our ratepayers have used it at least once in a year," she said.
......
The council previously tried to gift the centre to the State Government but Cr Moran said that offer was "laughed off".............. Cr Moran said there had also been a suggestion that the Adelaide Football Club could partner with the council to use the facility but that idea had not gone anywhere. She said only the State Government or private investment could save it. "As I said, the person paying for it is not the person using it and seeing as it is such an important facility to the state, the State Government should take it over," she said........
http://www.abc.net.au/news/2017-03-13/adelaide-aquatic-centre-drowning-council-in-debt/8348342