RussellEbertHandball
Flick pass expert
Ford asked me to gather the stuff I have written on stadium deals and put it into one thread and it can be a bit of a reference source/sticky for stadium deals stuff. I want to expand on that a little in some other posts as SA footy is in for a paradigm shift and it all ties in with the stadium deal we are trying to change as well as what is happening in Victoria at the moment between the AFL + it's clubs and the MCG and Docklands.
This first thread will be long and detailed but the idea is that it is a reference source you can cut and paste or link to when you are having debates about stadiums.
Fundamentally there are two types of stadium deals, clean stadiums and non clean stadiums. A clean deal is where the hirer of the stadium takes a greater share of the risk from the owner by paying a higher up front rent but has access to most of the revenue streams. A non clean deal is where the hirer, takes a lower level of risk and is charged a low or no rent and has access to a limited number of the revenue streams. Late last year I read most of the WA Major Stadia Taskforce’s Feasibility Report into the new WA stadium.
If you want to get a good feel for a new stadium and issues, technical and ownership, governance and financial feasibility then its worth having a look at it. You also will get information on other stadiums around Oz.
Major Stadia Taskforce Publications page link
Worth a read are
1. The Stadium & the City: Volume 1 ie the Main report
2. The Stadium & the City: Volume 2 Section C - Governance and Financial Feasability
The following is a definition of a clean stadium the Taskforce used for the WA stadium and I have put the table that they showed who had access to the venue revenue and expenses. All the quote paragraphs with no reference, comes from the document I linked at point 2 above.
F&B = Food and Beverage
Venue Membership are an important part of the whole stadium financial model. They effect the returns to the stadium owner and the hirer and different membership arrangements affect the different deals.
So given the basic definition between clean and non clean and the potential revenue streams available to the hirer (ie the AFL clubs) lets look at what happens around Oz.
QUEENSLAND
All the major stadiums in Queensland are owned by the government through a trust type set up, the Major Sports Facilities Authority (MSFA), Queensland. It is called Stadium Queensland for short hand. From the WA report
Info on the individual Qld stadiums can found at:
http://www.msfa.qld.gov.au/content/overview.asp?name=MSFA_Home
The Gabba
The Gabba is basically a clean stadium. I remember reading that in 2002 the new Brisbane CEO Michael Bowers had negotiated a pourage rights deal with the Brisbane Cricket Ground Trust.
The Brisbane Cricket Ground Trust has 3,600 members and they have access to all cricket and AFL matches with an additional charge for finals. A little less than 10% of total capacity, which in 2005 increased from 37,000 to 42,000 but in that time the Lions have never had a crowd bigger than 37,000.
The Gabba was redeveloped over several stages between 1994 and 1999 for approx $120mil + the $40mil 2005 redevelopments, all paid for by the Qld government. So if the Lions get a 30,000 crowd it is the Queensland taxpayer who is effectively subsidising the Lions excellent stadium returns because they are transferring the right to earn decent profits on the stadium to the hirers of the ground.
The proposed upgraded Gold Coast Stadium
From this newspaper report.
http://www.goldcoast.com.au/article/2009/03/09/56921_gold-coast-top-story.html
So the AFL will have to find $51mil to build the stadium in the next 24 months which will then be reimbursed by the Queensland government. They might also have have to find another $50mil to finish off the stadium but it looks like there is some help coming from the federal government.
http://www.goldcoast.com.au/article/2009/03/14/59125_gold-coast-top-story.html
In other words the GC team will get a clean stadium subsidized by the state government, the GC Council, probably the federal government and the AFL so they will have an excellent stadium deal.
NEW SOUTH WALES.
The SCG Trust is a government body and Stadium Australia – now ANZ Stadium, is a privately owned stadium, that is a BOOT project, ie build, own, operate and transfer back to the NSW government in 2031 for $1 and be placed into the Sydney Olympic Park Authority (SOPA). All those stadiums at SOP are owned/run by the authority in a similar way to what the MSFA does in Qld.
ANZ Stadium cost $670mil to build, $555mil was from private monies and $115mil from the state government. After the Olympics another $80mil was spent to reconfigure the stadium by the private owners.
http://www.anzstadium.com.au/AboutUs/TheStadium.aspx
However the stadium did so poorly it was sold to ANZ for $10mil in late 2006 and the $140mil they lent the stadium owners was converted to equity and ownership of the stadium now resides in one of ANZ’s infrastructure funds. So effectively $555mil (1999$) + $80mil (2002$) was only worth $150mil in late 2006. See:
Debt sinks Stadium Australia: ANZ to take control for $10m
ANZ Stadium Corporate Structure
So in Sydney the Swans played off the government owned SCG Trust against the struggling Stadium Australia after the AFL committed to pay $1m a year for 5 years to help finance the reconfiguration of the ground. I don’t know what the deal is at each ground for the Swans, but whilst I know they don’t have a clean stadium deals at either ground, they have greater access to revenue streams and lower costs than the standard non clean stadium deals.
A good example of how playing the 2 stadiums off against each other when the lease agreements came due, was that ex test cricketer and CEO of NSW Cricket Association David Gilbert, was able to get an extra $6mil cash over 3 years and improved facilities from the SCG Trust, by threatening to take Test Matches and One Day Internationals to the Olympic Stadium.
Also the fact that ANZ group only have to make a profit on $150mil between 2006 and 2031 before handing back the stadium for $1, means that they have a lot more room to move than the original owners who had to make a profit on $555mil + $80mil over 32 years. If ANZ require a 6% return over 25 years, ie they could have put that in the bank and earned the same amount of interest, then they will only need about $13mil cash profits each year an reinvest them at 6%. The original owners just on the $555mil, @ 6%, needed to generate about $40mil cash profit each year to be no worse off than sticking the money in the bank for 32 years.
So when Sydney draw a crowd of 30,000 they get a good stadium return because at the SCG, the government owned SCG Trust is allowing them to do well and out at ANZ Stadium, the old owners of the stadium who lost around $400mil + $80mil, subsidised them when they signed a deal in desperation to get events to the stadium
This means there is scope for a second Sydney team to get a reasonable stadium deal from ANZ Stadium owners/managers as they don't have to charge an arm and a leg and rugby league is the anchor tenant so they can do deals that require less share of the revenue generated from a western Sydney game ie differential pricing compare to the RL tenants.
However the AFL wants to develop the Sydney Showground stadium, which is about 800m from ANZ Stadium, into a boutique 25,000 seat stadium for the new team for the games that will only draw small crowds. The expected cost for the stadium redevelopment is about $100mil. They are looking for the NSW government to pay for it. If they do they could offer it as a clean stadium, but I suspect they are smart enough, given the current pressure on the NSW budget, to charge a commercial rent for it. Only time will tell what happens here.
The membership set up at the two grounds is as follows.
SCG Trust = SCG + Aussie Stadium (ie Sydney Football Stadium). There are almost 20,000 members for the two grounds combined. Some memberships allow access to both grounds some to just one. Around 12,000 have access to the SCG but its hard to tell how many turn up, because the swans sell memberships that allow access to the SCG Trust members areas.
ANZ Stadium has 11,000 members holding 18,000 memberships.
VICTORIA
Victoria has 3 stadiums, MCG, Docklands and Kardinia Park. All have different set ups but the first two produce a similar result for the clubs when they draw 30,000 crowd but for a different reason.
MCG.
The MCG is owned by a government Trust. The only major assets of the MCG trust is the land the G is built on and surrounding area and the value of the items in the National Sports Museum. The trust carries no debt on its books.
The stadium management is performed by the Melbourne Cricket Club. It is the MCC that took out loans to build the Great Southern Stand and the recent northern stands redevelopment and show it in their accounts as leasehold improvements.
The Great Southern Stand cost about $150mil in 1991 and was paid for mainly by football people as the MCC gave the AFL a 23,000 members reserve and shiny new offices at the ground. Most of this debt has been paid off.
The AFL members consist of the following set up in 2008
2008 AFL Annual Report - Broadcasting & Commercial Operations section
AFL Membership grew in 2008, reaching a total figure of 49,150. The breakdown of membership included 29,966 full members, 16,924 silver members and 2260 absentee members. Some 41,882 were club support members, representing 8.5 per cent of the total club membership nationally. For a breakdown of the club support see page 41 of the above linked document.
These membership fees in 2009 are;
Full membership $430
Full membership - Adult Country Club Support $325
Silver membership $325 + a one off joining fee of $275
Absentee membership $90
There is an approximate 8 year waiting list for full membership.
In 2008 and 2009 the AFL pays each club $131 for every membership that has that club’s Club support indicated on the membership renewal form. The amount is based on the Victorian Club membership Adult 11 price the AFL sets. The same relevant amounts are transferred for concession and junior memberships by the AFL to the club. Monies paid at the gate of the AFL members reserve, for guest passes, is split between the home team and the AFL’s equilisation income fund.
So whilst Collingwood get approx 9,900 x $131 out of this deal, they arguably could have been getting 9,900 x $375 (average per membership) as income by selling those memberships direct to the club and the rental and match day costs would have been less than the $244 per member difference. So the well supported AFL members clubs are missing out big time.
The MCG has a 22,000 MCC Members Reserve allocated on a first come, first served basis for home and away games but has seat allocations for part of the reserve in the finals. For the GF members can elect to go into a ballot for 11,000 seats and the remaining 11,000 are for walk up full members. In 2006 membership nomination was $55 and the annual membership fee was between $200 and $500.
From the 2008 MCC annual report for the year ended 31st March 2008;
So without the federal and state government capital grants the MCC would have made a $1.1 mil profit in 2008 and a $4.1mil profit in 2007.
The debts of the MCC to redevelop the ground are in their balance sheet.
The MCG redevelopment cost $434mil. The state government chipped in $77mil when the federal government pulled out it’s $90mil proposed contribution because it wanted certain workplace conditions on the site for them to hand over the monies. Grollo constructions and the unions had an agreement the feds didn’t like so no monies were granted. The MCC went out and borrowed $357mil to pay for the redevelopment. . The MCC having 99,000+ members allowed them to go and borrow $357mil for the redevelopment
The deal struck with the AFL was that they would contribute $6mil per year for 32 years and from members funds $29mil for 20 years would be allocated to repayments. The MCC only put up fees by a bit less than $100 per year once the new stands were finished. At a bit more than $500 it’s a great deal and that’s why they have 175,000 on the waiting list.
So football people, via the AFL it's members and it's clubs and fans and MCC members who really want to watch the 40+ games of footy are paying for the redevelopment. As can be see from above the MCC aren’t screwing footy fans as they don't make huge profits without those government grants
So when a crowd of 30,000 turns up, it is the MCC bankers who do well out of the footy people rather than the MCC or the AFL clubs. The clubs don’t get much of the other revenue streams from the MCG. Collingwood were able to get a good deal because they have the numbers and were able to negotiate better facilities for their corporates. Maybe the MCC members need to pay a little more if the AFL clubs are going to do better out of the MCC
Let’s look at an extreme example of why a club could do really poorly out of the MCG yet get 40,000 people to a game.
The thing that Vic fans have to remember is that crowd numbers mean almost nothing in terms of a clubs viability. Look at the MCG, you could get a crowd of 40,000 to a game. 10,000 could be MCC members, 10,000 could be AFL members, 18,000 could be the home team fans who have a membership and 2,000 could be opposition fans. That means only the gate takings from the 2,000 fans would be collected to offset costs. That would mean the home club more than likely writing a cheque to the MCC. It's a bit of an extreme example but it shows the point of why clubs wont make any money on match days, just because they have decent crowds. The AFL finally woke up a couple of years ago that stadium returns, gross or net are what really counts. But James Brayshaw hasn't. He asked why can North Melbourne average almost 40,000 at the MCG and Brisbane 26,000 at the Gabba and there be such a discrepancy in stadium returns? That above example makes it pretty clear that crowd numbers are pretty irrelevant if the mix of paying vs non paying attendees isn't right and you have a clean vs non clean stadium deal.
I just heard Stephen Gough from the MCC, on the radio say that they take 15% of the gross gate takings on game day. I assume that doesn’t include game day costs and that would come out of the clubs other 85% share, but I don't know for sure.
DOCKLANDS
Docklands cost $430mil to build. The AFL stuck in $30 mil after ex AFL commissioner and current ACCC Chairman Graeme Samuel engineered a brilliant financial package for the AFL. The deal was struck in late 1999 and the monies had to be paid in late 2000.
It is a BOOT project, build, own, operate then transfer. A lot of money was lost by the owners and operators in the first few years. It started making a profit in 2005, then in January 2006 Ch 7 bought everybody else out and on 21 June 2006 it sold the stadium to a James Fielding Funds Management for $330mil. The infrastructure fund / superfund has to run it and maintain it until 2025 and then hand it over to the AFL for $1. If the superfund invested $330mil at 6% compound interest and paid no tax, which is a possibility for superfunds given their investment mix and franking credits earned, they would turn that amount into $998mil by 2025. So they have to make decent cash profits of about $30mil per year and then invest those cash profits at 6% compound or more to be ahead at the end of 2025. A tough ask!! But the original owners of the Docklands and Ch 7 lost $70mil of capital value plus it is estimated close to $200mil of pre tax operating losses in 6 years up to June 2006. The AFL didn’t lose it’s $30mil. It has basically paid for the land.
Seven and James Fielding secure agreement on Telstra Dome
Who pays for this? Mainly footy supporters as they are the biggest users of the ground. That's why breakeven crowd is around 30,000 at TD compared to 15,000 at Waverley Park. That's why the Western Bulldogs and North can't make any money out of the TD and St Kilda couldn't until they got their crowds up over 35,000.
I have read on the main board that Docklands break even is 15,000 and they rip the clubs off. That’s rubbish as the break even for a BOOT project is what they could have done if they stuck the money in a bank account. They have to hand the stadium back for $1. They can’t make a capital gain or sell it like the AFL did with Waverley Park for $100mil. It's a depreciating asset.
Another important part of the financing of Docklands is the 5,000 members in the Medallion club. The first 5 years if people wanted their own video seat they paid $5,000 joining fee plus $400 per month for 60 months. If you didn't want a video seat you paid $2,500 joining fee plus $350 per month for 60 months.
The second lot of 5 year memberships that go until March 2010, cost $325 per month for 60 months.
For this, each year you get 40+ games at Docklands plus 40+ games at MCG plus finals games tickets in weeks 1 and 2 and rights for PF and GF tickets as well as a 50% discount to cricket at the MCG plus free admission to any other sporting event at the stadium.
Then there are 3,000 Axcess One members that started at $499 per year which is now called Axcess One Premium and costs about $2,800 per year with a $500 joining fee and you have Axcess One memberships which costs $990 per year.
So when a crowd of 30,000 turns up, it is the Dockland Owners who do well out of the footy people rather than the AFL clubs. The clubs don’t get much of the other revenue streams from the Docklands. Essendon were able to get a good deal because they have the numbers and became they were the anchor tenants. However they would do a lot better in terms of membership income and gate takings if they played at the MCG. However the part of the deal that they don’t reveal is how better off their corporate facilities deal is than the other clubs who call the stadium their home.
The clubs at Docklands were sold a pup and they were stupid enough to fall for the deals. Yes the AFL initial deal with 35 games meant that some clubs were forced to play some home games, but the clubs were seduced by a shiny new stadium and didn’t do the hard number crunching.
It's nice to have 2 shiny new stadiums in Melbourne. But someone has to pay for them. That someone is the footy clubs and their fans as they are the biggest users. The AFL signing long term 40 year deals at the MCG and 25 year deals at Docklands have stuffed things up for the Vic clubs.
As I’m writing this I heard a grab from Eddie saying this Vic stadium deal problem is the AFL’s fault for signing a 40 year deal in 1992 with giving too much away as well as the long term deal at Docklands. Hallelujah, somebody has finally told the AFL it stuffed things up.
As i wrote the other day the AFL has a ****ed record when it comes to stadium deals going back to 1992 and the MCG negotiations for the Great Southern Stand. They could not sign up fast enough in 1991 to lock in 40 years of at least one final in each of the first 3 weeks and all GFs at the G. They just didn't care about non Vic teams getting the moral right to host finals. Introducing a second PF let them get away with their stupidity for another 8 or 9 years.
And now the MCG is suggesting 10 more years of GFs locked into the MCG as a trade off for a better deal.
Add in the Docklands 25 year deal and the dopy Gabba redevelopment contract whereby they guaranteed the Qld government they would pay a 100% of the construction costs as a penalty if a second team was entered into SE Qld before 2015 and didn't play all it's games at the Gabba. They didn't even have a clause that scaled down the penalty between 2005 and 2015.
The AFL had been blaming the clubs until for poor stadium returns, but for the last 2 or 3 years, it has finally woken up and realised the clubs were correct and that stadium returns, gross and net, is a critical issue for clubs viability.
Edit Footy stats diary page that has 7 years of news article on Docklands stadium.
http://footystats.freeservers.com/Footystats/Docklands-grass.html
KARDINIA PARK
This is probably the best set up that most of the Vic clubs and Port wished they had. Government monies have allowed this to become the most profitable stadium in Victoria. It’s a clean stadium because the City of Geelong own the stadium but charge Geelong a small rent.
City of Greater Geelong - Stadium Management
Geelong made a hard slog of it over the years building some basic but very functional facilities. I’ve been there a couple of times in the 1990’s and it was a mud heap when it rained and my nephew reminds of how bad it was even up to a few years ago. As far as I know it’s basically a clean deal with no stadium members, ie the crowd is basically full of members of the Geelong Football Club.
However, they have had government subsidies that have helped set them up with the building of the Hickey Stand on the eastern wing and further subsidies with the new Grandstand.
This page is no longer up but I saved it and shows clearly the assistance Geelong have received.
And this is how the new Grandstand will be funded
So when Geelong get 24,000 at Kardinia Park they do well out of it because they did the hard yards over the years and built up their stadium, but they also have been subsidised by 3 different government bodies. This will continue to be the case because they will do even better once the new stand is finished and they get 30,000 and can charge their corporates more and a bigger premium for these new seats.
WESTERN AUSTRALIA
Subiaco Oval
The WAFL never owned Subiaco Oval it was leased from Subiaco Council. When the WAFC was formed in 1983, after the WA government funded The Mitchell Inquiry and it recomended setting up the WAFC totook over the running of all aspects of footy in WA. Then around 1993/94/95 the WA government stepped in to sort out the financial mess WA footy was in because of the private debts associated with setting up the West Coast as a private company. Also the government decided to lend the WAFC monies to develop Subiaco. The WA government paid off a large chunk of the debt after the Labor party promised they would after an election early this decade, I think 2004.
So given the WAFC is effectively a quasi WA government body as they appoint the WAFC commissioners, has funded a large chunk of the Subi Oval redevelopment, little debt is associated with the stadium, it has offered the two clubs a clean stadium with high match day rents but access to most revenue streams. Because the oval is smaller than WCE requirements and close to capacity for Freo, and there is no stadium members, only several hundred Subiaco Football Club members who get access to tickets, the two WA clubs have the incentive to really maximize the revenue they can generate from hiring the oval off the WAFC.
Also as the WAFC are this quasi government organisation, they have been prepared to help Freo out to get it’s act together without any perceived conflicts of interest as you get with the SANFL and the 2 SA clubs.
The WAFC helped out Freo by also suspending their licence royalty fee. They let Freo retain 100% of their profits in the following years
That's a suspension of $2,800,000+ in licence fees over these 4 years. And between 1999 and 2002 they made 4 losses totalling $5mil and didn't pay $1 in licence fee in that 4 years so for 8 years Freo paid no licence fee between 1999-2006.
The difference in rent and licence fee according to the WAFC 2007 and 2006 annual report was;
Rent ---2008-----2007-- ---2006-- --2005--
WCE 3,122,983 3,051,000 2,972,500 2,900,000
FFC- 3,148,901 3,051,000 2,500,000 2,250,000
Licence fee –2008----2007 ----2006-- --2005
WCE--- 1,701,472 2,766,450 2,516,578 2,297,764
FFC------ 799,906 --519,454 --------0 --------0
So when the 2 WA clubs draw a crowd of 30,000 the WA taxpayer has helped subsidise this because their funding helped set up a clean stadium as a result of setting up an independent WAFC, helping get the West Coast and WA footy out of the mess of the early private company set up of the WCE and their debt problems, sureing up Subiaco Oval by taking out the loan for the redevelopment and then paying off a large chunk of that loan. The massive earning capacity of the West Coast has added to that by sureing up Subiaco, along with the shortage of seats and the ability to charge high premiums for seats. The booming WA economy has helped as well but it is the clean stadium deal that lies at this success.
If either of the top 2 recommendations of the WA Major Stadia Taskforce are taken up it will be the WA taxpayers who provide a great stadium deal to subsidise the great returns expected to be earned by the 2 WA clubs. The $821mil East Perth option sees the government trust only make annual profits of $3.8mil after 5 years and the Kitchener Park option costs $849mil with the government trust only make annual profits of $1.9mil after 5 years. There is no way the private sector or the WAFC would accept those returns on such a big project so a taxpayer subsidised clean stadium would provide great returns for the WA clubs
.
Here is some more details from the Major Stadia Taskforce and a new stadium and the WAFC and current Subiaco Oval position. I think this should be seriously considered especially if the SA government is going to put $100mil+ into a stadium owned by a private organisation.
SOUTH AUSTRALIA
Football Park
Was constructed between 1971 and 1974 for a cost of $6.6mil and the land cost $48,538 in 1971 to buy. This is the SANFL’s golden goose which gave it financial independence after leaving Adelaide Oval. It was the biggest difference between the WAFL and SANFL for the dozen years between 1974 and 1986.
The capacity of 51,515 and with approximately 19,500 members of Footy Park, it is the biggest ground membership reserve as a percentage of total seats available of any of the stadium owners/operators. If you add the MCC reserve and AFL reserve together then percentage wise they are bigger.
The clubs have limited access to corporate revenues as well as advertising revenues. I thought they had no access to catering revenue and parking revenue but Haysman said something which said if they don’t get it directly it is part of the overall rent/match day cost formula. They have the standard gate takings arrangement and match day costs as most other non clean stadium. There was only $17mil of debt associated with the stadium as at 31/10/07.
The 27,000 break even figure you hear about is an approximation figure and its not one set in concrete. When I spoke to our ex Finance manager David Bartlett he wouldn’t tell me what the figures were but he said they were made up of 3 components;
1. A fixed amount plus
2. A variable amount which was driven by attendances plus
3. A charge for each seat in the northern stand.
I think this covered both rent and match day costs. As the northern stand has now been paid off I assume this component has either been eliminated or been absorbed into the other 2 costs. Previously each one of the 6,000 crows members who sat in the northern stand contributed $100 per season ticket to that rent component. Our members who bought a membership in the stand were charged $100 and any game day tickets in the northern stand were charged a rental fee.
The fixed component would cover fixed overheads associated with the stadium and probably also has a minimum crowd component for the catering income and maybe parking income. The variable component allows for things like staff Sunday penalty rates to be charged.
So when a crowd of 30,000 turns up, it is the Football Park owners, ie the SANFL who do well out of the footy people rather than the AFL clubs.
The SANFL never received any SA government monies until it constructed the northern stands. Since then it has received the following
2001- 2005 $828,000 x 5 annual grants for the northern grandstand.
2006 $6,624,000 for the northern grandstand final repayment + a $5,500,000 video screen and security grant.
2007 $9,000,000 capital expenditure grant to help pay for $4mil projects to provide new facilities for St Johns, additional bars and kiosks and storage facilities and $5mil for the new lighting system.
From the premier’s mid year economic review in Dec 2008.
Originally it was planned for $100 million over three years, commencing in 2009-10 to assist with the substantial upgrading of AAMI stadium – the only stadium solution supported by the SANFL, the AFL and our two AFL clubs. It was going to be $60mil in 2009-10 and $20mil in each of the next 2 years. Supposedly this has now been pushed out to 2012-13 to start.
So it would be fair to say that in the following years these were the biggest single contributors to Footy Park
1974-1990 Port Adelaide probably contributed at least 35% of the revenue
1991-2005 The crows were the single biggest contributor especially during 1991-96.
2006 – 2007 The SA Government
2008 The Crows
2009 The SA Government
2010-2012 The Crows
2013-2015 The SA government
So given that the governments have effectively helped subside excellent stadium returns for 30,000 crowds at the Gabba, the SCG, Kardinia Park and Subi Oval and the proposed new WA stadium if they follow the taskforce’s recommendation, the question has to be asked who should this government subsidy in SA benefit most, the 2 AFL clubs who generate the revenue or the private owners of the stadium, ie the SANFL and it’s 9 clubs.
As I hope you can see it’s a complicated set up around the country and these stadium deals will be the difference between prospering to bigger and better things or struggling along. As you can see you aren’t neccesarily comparing apples with apples when you compare 2 stadiums.
I have no problems if private owners make a decent return out of footy clubs. They are there to make a profit. But when government monies are involved then what’s the point of ripping the clubs off so that a government trust makes a s**t load of money?
But you have to balance that up in the MCG’s case and say that if they have gone out and borrowed $357mil they have to be able to make their debt and interest repayments.
But the SANFL is a football organisation it has to balance up what is best for the whole football community in this state. And now that government subsidies are thrown in there it would be foolish not to make sure a fair and equitable deal isn’t done for both Port and the crows as they are the generator of the real revenue associated with the stadium.
Football tourism of interstate visitors coming to watch the footy in SA means the 2 AFL clubs, not the 9 SANFL clubs so if the government wants this to continue it has to ensure a fair deal happens for both AFL clubs.
You can't just change these deals overnight because not only have the SANFL clubs been dependant on the revenue generated by Footy Park, but so has all footy development programs across all levels in SA benefited.
It's now a changed environment and its time to tweak the deal. But it doesn't happen overnight because there are massive implications down the food chain which can't be dismissed off hand.
The Ernest and Young report they are putting together for the SANFL is going to make for some interesting reading in 4 to 6 weeks time when it is finished.
As we see from the s**t fight in Victoria at the moment with the MCG and Docklands, things will change in the next 12 to 24 months.
Who was it that said that we live in interesting times.
And that’s before we even look at the SANFL-AFL fight for control of the development levels of footy below the AFL competition.
This first thread will be long and detailed but the idea is that it is a reference source you can cut and paste or link to when you are having debates about stadiums.
Fundamentally there are two types of stadium deals, clean stadiums and non clean stadiums. A clean deal is where the hirer of the stadium takes a greater share of the risk from the owner by paying a higher up front rent but has access to most of the revenue streams. A non clean deal is where the hirer, takes a lower level of risk and is charged a low or no rent and has access to a limited number of the revenue streams. Late last year I read most of the WA Major Stadia Taskforce’s Feasibility Report into the new WA stadium.
If you want to get a good feel for a new stadium and issues, technical and ownership, governance and financial feasibility then its worth having a look at it. You also will get information on other stadiums around Oz.
Major Stadia Taskforce Publications page link
Worth a read are
1. The Stadium & the City: Volume 1 ie the Main report
2. The Stadium & the City: Volume 2 Section C - Governance and Financial Feasability
The following is a definition of a clean stadium the Taskforce used for the WA stadium and I have put the table that they showed who had access to the venue revenue and expenses. All the quote paragraphs with no reference, comes from the document I linked at point 2 above.
Definition of “Clean” Stadium
………the individual sporting codes have suggested that a “clean” stadium model would be the preferred solution for all sports. As highlighted earlier, from a financial perspective the venue owner has to recoup the foregone venue membership revenue by charging higher fixed rents, increase its share of other revenue sources in hiring arrangements, or a combination of both.
The definition of “clean” stadium presented in Table 22 has been assumed for the purpose of this study.
Table 22: Definition of “Clean” Stadium
• The venue is provided to hirers free of any seating and membership restrictions, i.e. the venue will be provided to hirers as a 60,000 seat stadium including all corporate facilities, excluding those required for the owner and major sponsors, such as a naming rights sponsor;
• The owner has the right to the sell the naming rights for the venue / and or individual grandstands with all revenue retained by the owner (refer to Section C 2.3 for further detail on naming rights);
• The owner has the right to sell pourage rights and retain the revenue associated with these rights and will provide access rights for an alternative sponsor supplier to minimize potential conflicts with hirers;
• The owner has the right to undertake or sell catering rights and retain the associated revenue;
• The owner may negotiate to share some of the revenue associated with naming, catering and pourage rights with venue hirers (on a case by case basis) as part of the overall stadium hire arrangement;
• Revenue from signage that is visible to TV cameras flows to the hirer whereas signage revenue generated from sections of the venue that is not visible to TV cameras (e.g. stadium exterior or concourse level) of the venue remains with the owner; and
• Revenue from TV and other broadcast rights are retained by the venue hirers with any access / installation costs to be borne by the hirer.
Potential Sources of Revenues / Costs associated with Major Venue Operations
F&B = Food and Beverage
Similarly, the owner and hirers face a range of costs associated with owning and operating / hiring the venue. Table 1, above, provides an overview of the different revenue and cost sources associated with major venue operations and the general allocation of such items between the venue owner and hirer.
While there are some generally accepted industry benchmarks for rental levels and cost apportionment, such as a 15% rental plus venue related event costs, it is rare that any rental arrangement is this simplistic and will depend on the facilities available to the hirer to sell, the size of the venue, and the competition between venues. Ultimately the revenue share between the hirer and the owner is the outcome of negotiations, where the deal may be made in a number of different ways to provide return and risk and incentive for both parties, recognising that rather than an owner and hirer relationship this is actually a partnership.
Venue Membership are an important part of the whole stadium financial model. They effect the returns to the stadium owner and the hirer and different membership arrangements affect the different deals.
Given the fixed nature of venue ownership costs the preferred position of the venue owner is to secure revenue streams with a smaller degree of volatility and, in turn, greater certainty.
Venue memberships have traditionally provided a significant revenue stream for the venue owner with all major stadia across Australia having some form of venue memberships in place, with the exception of Subiaco Oval.Venue memberships are a popular product for major multi-sport venues, as they provide access for all events, and are highly sought after by both sporting fans and those who particularly want to attend the major events with access to the best possible seats and additional facilities and services. Membership packages typically appeal to middle to high income sports fans and corporate clients, who choose the informal atmosphere that a membership offers, with the option for dining if desired, rather than the more formal atmosphere of the corporate suite.
In Australia, about 10% to 20% of seats are allocated to memberships, and in all stadia, venue owners have had to manage issues with individual hirers to protect the rights of their members, both in terms of the perceived competition of the membership program with other programs they may offer and other issues such as empty seats in prime areas when members do not attend events. This is particularly the case in sold out events.
So given the basic definition between clean and non clean and the potential revenue streams available to the hirer (ie the AFL clubs) lets look at what happens around Oz.
QUEENSLAND
All the major stadiums in Queensland are owned by the government through a trust type set up, the Major Sports Facilities Authority (MSFA), Queensland. It is called Stadium Queensland for short hand. From the WA report
The Queensland Government has adopted an alternative model and established the MSFA to manage and promote the use of the State’s major sports, recreation and leisure facilities. The MSFA oversees a range of major sports and entertainment venues throughout Queensland, some of which it manages in house and others it manages by way of contract management.
The consolidation of the oversight role of Government funded venues into a single body such as the MSFA, ensures the management and operation of such venues is undertaken in a coordinated and consistently professional manner from a whole-of-government, whole-of-community perspective.
For example, a single oversight body will ensure that Government funded and owned venues do not compete with each other “against the public interest” to secure major national and international events. In addition, such a model provides the opportunities for economies of operation, both from an ownership and management perspective.
Table 10: MSFA Major Venues
Venue Management Arrangements
• The Brisbane Cricket Ground (Gabba) • Staff appointed directly by the Trust
• Suncorp Stadium • Contracted to a professional venue management company
• Dairy Farmer’s Stadium Townsville • Staff appointed directly by the Trust
• Brisbane Entertainment Centre • Contracted to a professional venue management company
• Queensland Sports & Athletic Centre • Staff appointed directly by the Trust
• The Sleeman (Aquatic) Centre • Staff appointed directly by the Trust
• Gold Coast Stadium • Staff appointed directly by the Trust
Info on the individual Qld stadiums can found at:
http://www.msfa.qld.gov.au/content/overview.asp?name=MSFA_Home
The Gabba
The Gabba is basically a clean stadium. I remember reading that in 2002 the new Brisbane CEO Michael Bowers had negotiated a pourage rights deal with the Brisbane Cricket Ground Trust.
The Brisbane Cricket Ground Trust has 3,600 members and they have access to all cricket and AFL matches with an additional charge for finals. A little less than 10% of total capacity, which in 2005 increased from 37,000 to 42,000 but in that time the Lions have never had a crowd bigger than 37,000.
Table 21: Types of Membership Packages offered for Events at the Gabba in 2006
Issuer Price of Premium Membership
Hirer Brisbane Lions $257 - $433
Trust The Gabba Trust $990 joining fee + $490 p.a.
The Gabba was redeveloped over several stages between 1994 and 1999 for approx $120mil + the $40mil 2005 redevelopments, all paid for by the Qld government. So if the Lions get a 30,000 crowd it is the Queensland taxpayer who is effectively subsidising the Lions excellent stadium returns because they are transferring the right to earn decent profits on the stadium to the hirers of the ground.
The proposed upgraded Gold Coast Stadium
From this newspaper report.
http://www.goldcoast.com.au/article/2009/03/09/56921_gold-coast-top-story.html
The state's $60million funding builds on the Gold Coast City Council's pledge of $20million, but is contingent on the AFL securing the shortfall of $50million from either its own funds or the Federal Government.
<snip>
Against the backdrop of the global financial crisis and a crippled state budget, Ms Bligh has engineered a funding model that will cost the state just $9million in its first two years and will see the AFL carrying most of the upfront construction costs.
The state will pay just $2million next financial year, $7million in 2001-12 and $51million the following year, `when the economic situation should be better'.
``We could not have got this deal over the line if the AFL had not been prepared to structure the financing in a way that fitted our finances, but equally our commitment gives the AFL certainty on which to proceed,'' said Ms Bligh.
``In return we expect the AFL to start construction within months (of the first funding allocation).''
So the AFL will have to find $51mil to build the stadium in the next 24 months which will then be reimbursed by the Queensland government. They might also have have to find another $50mil to finish off the stadium but it looks like there is some help coming from the federal government.
http://www.goldcoast.com.au/article/2009/03/14/59125_gold-coast-top-story.html
Federal Infrastructure Minister Anthony Albanese stopped by The Bulletin office yesterday to say it would almost certainly part-fund the project -- virtually securing the Gold Coast an AFL licence.
"The council has asked for $40 million and we've had discussions with them and the AFL," he said.
"Each application is being checked by outside auditors to make sure it complies with the guidelines but it appears that this is precisely the sort of project that we are looking to support."
In other words the GC team will get a clean stadium subsidized by the state government, the GC Council, probably the federal government and the AFL so they will have an excellent stadium deal.
NEW SOUTH WALES.
The SCG Trust is a government body and Stadium Australia – now ANZ Stadium, is a privately owned stadium, that is a BOOT project, ie build, own, operate and transfer back to the NSW government in 2031 for $1 and be placed into the Sydney Olympic Park Authority (SOPA). All those stadiums at SOP are owned/run by the authority in a similar way to what the MSFA does in Qld.
Table 15: SOPA Major Venues
Venue Management Arrangements
• Telstra Stadium • Contracted to professional venue management company
• Acer Arena (previously Superdome) • Contracted to professional venue management company
• Aquatic & Athletic Centres • Previously contracted to SCG Trust, now SOPA, pending a redevelopment
• Golf Centre • Private Lease
• Sports Centre • State Government
• Sydney International Tennis Centre • Tennis NSW
• Sydney Showground • Royal Agricultural Society
• Waterview Convention Centre • Private Lease
ANZ Stadium cost $670mil to build, $555mil was from private monies and $115mil from the state government. After the Olympics another $80mil was spent to reconfigure the stadium by the private owners.
http://www.anzstadium.com.au/AboutUs/TheStadium.aspx
However the stadium did so poorly it was sold to ANZ for $10mil in late 2006 and the $140mil they lent the stadium owners was converted to equity and ownership of the stadium now resides in one of ANZ’s infrastructure funds. So effectively $555mil (1999$) + $80mil (2002$) was only worth $150mil in late 2006. See:
Debt sinks Stadium Australia: ANZ to take control for $10m
ANZ Stadium Corporate Structure
So in Sydney the Swans played off the government owned SCG Trust against the struggling Stadium Australia after the AFL committed to pay $1m a year for 5 years to help finance the reconfiguration of the ground. I don’t know what the deal is at each ground for the Swans, but whilst I know they don’t have a clean stadium deals at either ground, they have greater access to revenue streams and lower costs than the standard non clean stadium deals.
A good example of how playing the 2 stadiums off against each other when the lease agreements came due, was that ex test cricketer and CEO of NSW Cricket Association David Gilbert, was able to get an extra $6mil cash over 3 years and improved facilities from the SCG Trust, by threatening to take Test Matches and One Day Internationals to the Olympic Stadium.
Also the fact that ANZ group only have to make a profit on $150mil between 2006 and 2031 before handing back the stadium for $1, means that they have a lot more room to move than the original owners who had to make a profit on $555mil + $80mil over 32 years. If ANZ require a 6% return over 25 years, ie they could have put that in the bank and earned the same amount of interest, then they will only need about $13mil cash profits each year an reinvest them at 6%. The original owners just on the $555mil, @ 6%, needed to generate about $40mil cash profit each year to be no worse off than sticking the money in the bank for 32 years.
So when Sydney draw a crowd of 30,000 they get a good stadium return because at the SCG, the government owned SCG Trust is allowing them to do well and out at ANZ Stadium, the old owners of the stadium who lost around $400mil + $80mil, subsidised them when they signed a deal in desperation to get events to the stadium
This means there is scope for a second Sydney team to get a reasonable stadium deal from ANZ Stadium owners/managers as they don't have to charge an arm and a leg and rugby league is the anchor tenant so they can do deals that require less share of the revenue generated from a western Sydney game ie differential pricing compare to the RL tenants.
However the AFL wants to develop the Sydney Showground stadium, which is about 800m from ANZ Stadium, into a boutique 25,000 seat stadium for the new team for the games that will only draw small crowds. The expected cost for the stadium redevelopment is about $100mil. They are looking for the NSW government to pay for it. If they do they could offer it as a clean stadium, but I suspect they are smart enough, given the current pressure on the NSW budget, to charge a commercial rent for it. Only time will tell what happens here.
The membership set up at the two grounds is as follows.
SCG Trust = SCG + Aussie Stadium (ie Sydney Football Stadium). There are almost 20,000 members for the two grounds combined. Some memberships allow access to both grounds some to just one. Around 12,000 have access to the SCG but its hard to tell how many turn up, because the swans sell memberships that allow access to the SCG Trust members areas.
Type 1 – SCG Membership: Memberships are life memberships. SCG has a 10 year waitlist. SCG joining fee approx. $1,100 plus annual subscription fee of $260 for pensioners to $1,180 for corporate memberships. Type 2 – Gold membership: guaranteed access to all sporting events at both venues, stadium fitness centres, access to Member’s dinning room, not transferable Single membership cost $8,000 (in 2006 now $9,000) plus $463 p.a ($560)……..
ANZ Stadium has 11,000 members holding 18,000 memberships.
Gold: guaranteed seat to every sporting event to 2030 and right to purchase tickets at special events, 17,200 memberships available cost $5,000 upfront (now $5,999 upfront or $1,399 + 12 x $400 or you can buy them on e-bay if people want to sell them) and annual subscription fee of $539 (2005) guaranteed seat until 2030. Platinum: 600 double memberships, all sold out (last 2 sold for $65,000) X seats 800-1000 seats leased until December 2013 costing $12,500 plus annual licence fee for each successive year ($1,654 in 2006)
VICTORIA
Victoria has 3 stadiums, MCG, Docklands and Kardinia Park. All have different set ups but the first two produce a similar result for the clubs when they draw 30,000 crowd but for a different reason.
MCG.
The MCG is owned by a government Trust. The only major assets of the MCG trust is the land the G is built on and surrounding area and the value of the items in the National Sports Museum. The trust carries no debt on its books.
The Board of the MCG Trust currently consists of nine members who are independent from any sport which is a tenant of the MCG and who manage the venue on behalf of the Government.
The stadium management is performed by the Melbourne Cricket Club. It is the MCC that took out loans to build the Great Southern Stand and the recent northern stands redevelopment and show it in their accounts as leasehold improvements.
The Great Southern Stand cost about $150mil in 1991 and was paid for mainly by football people as the MCC gave the AFL a 23,000 members reserve and shiny new offices at the ground. Most of this debt has been paid off.
The AFL members consist of the following set up in 2008
2008 AFL Annual Report - Broadcasting & Commercial Operations section
AFL Membership grew in 2008, reaching a total figure of 49,150. The breakdown of membership included 29,966 full members, 16,924 silver members and 2260 absentee members. Some 41,882 were club support members, representing 8.5 per cent of the total club membership nationally. For a breakdown of the club support see page 41 of the above linked document.
These membership fees in 2009 are;
Full membership $430
Full membership - Adult Country Club Support $325
Silver membership $325 + a one off joining fee of $275
Absentee membership $90
There is an approximate 8 year waiting list for full membership.
In 2008 and 2009 the AFL pays each club $131 for every membership that has that club’s Club support indicated on the membership renewal form. The amount is based on the Victorian Club membership Adult 11 price the AFL sets. The same relevant amounts are transferred for concession and junior memberships by the AFL to the club. Monies paid at the gate of the AFL members reserve, for guest passes, is split between the home team and the AFL’s equilisation income fund.
So whilst Collingwood get approx 9,900 x $131 out of this deal, they arguably could have been getting 9,900 x $375 (average per membership) as income by selling those memberships direct to the club and the rental and match day costs would have been less than the $244 per member difference. So the well supported AFL members clubs are missing out big time.
The MCG has a 22,000 MCC Members Reserve allocated on a first come, first served basis for home and away games but has seat allocations for part of the reserve in the finals. For the GF members can elect to go into a ballot for 11,000 seats and the remaining 11,000 are for walk up full members. In 2006 membership nomination was $55 and the annual membership fee was between $200 and $500.
From the 2008 MCC annual report for the year ended 31st March 2008;
Members by category at August 31 2007
Full ................................60,300
Restricted .......................39,500
TOTAL.............................99,800
Waiting List....................175,000
________________________ 2008 __ 2007
TOTAL INCOME ($’000)___ 115,168 135,716
NET PROFIT of MCC ($’000) 11,196 27,696
Total of other income included in above was ($'000) 17,179 45,759
Prior year contributions of $15.000 million received from the Federal Government for the NSM, and $8.500 million received from the State of Victoria for the Southern Concourse upgrade ($3.500 million) and heritage projects at the MCG ($5.000 million), compared with $10.000 million received from the Federal Government for the National Sporting Museum in the current year.
So without the federal and state government capital grants the MCC would have made a $1.1 mil profit in 2008 and a $4.1mil profit in 2007.
The debts of the MCC to redevelop the ground are in their balance sheet.
Interest bearing loans and borrowings__ 2008__ 2007
Current Liabilities ($’000 )_________9,629 17,626
Non- Current Liabilities ($’000 )__ 318,518 327,983
The MCG redevelopment cost $434mil. The state government chipped in $77mil when the federal government pulled out it’s $90mil proposed contribution because it wanted certain workplace conditions on the site for them to hand over the monies. Grollo constructions and the unions had an agreement the feds didn’t like so no monies were granted. The MCC went out and borrowed $357mil to pay for the redevelopment. . The MCC having 99,000+ members allowed them to go and borrow $357mil for the redevelopment
The deal struck with the AFL was that they would contribute $6mil per year for 32 years and from members funds $29mil for 20 years would be allocated to repayments. The MCC only put up fees by a bit less than $100 per year once the new stands were finished. At a bit more than $500 it’s a great deal and that’s why they have 175,000 on the waiting list.
So football people, via the AFL it's members and it's clubs and fans and MCC members who really want to watch the 40+ games of footy are paying for the redevelopment. As can be see from above the MCC aren’t screwing footy fans as they don't make huge profits without those government grants
So when a crowd of 30,000 turns up, it is the MCC bankers who do well out of the footy people rather than the MCC or the AFL clubs. The clubs don’t get much of the other revenue streams from the MCG. Collingwood were able to get a good deal because they have the numbers and were able to negotiate better facilities for their corporates. Maybe the MCC members need to pay a little more if the AFL clubs are going to do better out of the MCC
Let’s look at an extreme example of why a club could do really poorly out of the MCG yet get 40,000 people to a game.
The thing that Vic fans have to remember is that crowd numbers mean almost nothing in terms of a clubs viability. Look at the MCG, you could get a crowd of 40,000 to a game. 10,000 could be MCC members, 10,000 could be AFL members, 18,000 could be the home team fans who have a membership and 2,000 could be opposition fans. That means only the gate takings from the 2,000 fans would be collected to offset costs. That would mean the home club more than likely writing a cheque to the MCC. It's a bit of an extreme example but it shows the point of why clubs wont make any money on match days, just because they have decent crowds. The AFL finally woke up a couple of years ago that stadium returns, gross or net are what really counts. But James Brayshaw hasn't. He asked why can North Melbourne average almost 40,000 at the MCG and Brisbane 26,000 at the Gabba and there be such a discrepancy in stadium returns? That above example makes it pretty clear that crowd numbers are pretty irrelevant if the mix of paying vs non paying attendees isn't right and you have a clean vs non clean stadium deal.
I just heard Stephen Gough from the MCC, on the radio say that they take 15% of the gross gate takings on game day. I assume that doesn’t include game day costs and that would come out of the clubs other 85% share, but I don't know for sure.
DOCKLANDS
Docklands cost $430mil to build. The AFL stuck in $30 mil after ex AFL commissioner and current ACCC Chairman Graeme Samuel engineered a brilliant financial package for the AFL. The deal was struck in late 1999 and the monies had to be paid in late 2000.
It is a BOOT project, build, own, operate then transfer. A lot of money was lost by the owners and operators in the first few years. It started making a profit in 2005, then in January 2006 Ch 7 bought everybody else out and on 21 June 2006 it sold the stadium to a James Fielding Funds Management for $330mil. The infrastructure fund / superfund has to run it and maintain it until 2025 and then hand it over to the AFL for $1. If the superfund invested $330mil at 6% compound interest and paid no tax, which is a possibility for superfunds given their investment mix and franking credits earned, they would turn that amount into $998mil by 2025. So they have to make decent cash profits of about $30mil per year and then invest those cash profits at 6% compound or more to be ahead at the end of 2025. A tough ask!! But the original owners of the Docklands and Ch 7 lost $70mil of capital value plus it is estimated close to $200mil of pre tax operating losses in 6 years up to June 2006. The AFL didn’t lose it’s $30mil. It has basically paid for the land.
Seven and James Fielding secure agreement on Telstra Dome
Who pays for this? Mainly footy supporters as they are the biggest users of the ground. That's why breakeven crowd is around 30,000 at TD compared to 15,000 at Waverley Park. That's why the Western Bulldogs and North can't make any money out of the TD and St Kilda couldn't until they got their crowds up over 35,000.
I have read on the main board that Docklands break even is 15,000 and they rip the clubs off. That’s rubbish as the break even for a BOOT project is what they could have done if they stuck the money in a bank account. They have to hand the stadium back for $1. They can’t make a capital gain or sell it like the AFL did with Waverley Park for $100mil. It's a depreciating asset.
Another important part of the financing of Docklands is the 5,000 members in the Medallion club. The first 5 years if people wanted their own video seat they paid $5,000 joining fee plus $400 per month for 60 months. If you didn't want a video seat you paid $2,500 joining fee plus $350 per month for 60 months.
The second lot of 5 year memberships that go until March 2010, cost $325 per month for 60 months.
For this, each year you get 40+ games at Docklands plus 40+ games at MCG plus finals games tickets in weeks 1 and 2 and rights for PF and GF tickets as well as a 50% discount to cricket at the MCG plus free admission to any other sporting event at the stadium.
Then there are 3,000 Axcess One members that started at $499 per year which is now called Axcess One Premium and costs about $2,800 per year with a $500 joining fee and you have Axcess One memberships which costs $990 per year.
So when a crowd of 30,000 turns up, it is the Dockland Owners who do well out of the footy people rather than the AFL clubs. The clubs don’t get much of the other revenue streams from the Docklands. Essendon were able to get a good deal because they have the numbers and became they were the anchor tenants. However they would do a lot better in terms of membership income and gate takings if they played at the MCG. However the part of the deal that they don’t reveal is how better off their corporate facilities deal is than the other clubs who call the stadium their home.
The clubs at Docklands were sold a pup and they were stupid enough to fall for the deals. Yes the AFL initial deal with 35 games meant that some clubs were forced to play some home games, but the clubs were seduced by a shiny new stadium and didn’t do the hard number crunching.
It's nice to have 2 shiny new stadiums in Melbourne. But someone has to pay for them. That someone is the footy clubs and their fans as they are the biggest users. The AFL signing long term 40 year deals at the MCG and 25 year deals at Docklands have stuffed things up for the Vic clubs.
As I’m writing this I heard a grab from Eddie saying this Vic stadium deal problem is the AFL’s fault for signing a 40 year deal in 1992 with giving too much away as well as the long term deal at Docklands. Hallelujah, somebody has finally told the AFL it stuffed things up.
As i wrote the other day the AFL has a ****ed record when it comes to stadium deals going back to 1992 and the MCG negotiations for the Great Southern Stand. They could not sign up fast enough in 1991 to lock in 40 years of at least one final in each of the first 3 weeks and all GFs at the G. They just didn't care about non Vic teams getting the moral right to host finals. Introducing a second PF let them get away with their stupidity for another 8 or 9 years.
And now the MCG is suggesting 10 more years of GFs locked into the MCG as a trade off for a better deal.
Add in the Docklands 25 year deal and the dopy Gabba redevelopment contract whereby they guaranteed the Qld government they would pay a 100% of the construction costs as a penalty if a second team was entered into SE Qld before 2015 and didn't play all it's games at the Gabba. They didn't even have a clause that scaled down the penalty between 2005 and 2015.
The AFL had been blaming the clubs until for poor stadium returns, but for the last 2 or 3 years, it has finally woken up and realised the clubs were correct and that stadium returns, gross and net, is a critical issue for clubs viability.
Edit Footy stats diary page that has 7 years of news article on Docklands stadium.
http://footystats.freeservers.com/Footystats/Docklands-grass.html
KARDINIA PARK
This is probably the best set up that most of the Vic clubs and Port wished they had. Government monies have allowed this to become the most profitable stadium in Victoria. It’s a clean stadium because the City of Geelong own the stadium but charge Geelong a small rent.
City of Greater Geelong - Stadium Management
The City of Greater Geelong is the owner and operator of Skilled Stadium which is located in Kardinia Park, Geelong. The City of Greater Geelong Stadium Management Group is based at Sports House - Skilled Stadium, Moorabool Street Geelong.
Geelong made a hard slog of it over the years building some basic but very functional facilities. I’ve been there a couple of times in the 1990’s and it was a mud heap when it rained and my nephew reminds of how bad it was even up to a few years ago. As far as I know it’s basically a clean deal with no stadium members, ie the crowd is basically full of members of the Geelong Football Club.
However, they have had government subsidies that have helped set them up with the building of the Hickey Stand on the eastern wing and further subsidies with the new Grandstand.
This page is no longer up but I saved it and shows clearly the assistance Geelong have received.
http://www.geelongaustralia.com.au/Media_Releases/April_2005/New_eastern_stand_at_Skilled_Stadium/
New eastern stand at Skilled Stadium
22-Apr-05
The columns supporting the new eastern stand at Skilled Stadium have been dubbed cat’s claws by fans. There is definitely something feline about the striking curved forms which is appropriate at the home ground of the Geelong Cats.
The new stand is the most visible element of a $26 million upgrade to Skilled Stadium. Other improvements include a new gymnasium, new change rooms and umpires’ facilities, a medical suite, a 600 seat corporate function room and a revamped main entrance on the western side of the ground. The entrance has electronic ticketing facilities and a new Cats Shop.
Geelong’s first home game of the 2005 AFL season is the official opening day of the new eastern stand. The Skilled Stadium redevelopment has been a joint project of the Victorian Government, the City of Greater Geelong, Geelong Football Club and the AFL.
Contributions to the Skilled Stadium redevelopment:
Victorian Government (via the
Community Support Fund and the
Regional Infrastructure Development Fund) $13.5 million
City of Greater Geelong $6 million
Geelong Football Club $4.5 million
AFL $2 million
The eastern stand was created by award winning architects Peddle Thorp who are recognised as being amongst the best designers of sporting and stadium projects in the world. Kane Constructions were engaged to build the new stadium.
The stand has 6,000 seats across three tiers and stands 20 metres high.
And this is how the new Grandstand will be funded
http://www.geelongaustralia.com.au/...ion_to_28_million_upgrade_of_Skilled_Stadium/
Council to contribute $2million to $28 million upgrade of Skilled Stadium
11-Dec-07
The City of Greater Geelong will contribute $2 million towards a $28 million upgrade of Skilled Stadium.
Geelong Mayor Cr Bruce Harwood said the City's contribution would assist in the redevelopment of the Ross Drew Stand and provide for the replacement of the turf at the stadium.
Council has agreed to contribute to the upgrade in recognition of the social and economic benefits the upgrade promises to deliver to the wider community, the Mayor said.
While Skilled Stadium is best known as the home of the Geelong Cats it also serves as a venue for a great many other sporting and community uses, and this new redevelopment plan, will further improve community access to the venue.
The funding model represents a good outcome for the community with Council contributing $2 million for the return of a $28 million upgrade to a publicly owned facility, Cr Harwood said.
Contributions for the upgrade are as follows;
Geelong Football Club $3 million
AFL $3 million
Victorian Government $6 million
Federal Government $14 million
City of Greater Geelong $2 million
Total $28 million
Cr Harwood said the construction project would be managed in a similar way to the redevelopment of the Reg Hickey Stand which was completed in May 2005.
The City of Greater Geelong will be represented on a project control group which will comprise all the stakeholders in the project.
Council's Sport and Recreation portfolio holder Cr John Mitchell said the upgrade would provide a new stand to replace the old Ross Drew Stand and the Past Players Stand at the south west corner of Skilled Stadium.
The project will create an additional 3,000 seats, increasing capacity of Skilled Stadium to 30,000. There will be state of the art training, gymnasium and rehabilitation facilities; more spectator facilities for people with a disability; expanded corporate entertainment facilities; improved administration premises and new turf maintenance facilities, Cr Mitchell said.
Cr Mitchell said not only would the upgrade provide increased spectator capacity, it would add to the breadth of sporting infrastructure available in Geelong.
The expansion of the gymnasium facilities will give local high performance athletes more access to top quality training equipment and the replacement of the turf will improve the stadium's capacity to host a large number of events, he said.
In 2007 there were a total of 429 uses scheduled on the playing surface at Skilled Stadium, and although some events had to be relocated because of wet conditions, it's clear that the stadium is a significant venue for events from local to national level.
The replacement of the turf will help the surface withstand this very heavy schedule of events, Cr Mitchell said.
The City will also revise its lease arrangements with the Geelong Football Club to reflect the improved commercial return anticipated through increased gate takings.
So when Geelong get 24,000 at Kardinia Park they do well out of it because they did the hard yards over the years and built up their stadium, but they also have been subsidised by 3 different government bodies. This will continue to be the case because they will do even better once the new stand is finished and they get 30,000 and can charge their corporates more and a bigger premium for these new seats.
WESTERN AUSTRALIA
Subiaco Oval
The WAFL never owned Subiaco Oval it was leased from Subiaco Council. When the WAFC was formed in 1983, after the WA government funded The Mitchell Inquiry and it recomended setting up the WAFC totook over the running of all aspects of footy in WA. Then around 1993/94/95 the WA government stepped in to sort out the financial mess WA footy was in because of the private debts associated with setting up the West Coast as a private company. Also the government decided to lend the WAFC monies to develop Subiaco. The WA government paid off a large chunk of the debt after the Labor party promised they would after an election early this decade, I think 2004.
The WAFC manage Subiaco Oval under a 99-year lease agreement which expires in September 2090
Subiaco Oval
• Crown land with Management Order to City of Subiaco which have leased the venue to the WAFC for 99 years (with 84 years remaining).
• The existing lease and governance arrangements in place over Subiaco Oval which
the then Government provided to the WAFC (at no cost) to assist Football resolve their financial problems at the time;
So given the WAFC is effectively a quasi WA government body as they appoint the WAFC commissioners, has funded a large chunk of the Subi Oval redevelopment, little debt is associated with the stadium, it has offered the two clubs a clean stadium with high match day rents but access to most revenue streams. Because the oval is smaller than WCE requirements and close to capacity for Freo, and there is no stadium members, only several hundred Subiaco Football Club members who get access to tickets, the two WA clubs have the incentive to really maximize the revenue they can generate from hiring the oval off the WAFC.
Also as the WAFC are this quasi government organisation, they have been prepared to help Freo out to get it’s act together without any perceived conflicts of interest as you get with the SANFL and the 2 SA clubs.
Eagles supporters will reap dividend rewards
MARK DUFFIELD
……….
The West Australian understands the new scheme will aim to have both West Coast and Fremantle paying equal rent on Subiaco Oval after two years. The rent figure per club is likely to be about $2.9 million, the figure paid by West Coast last year.
…………
Fremantle's rent ($1.9 million in 2003) would increase substantially next year to around $2.5 million.
Fremantle supports the principle of the new agreement but may ask the WAFC for more time before paying the same rent as the Eagles.
"We are asking to be equal when we are equal," chairman Rick Hart said. "We see that happening in the not too distant future."
…………
July 28, 2004 The West Australian
The WAFC helped out Freo by also suspending their licence royalty fee. They let Freo retain 100% of their profits in the following years
Code:
2003 $711,000
2004 $1,254,000
2005 $1,015,000
2006 $1,261,000
Total $4,241,000
That's a suspension of $2,800,000+ in licence fees over these 4 years. And between 1999 and 2002 they made 4 losses totalling $5mil and didn't pay $1 in licence fee in that 4 years so for 8 years Freo paid no licence fee between 1999-2006.
The difference in rent and licence fee according to the WAFC 2007 and 2006 annual report was;
Rent ---2008-----2007-- ---2006-- --2005--
WCE 3,122,983 3,051,000 2,972,500 2,900,000
FFC- 3,148,901 3,051,000 2,500,000 2,250,000
Licence fee –2008----2007 ----2006-- --2005
WCE--- 1,701,472 2,766,450 2,516,578 2,297,764
FFC------ 799,906 --519,454 --------0 --------0
So when the 2 WA clubs draw a crowd of 30,000 the WA taxpayer has helped subsidise this because their funding helped set up a clean stadium as a result of setting up an independent WAFC, helping get the West Coast and WA footy out of the mess of the early private company set up of the WCE and their debt problems, sureing up Subiaco Oval by taking out the loan for the redevelopment and then paying off a large chunk of that loan. The massive earning capacity of the West Coast has added to that by sureing up Subiaco, along with the shortage of seats and the ability to charge high premiums for seats. The booming WA economy has helped as well but it is the clean stadium deal that lies at this success.
If either of the top 2 recommendations of the WA Major Stadia Taskforce are taken up it will be the WA taxpayers who provide a great stadium deal to subsidise the great returns expected to be earned by the 2 WA clubs. The $821mil East Perth option sees the government trust only make annual profits of $3.8mil after 5 years and the Kitchener Park option costs $849mil with the government trust only make annual profits of $1.9mil after 5 years. There is no way the private sector or the WAFC would accept those returns on such a big project so a taxpayer subsidised clean stadium would provide great returns for the WA clubs
.
Here is some more details from the Major Stadia Taskforce and a new stadium and the WAFC and current Subiaco Oval position. I think this should be seriously considered especially if the SA government is going to put $100mil+ into a stadium owned by a private organisation.
Table 3: Key Elements of the WAFC “All Stadia Management Model”
Key Elements of the WAFC “All Stadia Management Model”
• The proposed governance model applies whether a multi-sport venue or a primarily
single sport venue is developed;
• Subiaco Oval is the preferred location however the proposed governance solution would also be applicable if the stadium is developed at an alternative location;
• The WAFC agree to the establishment of a Trust to oversight the management of the major stadium in accordance with an agreed Constitution, however the WAFC require control of the Trust through majority membership;
• The WAFC require the right, along with other venue hirers, to veto any proposed changes to the Constitution with none of the sporting codes indicating the requirement for veto rights;
• The WAFC be the venue manager for the estimated economic useful life of the new stadium – 20 years with a further option of 20 years (at WAFC’s discretion). The operations of the venue manager to be oversighted by the Trust to ensure compliance with the provisions of the agreed Constitution So in essence under this model the WAFC would oversight their own venue management activities;
• After the expiration of the term of the management rights the ongoing control of the venue reverts to the WAFC under the terms of the lease over Subiaco Oval which expires in 2090;
• The management agreement with the WAFC cannot be effectively terminated for nonperformance as under the WAFC governance model, the management rights to the venue would revert to the WAFC under the terms of the lease;
• The WAFC is to receive a management fee with any profits to be reinvested into the development of football across WA;
• The WAFC to be guaranteed the current levels of revenue generated from Subiaco operations;
• The WCE and FFC to only pay rent on any incremental revenue generated at the new stadium; and
• AFL will be given preferential access to the venue during the AFL season.
Table 4: Key Factors considered by the Taskforce in Response to the WAFCs Proposed Model
• The existing lease and governance arrangements in place over Subiaco Oval which the then Government provided to the WAFC (at no cost) to assist Football resolve their financial problems at the time;
• Football being the anchor tenant of any multi-purpose major stadium but in which other national codes would also be tenants;
• The venue will likely be Government (i.e. taxpayer) funded – in this case the stadium would be included on the Government’s balance sheet which would necessitate it to have governance control;
• The WAFC will be a major benefactor of the new stadium and would therefore be adequately compensated for the early termination of the current lease and management arrangements over Subiaco Oval;
• The stadium is to provide benefits to all sports in WA in general and the wider community;
• The likely conflicts between hirers of the stadium relating to access and pricing;
• The need to protect the Government’s investment in the venue (i.e. asset maintenance and capital replacement over the life of the venue), and
• Greater expertise existing within Government for the planning, design and project
management (a whole-of-Government approach) to major stadia.
SOUTH AUSTRALIA
Football Park
Was constructed between 1971 and 1974 for a cost of $6.6mil and the land cost $48,538 in 1971 to buy. This is the SANFL’s golden goose which gave it financial independence after leaving Adelaide Oval. It was the biggest difference between the WAFL and SANFL for the dozen years between 1974 and 1986.
The capacity of 51,515 and with approximately 19,500 members of Footy Park, it is the biggest ground membership reserve as a percentage of total seats available of any of the stadium owners/operators. If you add the MCC reserve and AFL reserve together then percentage wise they are bigger.
The clubs have limited access to corporate revenues as well as advertising revenues. I thought they had no access to catering revenue and parking revenue but Haysman said something which said if they don’t get it directly it is part of the overall rent/match day cost formula. They have the standard gate takings arrangement and match day costs as most other non clean stadium. There was only $17mil of debt associated with the stadium as at 31/10/07.
The 27,000 break even figure you hear about is an approximation figure and its not one set in concrete. When I spoke to our ex Finance manager David Bartlett he wouldn’t tell me what the figures were but he said they were made up of 3 components;
1. A fixed amount plus
2. A variable amount which was driven by attendances plus
3. A charge for each seat in the northern stand.
I think this covered both rent and match day costs. As the northern stand has now been paid off I assume this component has either been eliminated or been absorbed into the other 2 costs. Previously each one of the 6,000 crows members who sat in the northern stand contributed $100 per season ticket to that rent component. Our members who bought a membership in the stand were charged $100 and any game day tickets in the northern stand were charged a rental fee.
The fixed component would cover fixed overheads associated with the stadium and probably also has a minimum crowd component for the catering income and maybe parking income. The variable component allows for things like staff Sunday penalty rates to be charged.
So when a crowd of 30,000 turns up, it is the Football Park owners, ie the SANFL who do well out of the footy people rather than the AFL clubs.
The SANFL never received any SA government monies until it constructed the northern stands. Since then it has received the following
2001- 2005 $828,000 x 5 annual grants for the northern grandstand.
2006 $6,624,000 for the northern grandstand final repayment + a $5,500,000 video screen and security grant.
2007 $9,000,000 capital expenditure grant to help pay for $4mil projects to provide new facilities for St Johns, additional bars and kiosks and storage facilities and $5mil for the new lighting system.
From the premier’s mid year economic review in Dec 2008.
• The timeline for the Government’s contribution to the AAMI Stadium refurbishment will be extended. The SANFL will be allocated $2.6 million in 2008-09 and a further $10 million in 2009-10 to begin the redevelopment and to substantially upgrade the stadium food, drink, toilet and other patron amenities. The remaining contribution to the stadium refurbishment will be delayed by three years.
Originally it was planned for $100 million over three years, commencing in 2009-10 to assist with the substantial upgrading of AAMI stadium – the only stadium solution supported by the SANFL, the AFL and our two AFL clubs. It was going to be $60mil in 2009-10 and $20mil in each of the next 2 years. Supposedly this has now been pushed out to 2012-13 to start.
So it would be fair to say that in the following years these were the biggest single contributors to Footy Park
1974-1990 Port Adelaide probably contributed at least 35% of the revenue
1991-2005 The crows were the single biggest contributor especially during 1991-96.
2006 – 2007 The SA Government
2008 The Crows
2009 The SA Government
2010-2012 The Crows
2013-2015 The SA government
So given that the governments have effectively helped subside excellent stadium returns for 30,000 crowds at the Gabba, the SCG, Kardinia Park and Subi Oval and the proposed new WA stadium if they follow the taskforce’s recommendation, the question has to be asked who should this government subsidy in SA benefit most, the 2 AFL clubs who generate the revenue or the private owners of the stadium, ie the SANFL and it’s 9 clubs.
As I hope you can see it’s a complicated set up around the country and these stadium deals will be the difference between prospering to bigger and better things or struggling along. As you can see you aren’t neccesarily comparing apples with apples when you compare 2 stadiums.
I have no problems if private owners make a decent return out of footy clubs. They are there to make a profit. But when government monies are involved then what’s the point of ripping the clubs off so that a government trust makes a s**t load of money?
But you have to balance that up in the MCG’s case and say that if they have gone out and borrowed $357mil they have to be able to make their debt and interest repayments.
But the SANFL is a football organisation it has to balance up what is best for the whole football community in this state. And now that government subsidies are thrown in there it would be foolish not to make sure a fair and equitable deal isn’t done for both Port and the crows as they are the generator of the real revenue associated with the stadium.
Football tourism of interstate visitors coming to watch the footy in SA means the 2 AFL clubs, not the 9 SANFL clubs so if the government wants this to continue it has to ensure a fair deal happens for both AFL clubs.
You can't just change these deals overnight because not only have the SANFL clubs been dependant on the revenue generated by Footy Park, but so has all footy development programs across all levels in SA benefited.
It's now a changed environment and its time to tweak the deal. But it doesn't happen overnight because there are massive implications down the food chain which can't be dismissed off hand.
The Ernest and Young report they are putting together for the SANFL is going to make for some interesting reading in 4 to 6 weeks time when it is finished.
As we see from the s**t fight in Victoria at the moment with the MCG and Docklands, things will change in the next 12 to 24 months.
Who was it that said that we live in interesting times.
And that’s before we even look at the SANFL-AFL fight for control of the development levels of footy below the AFL competition.