What does asking the AFL for help cost the clubs other than $interest

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Kwality

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Why are some clubs happy to take help & others fighting hard to avoid it? Exactly what does a club give up versus standing on its own two feet, not just independence.

Carlton seemed to be going meekly: https://www.carltonfc.com.au/news/584787/logiudice-preparing-for-a-number-of-scenarios

Essendon dont want a bar of it: https://www.cessnockadvertiser.com.au/story/6722533/essendon-wont-seek-afl-funds-president/

The media have reported Freo going both ways.

Will the categorising of the clubs, the different treatment of the clubs actually do any harm to the fabric of the game, further entrench the haves & the 'have nots'.

If anyone has seen anything on the detail on this issue, pls contribute.
 

RussellEbertHandball

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The AFL are self confessed control freaks. Asking the AFL for help, means they stick their nose in see nearly everything that is happening at a club, and go further down the Mcdonald's franchise model. Political correctness is one little thing they might impose, but there will be other legal, financial and cost control type things is what they will impose.

Clubs are inherently secretive and independent from HQ animals, and don't want to be like Mcdonald's franchises.
 

Kwality

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The AFL are self confessed control freaks. Asking the AFL for help, means they stick their nose in see nearly everything that is happening at a club, and go further down the Mcdonald's franchise model. Political correctness is one little thing they might impose, but there will be other legal, financial and cost control type things is what they will impose.

Clubs are inherently secretive and independent from HQ animals, and don't want to be like Mcdonald's franchises.
Even an audit can have a positive effect IF you've got the right people.

Will it involve putting someone on site or will the controls be monitored remotely?

Have you seen or heard any detail REH?
 

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RussellEbertHandball

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Even an audit can have a positive effect IF you've got the right people.

Will it involve putting someone on site or will the controls be monitored remotely?

Have you seen or heard any detail REH?
Nobody would have seen anything at the moment as clubs are locked down so unless you are an employee of the club or a board member you wouldn't see anything. Heard anything from these two groups of club officials? Nope.

I know from a Port director that a few weeks ago the AFL told all the clubs not to borrow any new monies until they had sorted out the line of credit as we talked about alternative funding sources. But I haven't spoken to him since the AFL got their line of credit from ANZ and NAB.
 

Kwality

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Nobody would have seen anything at the moment as clubs are locked down so unless you are an employee of the club or a board member you wouldn't see anything. Heard anything from these two groups of club officials? Nope.

I know from a Port director that a few weeks ago the AFL told all the clubs not to borrow any new monies until they had sorted out the line of credit as we talked about alternative funding sources. But I haven't spoken to him since the AFL got their line of credit from ANZ and NAB.
Does that suggest the AFL were not fully aware of the controls required by the lender at that he time you spoke to the director?
 

RussellEbertHandball

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Does that suggest the AFL were not fully aware of the controls required by the lender at that he time you spoke to the director?
No I think it was the AFL wanting to have an industry wide solution and be the industry banker's first. Remember the AFL now own/control all the state leagues except the WAFL and SANFL, so its borrowings are to help those leagues survive as well, and help out the WAFL and SANFL if they request help.

They wanted a one in, all in, approach. I think they got a Vic govt guarantee and used Docklands as additional security.

Since then it looks like the AFL have released restrictions and said clubs can borrow from them or others. This is what Caro wrote about borrowing from AFL in her article 2 weeks ago on 3rd April.

While the clubs can loan money from the AFL interest-free until the end of October, borrowings after that will acquire interest charges of 3.3 per cent.

So if banks/financial institutions/benefactors are prepared to lend the clubs monies at a better interest rate and repayment terms than the AFL, then I can't see how legally the AFL could stop them. They could get vindictive and say if you borrow from outsiders then we wont give you xxxxx that you have requested from us.
 

RussellEbertHandball

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From Caro's article.

And to underline the increasing differences between the ''haves'' and the ''have nots'', the wealthier clubs such as West Coast, Richmond and Collingwood - disenchanted at having to follow receivership rules - have achieved a special clause in the new agreement. This will exempt them from having to regularly open their books to head office.
........
Further divisions emerged with clubs questioning the unfairness of the debt-free financial circumstances of Gold Coast and Greater Western Sydney, which are funded each year to the tune of roughly $25 million respectively.
.......
Should the football season commence by early August the prevailing view is that Essendon, the Western Bulldogs - which recently sold off a large parcel of gaming machines - and potentially Adelaide retain sufficient cash flow to survive without borrowing from the AFL's $600 million pool.

The fact that only one-third of the 18 clubs boast bank balances that could take them through to the end of July has underlined the false nature of the profits announced by the majority of the clubs at the end of last season.

While several clubs sought independent legal advice, Western Bulldogs chairman Peter Gordon has engaged legal opinion that has been made available to all the clubs.

The AFL has engaged one of Australia's most respected lawyers, Arnold Bloch Leibler's Leon Zwier, who worked with the commission as it negotiated the $600 million NAB/ANZ bank loan and then advised on the complex negotiations with the 18 clubs.
 

Kwality

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That Age article referred to receivership & I battled to see what Caro was saying, was it simply reporting controls (that I'd think would apply to all clubs) or does the AFL simply take control of the money of clubs wanting AFL advances, any money paid out crosses their desk, funds in closely monitored.

The line of credit covenant will include KPI's, will the clubs be aware what they are as it refers to them?

Interesting days ahead for those of us into these things broadly.
 

RussellEbertHandball

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That Age article referred to receivership & I battled to see what Caro was saying, was it simply reporting controls (that I'd think would apply to all clubs) or does the AFL simply take control of the money of clubs wanting AFL advances, any money paid out crosses their desk, funds in closely monitored.

The line of credit covenant will include KPI's, will the clubs be aware what they are as it refers to them?

Interesting days ahead for those of us into these things broadly.
The AFL wont take over legal control and day to day control, but they will have greater oversight and I suspect weekly, monthly and quarterly budgets would have to be presented to them by clubs taking on the loans from AFL.

I think the use of the receivership phrases is that if the AFL didn't go guarantor / supply credit then the directors would have to call in either liquidators or administrators to protect the business from going under and the directors from being sued for trading whilst they know the club is insolvent.
 
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RussellEbertHandball

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There is some detail over the financial arrangement/covenant in this release by Freo.
I'll take it in tomorrow:
Thanks K. That is interesting and clearly sets out why clubs will want to avoid taking funds from the AFL. This bit is new to me as haven't read or heard anything about it in the media. It makes sense that the AFL will cover payment of players but I'm surprised there is no other distribution paid, it will all be loans.

The practical way in which this will work, is that the AFL will provide an identical fund to all clubs to cover the renegotiated player payments for the remainder of the year, however all other previous funding provided to clubs by the AFL has been withdrawn until 31 October.
 

Kwality

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Thanks K. That is interesting and clearly sets out why clubs will want to avoid taking funds from the AFL. This bit is new to me as haven't read or heard anything about it in the media. It makes sense that the AFL will cover payment of players but I'm surprised there is no other distribution paid, it will all be loans.

The practical way in which this will work, is that the AFL will provide an identical fund to all clubs to cover the renegotiated player payments for the remainder of the year, however all other previous funding provided to clubs by the AFL has been withdrawn until 31 October.
I'm still unsure how to read whats going on here, the bottom line & future loans to the clubs, the role of the lender & the covenant.
Hopefully the Freo letter to members might see some other clubs filling in the missing peices.
 

RussellEbertHandball

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I'm still unsure how to read whats going on here, the bottom line & future loans to the clubs, the role of the lender & the covenant.
Hopefully the Freo letter to members might see some other clubs filling in the missing peices.
The AFL are basically acting as bankers for clubs, rather than clubs going to their individual banks and the AFL going guarantor on the loan. This way the AFL have more control.
 

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Kwality

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The AFL are basically acting as bankers for clubs, rather than clubs going to their individual banks and the AFL going guarantor on the loan. This way the AFL have more control.
The role of the NAB/ANZ covenant will dictate any 'slack' the AFL is able to offer the clubs.

Your comment elsewhere of how tired Gil looks is a reflection on how hard it is to manage the way through this mess, I'm not sure how many fans understand this is only the start.
 

jatz14

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There is a podcast on the Bulldogs site where they say that the need for the financial assistance package is determined by the AFL not the clubs.

So clubs do not apply for it, they are told they are getting it.

They reiterate and confirm this point.

The podcast was by Gordon and the CEO

On moto g(6) plus using BigFooty.com mobile app
 

Capriati

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There is a podcast on the Bulldogs site where they say that the need for the financial assistance package is determined by the AFL not the clubs.

So clubs do not apply for it, they are told they are getting it.

They reiterate and confirm this point.

The podcast was by Gordon and the CEO

On moto g(6) plus using BigFooty.com mobile app
Yeah, I have listened to the same podcast and am not sure how to square that with the statements made by a few clubs (Carlton & Essendon come to mind) who have stated that they have made a decision as a club on their status as an assisted/unassisted club based on their financial standing.
 

Kwality

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There is a podcast on the Bulldogs site where they say that the need for the financial assistance package is determined by the AFL not the clubs.

So clubs do not apply for it, they are told they are getting it.

They reiterate and confirm this point.

The podcast was by Gordon and the CEO

On moto g(6) plus using BigFooty.com mobile app
Guess it makes sense with Gil saying 18 clubs will survive,
 

jatz14

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Guess it makes sense with Gil saying 18 clubs will survive,
I am guessing it would be because they do not want clubs putting themselves in peril trying to go it alone, and needing even more assistance later. But like Capriati, I couldn't square it with what I was hearing elsewhere.
 

Kwality

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Yeah, I have listened to the same podcast and am not sure how to square that with the statements made by a few clubs (Carlton & Essendon come to mind) who have stated that they have made a decision as a club on their status as an assisted/unassisted club based on their financial standing.
Gets back to what there is to lose when you are an assisted club other than $interest

From Mondays Aus:
While maintaining the independence of the AFL Commission, the war cabinet of AFL and club heavyweights helped to quell self-interest for the common benefit. Ensuring the AFL is the last creditor-in-line for the clubs was the rapid response. Lines of credit reportedly up to $600m were extended to the AFL by NAB and ANZ. Greater AFL oversight of club finances represents the starting and sticking point as bigger clubs elected to financially go it alone.

 

Kwality

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Interesting thoughts from the white knight of North Melbourne Jimmy Brayshaw:

League headquarters is attempting to bring all clubs back to the same level in terms of football staff, but Brayshaw believes the Eagles won’t need to rely on the AFL for a line of credit and therefore shouldn’t have to make the same number of concessions.

“West Coast are by that far the biggest team in our competition it doesn’t matter. They’ve got more money times 10 than any other club.

“They don’t need the AFL’s money. They’ve got enough of it.

“So (the Eagles could) go and say ‘why should our footy department be cut along with everyone else’s when we haven’t got our hand out for money’?

“So they’ll probably be disadvantaged more than any others, but the North Melbournes, the St Kildas the Western Bulldogs, the Carltons, if they want access to this line of credit, then they’ve got to cut their money and it is really as simple as that.”



Not even a good try Jimmy.
 

Kwality

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Jeff weighs in on 'unsustainable clubs':
The AFL hasn’t stipulated this, but I would always say you’ve got to have KPIs (key performance indicators), and I’d be looking to a period three years from now where you’d be saying, ‘all right, let’s have a look at the clubs’,” Kennett said.

“What have they done in the three years that we’ve been supporting them? Have they increased their independence or have they not? And if they haven’t, then you’ve got to look at yourself and say, ‘well, how long can we just continue to support organisations that cannot at least improve their financial performance?’

“That’s the challenge, but it’s a challenge for the next three years, in my opinion, for all clubs.

“If you look at the five or six (not needing AFL assistance), our challenge is to stay unassisted. Our challenge is to continue to find other revenue streams, so that we will not have to burden the AFL with borrowings beyond what they pay for the salary cap.”

 

Kwality

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Melbourne put up its hand as looking for $6-10mil depending on ...

' Glen Bartlett said .... there were two options to consider in order to survive.

“In terms of cash flow, we would either need to increase our debt again, which we’ve worked very hard over the last few years to reduce from $8.2 million to $2 million, [or seek help from the AFL],” he said.

“Under the letter of arrangement, clubs can flip between assisted and non-assisted, but with that kind of hole, which could be $10million, clearly, we will need some cash flow assistance.

“We’re working hand-in-hand with the AFL and will be accountable to the AFL in that regard.
“It has no impact on the fixture or footy department or any competitive advantage issues – it’s around accountability and finances.”

The full impact of the industry shutdown is still unknown, with uncertainty surrounding all things from membership to crowds, staffing to sponsorship.
CEO Gary Pert ... reinforced that regardless of the many different scenarios that could play out, the damage would be substantial.

 

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