Unprofitable clubs get millions in aid from AFL (Age)

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The Age saying we're only one of six clubs that are making a profit without substantial help from the AFL.


Unprofitable clubs get millions in aid from AFL

John Stensholt and Jon Pierik
The Age
March 2, 2015


The financial health of the 18 AFL clubs has been laid bare, with only six making profits without substantial help from the league's governing body, an analysis of the competition's finances shows.

While several clubs in Melbourne have announced operating profits for 2014 in the past few months, a Fairfax Media investigation has found the annual reports posted by the clubs or lodged with the Australian Securities and Investments Commission show many did so only with additional funding from the AFL.

Collingwood, Essendon, Hawthorn and Richmond were the only ones of 10 Victorian clubs to achieve profits in their own right, as did the West Coast Eagles and Fremantle. Essendon's $720,000 profit, however, was boosted by about $700,000 worth of donations.

The 10 Victorian clubs are also carrying about $46 million in combined debts, though some of that is related to gaming businesses.

It has also emerged an independent auditor with a strong interest in the league has claimed that only 40 per cent of AFL income is parlayed to the clubs.

Club chiefs are worried about the rising costs they face, and have expressed concerns the players will soon pocket too great a pay rise. This will come in a new collective bargaining agreement, to be brokered once what shapes as a $1.75 billion television broadcast rights deal is completed later this year.

AFL Players Association chief Paul Marsh has made it clear he believes the players remuneration must leap significantly, declaring recently it was an "indictment" that only Gold Coast Suns champion Gary Ablett appeared on BRW's top-50 list of Australian sports earners.

Grand-final winner Hawthorn is considered the strongest of the Victorian clubs, along with Collingwood. Hawthorn recorded a $3.4 million profit last year from about $67 million revenue. It made about $18 million revenue from its gaming business, and another $2 million income from accommodation sources.

Hawthorn has also got $6.3 million invested in equities and term deposits and has a new $250,000 innovation fund established with seed capital from former director and Flight Centre co-founder and BRW Rich List member Geoff Harris.

The 10 Victorian teams made just over $500 million combined revenue in 2014, about 20 per cent of which came from gaming and po-ker machine incomes.

North Melbourne was the only club in Victoria not to have income from po-ker machines. While the Kangaroos announced a small operating profit of $420,000 from revenue of about $34 million, the profit was only achieved with $2.8 million in additional funds from the AFL in future fund distributions.

Both Adelaide teams also recorded big losses in 2014, despite attracting huge crowds after moving to a refurbished Adelaide Oval. The Adelaide Crows lost $408,011 even after a 43 per cent increase in crowds, while Port Adelaide lost a whopping $2.5 million.

Adelaide and Port Adelaide are both locked in talks with stadium authorities that should see them gain access to further commercial and match-day revenue from home matches and say their financial positions are sound. Brisbane Lions will also receive additional assistance after recording a $3.5 million operating loss, while Greater Western Sydney and the Gold Coast Suns still require large dollops of AFL funding to remain sustainable.

The Giants dealt with a drop in revenue of $1.4 million last year, with merchandise and membership down by more than $300,000.

AFL chief executive Gillon McLachlan says the league and its clubs face financial "challenges".

"I think we've got challenges at a lot of our clubs in terms of this disparity between the strong and the less strong, GWS is one of those (clubs)," McLachlan said.

"They are a start-up club in a very tough market who's got an extraordinarily talented list, but the reality of their list-build means they've won [nine] games in 66.

"So I'm very confident long-term, we know it's a generational decision and the guys up there are working really hard."

The Western Bulldogs, which announced an operating profit of $329,000, also received $2.8 million in AFL future fund distributions. Melbourne got an extra $2.27 million from the same source, helping it to a $284,000 operating profit.

St Kilda will receive an additional $3.8 million from the AFL in 2014 after recording a $3.91 million loss from $30 million in 2014. Carlton also made a loss in 2014 of $1.6 million as did Geelong, recording a small $280,000 deficit.

The Sydney Swans announced a profit of about $846,000 but received about $12 million in AFL funding, higher than many clubs including the likes of Collingwood, Essendon and Hawthorn.

http://www.theage.com.au/afl/afl-news/unprofitable-clubs-get-millions-in-aid-from-afl-20150301-13rqwm.html

[dwaino]

AFL paying the Bulldogs so their captain can play for another club.

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AFL clubs delusional, says West Coast chief

Caroline Wilson
The Age
March 18, 2015


 One of the AFL's longest-serving chiefs has accused the clubs of being "delusional" and "undisciplined" as they continue to gloss over mounting debts and multimillion-dollar losses.

West Coast CEO Trevor Nisbett has hit out at the game's growing financial crisis as Fairfax Media confirmed the 18 clubs' combined debts had topped the $100 million mark at the end of last season, a jump of $20 million on the previous year. Victorian clubs are responsible for half that debt.

"We are all delusional as an industry if we think we can keep going on like this," said Nisbett. "There is a lack of discipline in what we do and it reflects poorly on all of us.

"It's about time we did something about it. Whichever way you look at it it's a bad business."

Nisbett's savage public reality check comes just days before the the annual pre-season gathering of the 18 club bosses, in which the bitter debate over the gap between the rich and poor clubs is expected to dominate.

The AFL had forecast at the end of 2013 that the clubs' combined debt would jump from $80 million to $85 million by the end of 2014. Instead the increase was four times that prediction. While half the total debt is regarded by the clubs as "good debt", such as money owed on profitable gaming venues, Nisbett said: "This is a priority for the commission. It's a priority for all of us. We have to get our finances in order.

"It's one of the critical issues we always gloss over. These clubs are delusional, too, if they think they can budget for a profit and then lose a couple of million dollars. That happens too often."

The extent of the combined debt was revealed to the clubs by the AFL's outgoing finance boss Ian Anderson, who departed head office last week as part of Gillon McLachlan's ongoing restructure of his executive. McLachlan is expected to put the crucial chief financial officer position — which Anderson held under three league chiefs over 15 years — out to tender across the national marketplace.

Fairfax Media revealed early this month that only one-third of the clubs had achieved a profit last year, with the game's most challenging club - Greater Western Sydney - recording an operating loss of more than $500,000 despite the AFL pouring $20.16 million in grants into the fledgling club, $3.25 million more than originally budgeted. The Giants also suffered a fall in marketing and sponsorship income.

Another financial basket case, the Brisbane Lions, lost more than $3 million last year and is existing upon a debt of close to $12 million, about half of that attributed to its gaming facility. The AFL ploughed an additional $5 million into the Lions last year and worked to replace its chief executive Malcolm Holmes with the more experienced Greg Swann.

Nisbett also pointed to the massive debt across a number of Melbourne-based clubs. "I'm sure a lot of the Melbourne guys will say: 'It's all very well for you, you've got a great stadium deal.' Well that's because we did something about it. I'm sure I'm not a lone voice in this."

The AFL's most experienced club chief Brian Cook said that despite the AFL's equalisation measures the gap between the rich and poor clubs "is still getting bigger".

The equalisation debate continues to simmer in the background with Hawthorn and Collingwood adamant that the AFL and not the wealthy clubs should be taking responsibility for the poorer clubs.

Cook added: "It's a sensitive issue. My belief is that the costs are largely driven by the wealthiest clubs. It's an arms race. It's unrelenting. It's never-ending. You look at clubs like ourselves and Essendon and West Coast and we're ploughing between $30 million and $60 million into new facilities. It's hard to see how the smaller clubs turning over $30 million and $40 million in total every year can hope to keep up."

http://www.theage.com.au/afl/afl-news/afl-clubs-delusional-says-west-coast-chief-20150317-1m1f8t.html