RFC debt elimination plan rejected by the commission

[one-eyed]

Clubs' radical debt plan rejected by commission
By Caroline Wilson
The Age
April 19, 2006

A bold proposal put to the AFL by Richmond and Melbourne to eradicate the $25 million debt shared by close to half the clubs in the competition was rejected by the wealthier clubs and has not been seriously considered by the commission.

The proposal, put forward at talks between the clubs and the AFL two weeks ago, suggested that clubs such as the Tigers and the Demons - who are servicing a combined debt of close to $8 million - were hemorrhaging as a result of interest payments each year.

With the AFL investigating how best to spread the extra $50 million a year it will receive from the 2007-2011 broadcast rights, some of the poorer Victorian clubs remain sceptical about how determined the competition remains to keep them alive.

The debt deliverance was one of several proposals put forward by the financially struggling clubs. Melbourne wrote to the AFL in January pushing for improved AFL-sponsored stadium agreements for the cash-strapped clubs and those receiving financial assistance have also put forward proposals to substantially increase it.

West Coast and Essendon, supported by Geelong, strongly argued against the debt recovery, suggesting that such a proposal could prove a quick fix that would not solve the financially struggling clubs' futures.

They pointed out that while some clubs were suffering financially because of low supporter bases or problematic stadium agreements, others were in debt because of bad management.

The majority of club debt is shared by five Victorian clubs, which include the Bulldogs, the Kangaroos and Carlton. Hawthorn, which has a short-term debt after recently bringing forward proceeds from the sale of Waverley, suggested the AFL consider servicing interest repayments.

The chief executives' meeting is also reported to have left several clubs frustrated by a proposal from AFL chief Andrew Demetriou that the TV rights boon would lead to an extra $1 million payment to each club over five years.

The AFL has denied those reports saying that the figure was one of several put forward. It is certain to be challenged when the club presidents meet the AFL Commission early next month with clubs believing the $1 million proposal was a "softener" in the wake of a payment to each club of at least $2 million or substantially more.

Similarly, few football observers believe Demetriou's suggested offer to the AFL Players Association of a 5 per cent pay rise next season after the new $780 million five-year broadcast deal is a serious one.

It is understood those negotiations will see the players offered a much bigger pay rise - at least 10 per cent - in the first year of any new collective bargaining agreement.

While the AFL Commission yesterday approved an adjustment to the father-son rule, changes to the contentious rule that many clubs believe threaten the competition's equalisation philosophy are expected to continue beyond this season. Those changes are not expected to take place before this year's draft, meaning Geelong's father-son choice at the end of 2006 - Jack Hawkins' son Tom - could still be taken by the Cats as a third-round pick.

http://www.realfooty.theage.com.au/realfooty/articles/2006/04/18/1145344087619.html

[mightytiges]

The proposal, put forward at talks between the clubs and the AFL two weeks ago, suggested that clubs such as the Tigers and the Demons - who are servicing a combined debt of close to $8 million - were hemorrhaging as a result of interest payments each year.

If we're haemorrhaging then how did we make a real (unlike the Dees) profit last year  .

I could be wrong but if I'm not I find it ironic that Geelong opposed our plan given IIRC their creditors (I think it was the Bendigo Bank) "refinanced" their debt when they were $7m in the red so that they got at least the majority of their money lent back from the Cats.

[PuntRdRoar]

Im surprised our club would believe that this plan would get the go ahead. In the end, we got ourselves into this situation and we have to get ourselves out.

[WilliamPowell]

If we're haemorrhaging then how did we make a real (unlike the Dees) profit last year  .

I think haemorrhaging is a bit over  the top but certainly the interest bills take a massive chunk out of the bottom line - $300-600k.

What is important to remember with our "debt" is that it includes the funding for the last lot of redevelopments at Punt Road Oval (the pool etc) - not all the $$$ for that project came from the JDF. That loan (for want of a better term) has a interest component plus a the CLub makes significant prioncipal repayments every year - this is common business practice. The balance of the "debt" would be the overdraft.

I owuld be surprised if all teams in the competition didn't have available for use a significant overdraft facility, some may not use it but I reckon there is a fair chance it would be available to them which again is quite common for businesses that are turning over $20 million a year

I could be wrong but if I'm not I find it ironic that Geelong opposed our plan given IIRC their creditors (I think it was the Bendigo Bank) "refinanced" their debt when they were $7m in the red so that they got at least the majority of their money lent back from the Cats.

arghh Geelong - saved because of the generosity of their bank - funny how they forget that. They go on and on about how they turned things around if the bank hadn't of come to the party they'd be history - one of the advantages of being in a 1 team town

Their debt was much bigger than ours (around 8-10 million ) and their bank accepted repayment of the debt by taking so many cents in the dollar - I think it was around $0.30.

The AFL are full of such hypocrites it isn't funny

[mightytiges]

arghh Geelong - saved because of the generosity of their bank - funny how they forget that. They go on and on about how they turned things around if the bank hadn't of come to the party they'd be history - one of the advantages of being in a 1 team town

Their debt was much bigger than ours (around 8-10 million ) and their bank accepted repayment of the debt by taking so many cents in the dollar - I think it was around $0.30.

The AFL are full of such hypocrites it isn't funny

Thanks for verifying that WP. I didn't realise they only had to payback 30c in the dollar  . Hypocrites they certainly are.

[Tiger Spirit]

In many respects, I agree with RT.  Clubs shouldn’t just be handed money to get them out of trouble.

At the same time though, if the AFL wants to equalise things so that we have as even a competition as possible on the field, then why does it seem that things become more uneven off the field, as time goes by?  Quite clearly, there is no level playing field.  And the way the AFL operates, there must be a reason for that.

With the AFL investigating how best to spread the extra $50 million a year it will receive from the 2007-2011 broadcast rights, some of the poorer Victorian clubs remain sceptical about how determined the competition remains to keep them alive.

For so many reasons, you have to think that nothing is ever as it seems with the AFL, because what’s the good of all this money, that’s now in the game, if Clubs are still struggling just as much, and in some cases even more, than ever before?

Clubs shouldn’t be reliant or dependent on hand outs in order to exist.  However, given the amount of money now in the game, couldn’t there be some scope for short term relief assistance, in certain cases?   There are so many inequalities in the competition that it’s practically a farce and impossible for some clubs to catch up to the richer clubs.  The AFL seems willing to take advantage of the strength of its stronger clubs and content to let the gap widen.

Some things can never be helped, but the AFL has an agenda, because the more disadvantaged some clubs become the richer others get.  Circumstances dictate that interstate teams have an advantage over Victorian clubs, purely because of their location and not necessarily because they work harder than Victorian clubs to generate income.

Before the national competition came into existence, clubs were generally in control of their own destiny.  With the AFL now virtually in total control; that is no longer the case and the destiny of clubs is virtually in the lap of the Gods.

Mainly because the aim of the AFL is to grow the game and competition, so whether or not the current Victorian clubs exist, in their current form, for the long term doesn’t matter to them.  Money and the amount of money they can generate from any financial arrangement is what counts and matters most of all.

As happened with Fitzroy, despite their efforts to gain sponsors and so on, the AFL thwarted their attempts to remain competitive off the field, and therefore on the field, because it suited them.  Now we see that, despite all the money in the competition, life is no better or easier for clubs.  If anything, deals that are done to bring more money into the game make it increasingly difficult for certain clubs to get even close to the rich clubs.

Maybe for clubs like Richmond and Carlton it’s just a matter of winning and then things may become easier.  But for other clubs it may never be like that.  And what if that winning edge eludes some clubs for too long?

Like Fitzroy, you have to think that the AFL will treat less advantaged clubs however it chooses, and if they survive the tough times then good on them and if they don’t then too bad.  Through attrition, the AFL will create the sort of competition where clubs emerge through their ability to generate money for the competition, without being the burden that some now seem to be.

There will come a point where some current Clubs will believe it’s useless to go up against the AFL, if some aren’t there already, and will then just tow the line on all issues.  If and when it gets to that stage, they’ll be as good as dead clubs walking.

If the AFL believes their approach is what’s good for the game then some of us supporters of certain clubs might as well just rip out our hearts now.  It’ll be easier that way, if we want to continue to support a team, which may not necessarily be the one we know now.

That’s what I believe.

[WilliamPowell]

In many respects, I agree with RT.  Clubs shouldn’t just be handed money to get them out of trouble.

But isn't that's what happening now with the CBF or whatever they chose to call it today

Granted, certain criteria must be met to get the money but it is still giving money to try and get teams out of trouble - even if those receiving are still struggling

At the same time though, if the AFL wants to equalise things so that we have as even a competition as possible on the field, then why does it seem that things become more uneven off the field, as time goes by?  Quite clearly, there is no level playing field.  And the way the AFL operates, there must be a reason for that.

That's why if the reported $1 million extra per club paid over 5 years is correct then you have to wonder what the 17th AFL team is up to.

We keep hearing about the extra $50 million a year from TV what about the extra $$ that they are expecting from radio, internet rights etc? Clubs should get more ...

I reckon each club should get a minimum $5 million over 5 years but it should be up to each club how they take it and use it. If the Tigers wanted all of it in one hit to pay of their debt then so be it. If the Bombers wanted to say take 2 million in 2007 and then $0 in 2008 and the balance in year 5 then that's OK too. The only criteria I'd put on it though would be that there would be no further assistance (eg CBF monies) given.

[PuntRdRoar]

i think we should put together a Richmond Future Fund- but not JDF. The RFF should be used to raise cash to pay down debt. Supporters could contribute a small weekly contribution via direct debit, they could make one off donations, people like me could run souvlaki & beer nights watching tiges on Video in a pub somewhere...Our club needs to allow us to contribute to its health and well being. In the past I have advocated

1) the Development of a Richmond Academy. This year we got Richmond Tafe.
2) moving the family day to the Sth Eastern suburbs. This year we went to Jells Park and it was a roaring success.

Now im not saying that Richmond officials watch this site and wait for me to run the club for them...coz if they are I will be sending the invoice shortly   but I do feel that we should be moving to being a people club...the people are us...and the club is ours. Our administrators need to let us help out i reckon.

[Tiger Spirit]

In many respects, I agree with RT.  Clubs shouldn’t just be handed money to get them out of trouble.

But isn't that's what happening now with the CBF or whatever they chose to call it today

Granted, certain criteria must be met to get the money but it is still giving money to try and get teams out of trouble - even if those receiving are still struggling

When I say ‘handed money’ I mean that clubs receive assistance, at a whim, to get them out of trouble, as opposed to needing to justify receiving financial assistance.

Quite rightly, if certain clubs continually get themselves into financial difficulties, through mismanagement, then they shouldn’t expect special handouts.  As long as Clubs need to show they are being responsible with their finances then I guess the issue doesn’t exist.

[one-eyed]

It's a Denham article so take this with a grain of salt but according to him we've apparently asked the AFL to give clubs $3 million over the next 5 years from the broadcast deal money.

--------------

Extract from: Jockeying starts for share of the riches
Greg Denham
The Australian
April 27, 2006

Clubs remain confident they will receive an additional $2m over the five years of the new broadcast agreement, on top of funding for any increase in total player payments.

But some clubs, believed to include Hawthorn, Melbourne and Richmond, want at least $3m.

Following the previous broadcast rights deal, clubs received a 13percent share of the extra revenue, which included AFL funding for the increases in total player payments up to the end of this year.

Full article: http://www.theaustralian.news.com.au/story/0,20867,18938822-36035,00.html

[one-eyed]

Clubs unite to claim extra $42m
Greg Denham
The Australian
May 05, 2006

CLUB presidents yesterday rocked the AFL establishment by demanding more than 50 per cent of the league's increase in revenue from the next five-year broadcast rights deal.

The AFL will pocket about $60 million in additional television revenue each year for the next five years and clubs yesterday put their hands out for more than $32 million of that each year.

On top of their demand of $2 million per club per year over five years, they also want the AFL to continue to fund the increase in future total player payments.

If players succeed in gaining a 10 per cent increase in player payments from next season, which is less than what they are seeking, that would equate to a further $650,000 per year, per club.

In essence, the clubs yesterday united to request an additional $42 million next year from the AFL's $60 million pie, based on a 10 per cent pay rise to players.

The 16 clubs met independently for three hours before fronting the AFL commission with a list of claims and to discuss the Spend for today, Invest for the Future document. Appointed spokesman for the clubs, Western Bulldogs president David Smorgon, described yesterday's meeting as historic and claimed the competition was vulnerable because of concerns about the financial state of some clubs that needed to be addressed immediately.

"The competition will thrive if 16 clubs are profitable and running effectively and efficiently," Smorgon said.

Smorgon pointed out that there was never any debate about the health of the commission or its executive, which this year secured a $780 million broadcast rights deal from next year.

"We believe the clubs have all contributed to the health of the game," he said.

"And the only area of vulnerability at the moment, when you look at the competition, is the financial health of some of the clubs."

Yesterday's massive claim was in response to discussions at last month's meeting of the AFL executive with club chief executives in which the AFL initially discussed increases to clubs of just $200,000 a year for the next five years. In announcing the clubs' demand, Smorgon said: "There was just a zero missing off the first figure."

In effect, the clubs want all gross total player payments paid for by the AFL, with change at the end.

Last year, AFL gross player payments and additional services agreements (marketing money for players) totalled more than $117 million.

The AFL has been working for more than six months on its financial strategy up to 2011, but yesterday's club demands have thrown that into chaos.

The AFL had identified 10 areas for potential distribution of its increased revenue, including an increase in player payments, AFL operations, game development, ground improvements, the development of new markets in NSW and Queensland, and a newly created future fund.

On top of the club demands, they want the annual $5.5 million special distribution package continued. The present beneficiaries of this special financial assistance are the Bulldogs, Melbourne and the Kangaroos.

Smorgon said the key philosophies to the clubs' stand were:

* The 16 clubs are united and continued to work together.

* It was now the clubs' turn to get their fair share of the revenue.

* A need to retain the equal annual distributions to all clubs

* Total support for the existing 16 clubs.

* The clubs also expressed a desire for greater prizemoney from the AFL.

Smorgan was optimistic in negotiating their demands from the league as long as the clubs remained united on this issue.

"As always with these things, it's open to further discussion and further debate," he said.

"We've all got the interest of the game at heart, but we've also got our own club interest at protect."

Four clubs last year made losses, but Smorgon said one of the main problems facing the clubs was that 11 lost money on their football operations.

"There's only five clubs that actually make money on football, forcing clubs to more and more go into non-football revenue items."

Smorgan said no clubs were denying players a pay rise.

"But it's the extent of increases, the extent of increases in game development, the extent of the new creation of the Future Fund," he said.

"That's the money we're looking at and we believe we've got to put the clubs first. Over a period of time, we've got an opportunity to put our house in order."

http://www.theaustralian.news.com.au/story/0,20867,19028716-36035,00.html

[mightytiges]

We need to try and get as much as we can so we can eliminate our $4 million overdraft/debts as quickly as possible.

[one-eyed]

Clubs press for cash
26 May 2006   Herald Sun
Jon Pierik

CLUB presidents have been told they will have a second meeting with the AFL Commission to push their case for a large share of the league's windfall from its new broadcast deal.

The presidents were informed of the meeting in a letter from commission chairman Ron Evans.

No date was specified.

Western Bulldogs president David Smorgon, the group's spokesman, is optimistic the AFL will respond kindly to the clubs' grab for $160 million cash over the next five years.

"I am confident they are taking it seriously and we'll be patient and see what they'll come up with," Smorgon said last night.

"We've said we are not going to tell them what to do or how to do it. We'll leave it up to them."

Richmond president Gary March was unsure whether a second meeting would be held after the clubs had made their extraordinary demand earlier this month.

The request equates to $2 million a club a year over the next five years and would effectively mean the AFL covered the wages of every player.

"I think we may not get exactly what we want to get, but I think they (AFL Commission) have changed their thinking a fair bit from the first time we met with them," March said.

"They seem to be coming around."

The demand had put the clubs in conflict with the AFL, which wants to pump millions of dollars into game development at the same time players are pressing for wage rises of up to 20 per cent.

It's understood the clubs may ultimately receive about $600,000 a year.

Essendon chief executive Peter Jackson last week branded the presidents' push as ridiculous, and felt $3 million would be more preferable.

http://www.heraldsun.news.com.au/footy/common/story_page/0,8033,19257602%255E19742,00.html