North on the Brink of financial disaster - The Age

[gaelictiogar]

Re: North on the Brink

Agree with this. Apart from Geelong's ongoing rivalry with Hawthorn and some short-lived rivalries which currently exist due to other circumstances (Essendon, Collingwood, St Kilda), playing against Carlton, Richmond or the Bulldogs does nothing more for me than playing against Brisbane, Adelaide or Fremantle.

Note: I'm taking the Skilled Stadium factor out of my example...imagining Geelong played all its home games in Melbourne.

Perhaps MC but there is a reason why you keep your interstaters in Pussy park while playing homers against Collingwood etc in the city......yes their fans go but yours are more likely to as well.

All I can say is that if I ask any of my Vic friends to namecheck three clubs they really want to beat none will mention anyone interstate. No offence to the interstate teams. Same in any sport. Ask Sydney NRL fans who they rival with and they wont say Canberra or North Queensland. They'll say Canterbury or Parramatta or whatever.

 

[Tzatziki_Man]

Re: North on the Brink

They will need to introduce their own debt demolition campaign if it's at around 7 million dollars, thats crazy.

Brayshaw may be going about this the right way, post profits and gain confidence from your supporters and then ask them to pony up the dough.

The only problem is, their profits are questionable right now.

 

[ThePuppetMaster]

Re: North on the Brink

their bank balance shouldn't concern anyone, i would imgaine most football clubs would have that kind of fluctuation in bank balance, with paying players, staff, loans, and what not

i would imagine that north's balance will be very healthy quite soon

also the debt, while concerning, is no huge obsticle, melbourne overcame similar numbers, richmond plan to do the same

north just need an initiative, preferably it's own and not a mix of other clubs attempts... and it will get it done

what would be most worrying for me if i was a north supporter, was the board lying about the significance of the debt, fudging the figures by two million (apparently)

if i was a north member i would not be happy at all

 

[shawthing09]

Re: North on the Brink

When I think of 3 teams I want to beat during the year I think Carlton, Essendon and Brisbane. Although that is flexible, this year St Kilda will be right up there due to the end of last season, last year Hawthorn and Geelong where because they both had the wood over us in recent years.

I guess what I am saying is geography doesn't have to be the only reason to have a good competitive rivalry.

 

[vjknight]

Re: North on the Brink

Why does it matter?

The AFL will be getting close to 1 billion dollars for the next TV rights.

remember the AFL's response to previous TV deals and clubs wanting cash - pretty much NO **** OFF.

As I've said before, St Kilda did that once and it was about 30 years ago. They recently said they want to repay those players anyway.

North have been on the drip feed for nearly 10 years. They receive an extra $1.5million every year from the AFL just to stay afloat. And even still have racked up an overall debt of $7million.

i thought the saints had paid out all those creditors - done the honourable thing.

 

[ThePuppetMaster]

Re: North on the Brink

I agree with what you are saying Trav 100%. Having said that though, I guess now that Melbourne are debt free the assistance from the AFL should be turned off. The Dees no longer need $1.5 million in extra funding. After all, they have been receiving this from the AFL for nearly 10 years now!!!!???

most clubs recieve assistance from the afl, no matter what position they are in iirc

 

[Tas]

Re: North on the Brink

Most clubs have overdrafts so you are correct. Borrowing however increased significantly.

Financial reports are a snapshot at a point in time, borrowings increased significantly but creditors dropped even more significantly.

The overall debt position reduced. It doesn't matter if you owe money to a bank or to several large creditors, you have to pay your debt as it falls due and it is often just a timing or cash flow issues.

As long as you are not stuck in a cycle of losing money on trading and have to convert that into debt, which isn't the case for us because we haven't made an operating loss for some time now and have over the years reduced debt overall.

The club has been focused on putting more money into the football department so we are competitive with all the AFL sides on-field. We have increased annual football department spending by $3-4 million, if things were dire, we could cut back spending and put that into debt repayment.

But things are not dire, even during the global financial woes hitting the same time as our rebuild phase we haven't had any financial issues whatsoever.

From an accounting perspective, I think you are right that North made a profit and increased the member's equity. However, my concern is that Arden Street leasehold improvements are listed as an Asset at $15m. However, is it realistic that the Kangaroos ever sell this? It would be very unlikely that the Kangaroos could transfer those assets even if it wanted to so its possible to suggest (like all football clubs) that it's assets may be overstated.

The assets do have real value, which is why they need to be shown on the accounts. The facilities itself has real value, other sporting bodies that use our facilities also pay to utilise the facilities. They can't exactly be sold to repay debt, which is why they are not shown as a current asset, an asset which can easily be turned into cash.

On the flip side, our profit figure includes the amortisation of the facility and also the depreciation of other assets, these reduce our net profit figure but are paper transactions, there is no cash outflow.

Financials for sporting clubs can be extremely misleading as to what is the actual day-to-day status of the sporting club.

Obviously, you can't make that judgement without knowing the full details but its concerning as assets are somewhat useless if you can't convert them to cash if needed. Perhaps the leasehold is also not transferable? I don't know the answers and neither does probably anybody on here.

We have a lifetime lease on the land, the land is effectively ours as long as we exist, we would lose the lease at the point where we went arse over ****.

The council itself has a unique perspective of the ownership, ie, according to the law, things like cleanup of the land due to industrial waste was responsibility of the council but they felt it was our obligation to do so, in most ways the council believes we own the land and let us do to it what we think is appropriate once we get past all the usual resident whining.

I think eventually the land at some point will end up in the hands of the club, lifetime leases are an obnoxious legal instrument and cause no ends of headaches, I think eventually in the future the government and club will sit down and come to an arrangement to transfer ownership. Will probably be when we have more money and there is a Sell, Sell, Sell Liberal government in position.

The other thing that concerns me is the current ratio. That is current assets over current liabilities. Current ratio significantly worsened during the year suggesting that cash flow will be a more significant issue than last year. These two things combined make me think that cash flow is going to be the killer as North don't have the cash to fund their operations as well as last year. There is no point having higher members equity if you can't use it and it would seem that the Kangaroos will be asset rich and cash poor.

On face value it is a concern, and it is the reason why the auditor's statement is as it is. Don't get me wrong, it is not a desirable position but it is one that can be rectified in a short period of time.

For a service based industry they usually do not have a high amount of assets, especially a non-profit service based industry like a sports club.

It has become recent trend to diversify largely because the operation of the business itself is not consistent, there are huge peaks and significant lows based on the performance of the sports club.

Most of the debt we have is either trade debt, something that will always be around no matter how much money you have or it is largely baggage remaining from the previous administration.

I think when the club sits down to address the old debt then it will be repaid in a timely manner but you have to first make sure the operation of the business is on solid ground. Back in 2007 the business was on shakey grounds. It is in a much stronger position now, we have a new naming rights sponsor, we will likely play a handful of games somewhere to generate more short-term revenue and the new broadcasting agreement kicks in next year which should also see some minor net benefit to clubs.

Now that the business is strong and stable the new gains came be directed towards the repayment of the debt and once that is done invest in the future.

They may need to rely on short term cash injections which is difficult.

I think the overdraft facility as it is will be sufficient, it is only an overdraft facility that is $201,268 at the time of the report.

The commercial bill we have has $250k more that can be put on it, if needed, but I do not think it will be necessary.

As JB said, a few days after the annual report there was over a million dollars in the bank account, clubs cash accounts fluctuate wildly as money comes in and payments fall due.

It is the overall performance which should be the focus, we wont be having any more facility building in the near future which will distort the accounts.

 

[Jade]

Re: North on the Brink

quoted for truth...

Thats because a few of us effin hate each other

 

[MC Extra Dollop]

Re: North on the Brink

Perhaps MC but there is a reason why you keep your interstaters in Pussy park while playing homers against Collingwood etc in the city......yes their fans go but yours are more likely to as well.

All I can say is that if I ask any of my Vic friends to namecheck three clubs they really want to beat none will mention anyone interstate. No offence to the interstate teams. Same in any sport. Ask Sydney NRL fans who they rival with and they wont say Canberra or North Queensland. They'll say Canterbury or Parramatta or whatever.

Fair point. But, speaking for myself, I'd nominate Hawthorn and whichever two sides are above or directly below us on the ladder (depending on where we're situated). Teams like Collingwood/Carlton only get my passion up when they're good. Who cares if you smash them, if they're fourteenth on the ladder? But, I can't speak for others.

 

[GAS PANIC]

Re: North on the Brink

i would imagine that north's balance will be very healthy quite soon

also the debt, while concerning, is no huge obsticle, melbourne overcame similar numbers, richmond plan to do the same

Do you think is was easier for Melbourne to wipe away their debt due to the perceived high socioeconomic background (ie. upper class) of their supporter base?

Or is that just a gross generalization these days?

 

[1990crow]

Re: North on the Brink

Tasmanian kangaroos 2012? I think it's plain obvious that Melbourne can't sustain 9 clubs anymore and in reality north is the one club that from the outside appears to be struggling the most. I don't think moving would alienate most of the Melbourne fan base as the relocated club would still be the same club just with a new home state. There would still be plenty of games played in Melbourne for north fans to go see and as tassie is pretty close I'm sure some wouldn't mind traveling a couple of times a season. Tasmania would be able to keep this club alive.

 

[A Living God]

Re: North on the Brink

The most distrubing things is North Melbourne Cash flow from Operating Activities. Their CFOA was $567,504 but it included $2,730,583 in government grants so that their cash flow from regular operating activites was -$2,163,079.

That being said the CFOA excluding government grants from last year was $2,233,336. It is possible that the shortfall in Cash Flow is just related to timing issues. If it isn't North Melbourne could have serious problems.

 

[The Falcon Strike]

Re: North on the Brink

We have a lifetime lease on the land, the land is effectively ours as long as we exist, we would lose the lease at the point where we went arse over ****.

The council itself has a unique perspective of the ownership, ie, according to the law, things like cleanup of the land due to industrial waste was responsibility of the council but they felt it was our obligation to do so, in most ways the council believes we own the land and let us do to it what we think is appropriate once we get past all the usual resident whining.

I think eventually the land at some point will end up in the hands of the club, lifetime leases are an obnoxious legal instrument and cause no ends of headaches, I think eventually in the future the government and club will sit down and come to an arrangement to transfer ownership. Will probably be when we have more money and there is a Sell, Sell, Sell Liberal government in position.

That is tripe.

Lifetime leases make perfect sense and have been created to serve a need in many facets of law.

In the case of that land, it makes perfect sense that it is a lifetime lease - so that should North go bellyup - the land ends up back in the hands of the council for the betterment of the ratepayers and not the hands of the creditors.

You are either making stuff up to suit an argument - or you don't understand the purpose or legal benefit of a lifetime lease.

 

[PDJohnson]

Re: North on the Brink

When North refused to go to the Gold Coast - as unpalatable as it was to the supporters - most knew this meant a slow agonizing death in Melbourne. No sensible / sensitive person will revel with this, as no-one jumped for joy when Fitzroy went, but it is common sense. If you are offered a lifeline (no matter what the conditions) and then slowly drown, it's your own fault. It's a shame the small, but dedicated core of supporters have had to be taken with them. They were offered plenty of games in both the Gold Coast AND Melbourne - soon there will be no games for them at all in the AFL. The board has loved the club to death!

 

[Rob]

Re: North on the Brink

I think the AFL should continue to help them out.

And they will. It's not in the AFL's interest to lose a bunch of supporters. But it's also not in the AFL's interest to send a couple of extra million only to have to do the same thing again every year, because that's money that is essentially taken away from other clubs - they don't want other clubs getting into financial strife because their share of AFL income is going towards bailouts. They're going to put pressure on the club to come up with structural change to ensure long term sustainability. They can't just keep going along the same path and expect bigger AFL bailouts without addressing the core problem.

 

[ThePuppetMaster]

Re: North on the Brink

Do you think is was easier for Melbourne to wipe away their debt due to the perceived high socioeconomic background (ie. upper class) of their supporter base?

Or is that just a gross generalization these days?

it's definitely a generalization, but it does have a basis in truth

i think the majority of melbourne's supporter base would be considered as middle class to 'upper' middle class these days, probably no different to a few other victorian clubs

i'm sure there are north melbourne members who can afford to make significant contributions to the club to help alleviate the debt

north doesn't have to go about it the same way as melbourne ie. a debt demolition, if they come up with a solid plan (and follow it) they will be able to eradicate the debt eventually

 

[Bayer_]

Re: James Brayshaw , we were damned if we did, damned if we didn't.

I see the $100 million cash to go the gold coast nonsense is rearing its ugly head again. At the time it was shown to be a load of rubbish made up figure, yet with the passing of time its being spouted as a fact again.

And re the above re assets...Fixed Assets are valued at cost less accumulated depreciation (net book value)...same as everyone else values them.

but hey, we turned down $100m to go to the gold coast...

Probably not an appropriate basis for valuation, certainly the banks wouldn't see your assets that way.

 

[sydney_crow]

Re: North on the Brink

IMHO the article is written by someone with little to no financial knowledge who is way out of their depth (no shame in not being an accountant but a man's got to know his limitations).

Stuff is being taken out of context (amount of money in the bank at a single point in time) or misconstrued (difference between 'net assets' and 'net current assets') to drive an attention-grabbing headline.

There's no doubt (and I'm sure Roos admin/supporters would agree) that they rely on the equalisation hand-outs from the AFL to stay afloat but that's not new news and not so different from other clubs in the league.

Would be nice to see more balanced and informed reporting from papers but that's probably a pipe dream.

 

[shawthing09]

Re: North on the Brink

Tasmanian kangaroos 2012?

I think if and when the AFL move to Tassie they will look to set up a new franchise for the state. As has been mentioned many people in Tassie already have a side they follow and whilst it may not make a huge difference people are much more likely to jump on board a new tassie side then to switch to an old rival now based in Tassie.

I hope it doesn't come to this but if North had to fold it would more then likely be merged with one of the new interstate sides or struggling interstate sides. The benifits from this for the AFL is that North fans who aren't lost to the game will then prop up the viability of one of the interstate sides.

 

[Tas]

Re: North on the Brink

That is tripe.

Lifetime leases make perfect sense and have been created to serve a need in many facets of law.

In the case of that land, it makes perfect sense that it is a lifetime lease - so that should North go bellyup - the land ends up back in the hands of the council for the betterment of the ratepayers and not the hands of the creditors.

You are either making stuff up to suit an argument - or you don't understand the purpose or legal benefit of a lifetime lease.

No, you are wrong. This land has been left to rot for over a century because council never puts money into anything that isn't run down.

It was saturated with industrial waste that ran off the old industrial sites, they are not upkeeping their responsibilities as land owners, they should let it go to those that do.

 

[Bouvet_Island]

Re: North on the Brink

Tasmanian kangaroos 2012? I think it's plain obvious that Melbourne can't sustain 9 clubs anymore and in reality north is the one club that from the outside appears to be struggling the most.

It would be nice to see Tassie get a seem, but it would seem weird to see a team named "North" to be relocated to be the southernmost team in the league.

 

[PDJohnson]

Re: North on the Brink

The only real difference is that Stynes has been shaking the tins and has a lot of emotional support behind him because of his condition.

Below the belt, Tas. Normally you write well, but you can give that blue and white middle finger to yourself on this one!

 

[Tassie19Cairns20]

Re: North on the Brink

This really is the worst attitude. The fun in footy is the footy. If you have to play local teams to get the fun, you're less of a footy fan and more of tribalistic rivalry fan or something. It's insular thinking that people always like to characterise Sydney with. It's not 1950 any more.

The old VFL is dead. Move on. If playing local teams is so important, go follow the existing VFL. It's nothing but local teams!

Agreed 100%. Fans of clubs interstate clubs(West Coast for example) are EQUALLY as excited to watch their club play North Melbourne, as they are to watch their club play Collingwood or Brisbane. It doesn't matter who the opponent is, its the footy that matters.

 

[Ernie Eclectus]

Re: North on the Brink

It would be nice to see Tassie get a seem, but it would seem weird to see a team named "North" to be relocated to be the southernmost team in the league.

What is wrong with the "Northern Tasmanian Roos"?

 

[MC Extra Dollop]

Re: North on the Brink

I think if and when the AFL move to Tassie they will look to set up a new franchise for the state. As has been mentioned many people in Tassie already have a side they follow and whilst it may not make a huge difference people are much more likely to jump on board a new tassie side then to switch to an old rival now based in Tassie.

It would be an interesting situation to see what happened if they relocated to Tasmania. I think the pros for their supporters would be the ability to keep their players and jumper, making it a similar move to South Melbourne's to Sydney. As you've mentioned though, Tassie is an Aussie Rules state, so whether Tasmanian supporters would be willing to switch sides would be a huge query.