North on the Brink of financial disaster - The Age

[irukandji]

Re: North on the Brink

$7M debt @ 7% is $500K/year to service it - that's double North's profit and 1/3rd of the AFL assistance they receive. This cannot be a good situation.

 

[Consolaçao]

Re: North on the Brink

I think the point mrpez was making - is that a large part of the mobilsation and money raised was done prior to Jim being diagnosed with cancer.

I don't have a timeline of all functions - but as of August 2008 - DD had raised $2m. Jim was diagnosed in July 2009.

So attributing his success due to his circumstances is plain wrong.

No doubt his protection in the media comes from his circumstances, but not a large part of the mobilsation of support resulting in debt being reduced.

I don't doubt that he was doing a fantastic job before he was diagnosed, but when was the last time you read an article critical of Melbourne?

 

[Kings Army]

Re: North on the Brink

Always find this argument to be a strange one.

North Melbourne get a fair draw, but they don't get good timeslots because nobody wants to watch them play.

They're compensated for having a small supporter/membership base, and a general lack of interest in them.

So if we played the Pies every Anzac day live on TV there would not be 90k at the game and thousands watching the game? Even though Essendon who were pus in 2010 and played an embarrassing brand of football on Anzac day still got thousands to watch the game.

Also I really enjoy Friday night football. 11th V 14th from 2010 is really a joke of a game against 2 crap teams but still I will watch - even if the football is pus. General lack of interest comes from people who don't really like football. I will be watching Crows V Bombers - as painful as it will be - its still football.

 

[Gen Y]

Re: North on the Brink

Always find this argument to be a strange one.

North Melbourne get a fair draw, but they don't get good timeslots because nobody wants to watch them play.

They're compensated for having a small supporter/membership base, and a general lack of interest in them.

Not true.

A fair draw would involve each team playing eachother the same amount of times over a number of seasons.

The AFL has a plan to maximize gate takings by playing "Blockbuster games" each year, and to compensate those teams that miss out, they have the equal distribution fund.

 

[Rob]

Re: North on the Brink

Collingwood had $10,000,000 sitting in 'cash and cash equivalents'. That is not money in a bank account... it includes things like shares.

Totally incomparable to a figure sitting in a bank account.

FFS, you're out of your depth here.

Shares are not a 'cash equivalent'. And in any case, if you looked a touch deeper at it, their $10m consists of about 500k cash at hand, and the rest cash at bank. It clearly aint shares. They even define what 'cash and cash equivalents' are in the report.

 

[MC Extra Dollop]

Re: North on the Brink

Well you must be a fickle supporter if you would jump ship just because a struggling opposition team has been relocated to your area

Sometimes it's best to actually think about what you are saying before running your mouth off .

You also have no idea about the Tassie demographics ..nobody from the North of the state (half the population) will travel to Hobart to watch a relocated team play on a sub standard ground .

Nobody has the millions to spend on another football venue when there is already one in the state .

You really do have no idea

Take it easy...

I wasn't speaking for myself. I can only guess at what someone in Hobart would do. I think it's fair to assume that a significant percentage of the population would not have felt an overwhelming connection to a team they have never seen play in Hobart and would therefore become supporters of a club that is representing the city in which they live. And for those that stay loyal to their current AFL club, well then their children would, in all likelihood, become Hobart Kangaroos (as an example) supporters, rather than following in their parents' footsteps.

As for the infrastructure for a club in Hobart, yes you've got me...not my strong suit. But, by the sounds of it, the Tasmanian government and the AFL have had serious discussions about this in the past and it would never be an option if they were unwilling to put the groundwork and funds in to make it work. My post was looking at it from a supporter's perspective, not an infrastructure perspective.

 

[Tas]

Re: North on the Brink

Always find this argument to be a strange one.

North Melbourne get a fair draw, but they don't get good timeslots because nobody wants to watch them play.

They're compensated for having a small supporter/membership base, and a general lack of interest in them.

That is an incorrect analysis.

Broadcasters have to decide by October the previous year which games they want to broadcast. At present they prefer to go for a game with an expected rating result than take a risk and try and guess which teams will be performing.

It has absolutely nothing to do with who wants to see what.

Foxtel make out like bandits in the current climate because they get the vast majority of high quality clashes because network television stations go for the predictability that is Carlton, Collingwood, Essendon and other teams that have been sniffing around the top 4 for a while like Geelong, Bulldogs and St Kilda (currently).

Friday night is the perfect tool for evaluating the success of the network decisions. Friday night results have typically been better without either Carlton, Collingwood or Essendon participating over a number of years, in fact the games these clubs are involved in do not even reach the same average as the games not involving them.

Unless the network can select games on much shorter notice, it is just too risky to select a club like ours unless we have spent a period of time near the top of the ladder and we get scheduled a number of high quality games.

As we rise up the ladder and other clubs like Hawthorn, St Kilda, Bulldogs, etc decline, we will just replace the others. Very few clubs can command high ratings even when not travelling that well. Hell, Hawks couldn't even out-rate us during their premiership year.

 

[King Elvis]

Re: North on the Brink

Not true.

A fair draw would involve each team playing eachother the same amount of times over a number of seasons.

The AFL has a plan to maximize gate takings by playing "Blockbuster games" each year, and to compensate those teams that miss out, they have the equal distribution fund.

They wouldn't be 'Blockbuster Games' if North was playing in them.

 

[Consolaçao]

Re: North on the Brink

I hope people have read the club's website "NMFC financials: The facts", responding to the Age article?

http://www.kangaroos.com.au/news/blogarticle/tabid/9795/newsid/107970/default.aspx

It seems a lot of posters are using The Age article just as Caro would have intended - as a launching pad for their own already held views (and biases) about North Melbourne. If people can't see how this (and her regular, negative articles) create an impression that makes our job harder, I'm staggered.

No time for those actively seeking our demise as if it affects you or your club. Just immature, mean-spirited stuff from those who can't distinguish on-field from off-field issues. I think the BF term is 'haters'?!

They won't read it.. clashes with their world view.

 

[Bestbird]

Re: North on the Brink

You would think after turning down the AFL's goldcoast offer that they would be in a stronger position than it appears a couple of years later.


Seems to me that Norths are really backing themselves into a corner with the current training facilities expenditure meaning staying in Melbourne is the only option in the short to medium term and the AFL you think would be reluctant to help as much they could due the club turning down the relocation option which they strongly favoured.

Interesting times ahead if things do go bad, ironicly the TV rights will probably save Norths even though they bring little to the table for the broadcasters due to their lack of footprint in the media market.

 

[The Falcon Strike]

Re: North on the Brink

Not true.

A fair draw would involve each team playing eachother the same amount of times over a number of seasons.

The AFL has a plan to maximize gate takings by playing "Blockbuster games" each year, and to compensate those teams that miss out, they have the equal distribution fund.

North can't play in blockbuster games - because no one turns up to watch

Richmond V Carlton have been blockbuster games to start the season for the last few years. Bothhave been cellar dwellars for a long time - and 70-80,000 still turn up.

Get 80,000 to turn up to a North game and you'll get more blockbuster games. You had your big Friday night exposure game last year celebrating 20 or 25 years of FNF, had pumped it up all week, were given a Big 4 opponent in Carlton - you had everything - and you got 43,000.

That's half of what two cellar dwellar clubs got.

The AFL can't schedule a blockbuster game for North - becuase you don't get blockbusters of 40,000

 

[Goldhawk]

Re: North on the Brink

As we rise up the ladder and other clubs like Hawthorn, St Kilda, Bulldogs, etc decline, we will just replace the others. Very few clubs can command high ratings even when not travelling that well. Hell, Hawks couldn't even out-rate us during their premiership year.

LOL In your dreams

North should have taken the Gold Coast proposal and your future would have been secured.


Looks like you've missed the boat now.

 

[RandB]

Re: North on the Brink

I am not sure. You are saying people didn't become members or kick in money to the club because they didn't like your previous administration?

Obviously our new administration (not just Stynes) has garnered momentum but lets look at the numbers here. Record membership for 2008 - Gardner steps down in June and Stynes new president. Increased record membership figure for 2009, Stynes announces cancer in July after figures released. The trend has continued and is it any surprise given the direction the club is taking? You don't have sustained increases in membership Tas due to sympathy, Stynes' resonance with the membership is based on good Governance and belief. I'm not saying Jimmy's condition didn't have an effect on people once it was announced but you're majorly overplaying this wrt the club's numbers.

I am sure Jimmy would have raised much needed money either way, I just do not believe he would have been as successful had he not had cancer.

There is no way of substantiating this one way or the other but in the whole scheme of things the club would have acheived its goal with DD in any case because supporters knew where the club was at. It also has no baring on the increased crowds MFC had in 2010 or the fact that our operating profits are improving by the year.

Seriously, when someone as ill as him calls out for people to give money not to him, not to fight cancer, but to save his football club and you were a supporter how could you not rally to the cause?

Tas, it is imaterial to the debate in this thread and to why North are down the bottom wrt operating revenue. You're overstating the significance of all of this. MFC had sound operating strategys in place.

Further, more than half of MFCs debt was already gone (pre-announcement) and if you look at the net DD proceeds by year, 2009 had the smallest inflow of the 3 years (remember DD was promoted amongst the supporters in August of each year) - so a month after his announcement. If anything IMO MFC held off on the DD drive in '09 so as not to appear to be cashing in on the situation. The reason why it picked up in 2010 is because supporters wanted it nipped in the bud.

DD Total Pledges & Other Income:

2008: 3,076,000
2009: 977,000
2010: 1,337,000
Total: 5,390,000

That doesn't make it a negative, it doesn't matter how or why clubs get money through the door. But Jimmy has no closet stalker chasing him looking for any kind of story they can turn into a potential negative.

I know you aren't inferring it as a negative but you are grossely overplaying it.

I agree, you guys cop it in the media.

In any case I don't think your financial situation is as bad as made out in 'the Age' as long as you don't have any more significant capital outlays (redevelopment), Aussie Rock brings in some dough and you increase your operating revenue. You really do need to get that interest bearing debt down though, especially in light of an increased salary cap and free agency (factors MFC need to and are preparing for as well).

 

[Kimbo]

Re: North on the Brink

Always find this argument to be a strange one.

North Melbourne get a fair draw, but they don't get good timeslots because nobody wants to watch them play.

They're compensated for having a small supporter/membership base, and a general lack of interest in them.

I'll assume for the moment that you have an open mind here. (Not wanting to have a go, but many who say this have already made their minds up about this issue).

Firstly, it is a reasonable starting assumption that our crowd numbers (and TV watching numbers) aren't, other things being equal, as good as say, Collingwood.

It is also fair to suggest that TV execs will, other things being equal, want larger, not smaller numbers watching, and would, other things being equal, prefer to schedule a Collingwood over a North Melbourne for that reason.

It is not reasonable, however, to suggest "nobody" wants to watch them play. That's an exaggeration and ungrounded. There have been times our games have rated well on TV.

Which brings me firstly to "other things being equal"; the point being "other things are not equal". A range of other factors come into it. On field success and an attractive style of footy being two such factors (while others, like rivalry, 8 point games etc. also come into play). In the case of NM, our attendances and ratings on Friday night, FTA were decent in the 90s. Why? Successful team, star player etc.

While Collingwood (just an example), may have more supporters than North Melbourne, it doesn't mean that 'neutral' supporters don't want to see a North Melbourne game, or that of other clubs, if other factors are present. Neutral supporters who watch, Friday nights, outside their own club, may prefer seeing a range of good clubs play (where good is defined by currently successful, up and coming, competitive etc.) rather than just the bigger clubs.

Which leads me to my last point. It requires a longer-term view, and it revolves around the ideas of social constructionism. In essence, success is quite often based on what is first perceived to be so. The same holds true for a lack of success. The 'reality' first occurs in perception. The implication is that, other things being equal, the more exposure the bigger clubs get (aiding perception), the bigger they get and the less exposure the smaller clubs get (out of sight, out of mind), the smaller their base gets. In effect, self-fulfilling prophecies.

What this means is that, over time, you'd see a reversal of the growth trends if teams that get lots of exposure got less, and vice versa.

The equalisation fund, as I understand it, 'compensates' for a range of factors, including stadium arrangements, scheduling. It doesn't compensate us for your perceived 'general lack of interest' in us or for our membership base. That said, I think it should compensate us for the longer term impact that the other factors have on our capacity to generate support.

 

[DaVe86]

Re: North on the Brink

I have no question that in the next decade, another team will fold. At the moment North seem the most likely, but there are other candidates as well.


The AFL wants a national competition. It can't be truly national with 10 Vic sides.

Already the MCG and Etihad are rarely filled. Anyone that comes to Australia from overseas always makes comment that our stadiums are empty for sporting games. This shocks them. With 10 teams vying for supporters it makes it hard to fill stadiums.

Also, an 18 team comp is not ideal either. I can see the AFL trying to reduce it back to 16.


In my mind, the question is not IF a team will fold...it is WHEN a team will fold. If I were Bulldogs, Melbourne and North Melbourne, I'd be seriously thinking about a merger that would place them in a position to be the strongest club in the state in the next 50 years.

I don't understand why Vic has a central, Northern and Western side. Surely you could merge all these 3 teams into 1. We automatically move back to a 16 team comp...and only 8 Vic sides. Considering Melbourne has expanded...the new side would represent the entire Melbourne as opposed to a portion of it.

The team would be placed to be the best and most marketable team in the comp once new generations come in, and it would amalgamate 3 support groups together.


Maybe a radical and outlandish idea...but I wonder whether these 3 Vic clubs want to continue scraping by for the remainder of their existence...or whether they want to get on the front foot and make a super-club that could rival Collingwood and Essendon.

Sometimes passion and loyalties can only count for so much. The AFL has shifted its focus to expansion sides...and they are the ones getting all the benefits. In this new climate, the weak sides will struggle more than ever.


Either way, discussion on this issue is necessary. We've had 5 new teams enter the comp in the last 20 years...that's an average of 1 every 4 years. So more will come. But I think some have to go first.

 

[NQTIGER]

Re: North on the Brink

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.



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.



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.



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.



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.

Yes but if you use borrowings and handouts to POST a profit, the bussiness is not travelling well and the quicker the supporters draggged their head out of the sand, the better.

Debt went up 1.25 mill on the back of a profit?

What are these assetts they speak of?

Leases on a building?

or does north own the freehold?

Leases on a buliding are only assets IF they can be realised.

At least in the old days you could sell some players and make some money.

 

[John Dorian]

Re: North on the Brink

LOL In your dreams

North should have taken the Gold Coast proposal and your future would have been secured.


Looks like you've missed the boat now.

I laugh at the people who think the Gold Coast would have been the best for North Melbourne, when really it would of been the end of our club.

Plus, if I wanted to go for a Queensland team, I would be supporting Brisbane already.

 

[incubi]

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).

.

Weird seeing that it's written by an award winning business writer (Melbourne Press Club Quill Award) who is an experienced columnist for the age business section.

 

[Consolaçao]

Re: North on the Brink

FFS, you're out of your depth here.

Shares are not a 'cash equivalent'. And in any case, if you looked a touch deeper at it, their $10m consists of about 500k cash at hand, and the rest cash at bank. It clearly aint shares. They even define what 'cash and cash equivalents' are in the report.

Yup, you're right... the point remains; you were being deliberately misleading by comparing Collingwood's CCE to the $2700 odd sitting in North's bank account.

 

[Rob]

Re: North on the Brink

Yup, you're right... the point remains; you were being deliberately misleading by comparing Collingwood's CCE to the $2700 odd sitting in North's bank account.

Eh? I didn't do that, you did.

It's not unusual for a small company to have a low balance in their cash account at given times (the one I work for runs very low at times; it's deliberate, and certainly not necessarily symptomatic of financial problems).
Accountants are not idiots. They're good managers of money and they'll have cash flow spreadsheets designed to make maximum use of cash. I dunno what you'd all expect, but I doubt Collingwood's got $3,000,000 sitting in their bank account.

Whatever point you were trying to make, it was a terrible example for you to use.

BTW, for the record, $2749 is North Melbourne's 'Cash and cash equivalents'. They are entirely comparable. I'd imagine in their case it would include the club shop's float and the admin's petty cash.

 

[SweetLeftFoot]

Re: North on the Brink

LOL In your dreams

North should have taken the Gold Coast proposal and your future would have been secured.


Looks like you've missed the boat now.

As an AFL owned Gold Coast club.

That resembles North how?

 

[vonn]

Re: North on the Brink

They've doing far more for Sydney for thirty years now.

At least Sydney are showing signs of financial stability, despite some minor fluctuations. North...

Anyway I don't want to turn this into a Sydney VS North thread again, but you'd be silly to not even be a little concered about the financial state of NMFC if you're a supporter.

 

[SweetLeftFoot]

Re: North on the Brink

At least Sydney are showing signs of financial stability, despite some minor fluctuations..

That's coz you died and got bought by the AFL.

This is the fact. You died, the AFL bought you. Don't lecture other clubs on surviving when you died.

For the record, I'll point out the hypocrisy of other club supporters.

 

[Bulldog1954]

Re: North on the Brink

I don't understand why Vic has a central, Northern and Western side. Surely you could merge all these 3 teams into 1. We automatically move back to a 16 team comp...and only 8 Vic sides. Considering Melbourne has expanded...the new side would represent the entire Melbourne as opposed to a portion of it.

How are the Dogs, Roos and Dees geographical identities any different to other Melbourne clubs? Why shouldn't out of nine teams in Victoria there be one that represents the West for example? I would have thought being the only side in the west of Melbourne (Essendon maybe borderline but they hardly embrace the west) would be a boost to the Dogs future prospects. Why would you have one team representing the entire Melbourne population when there are eight teams in Melbourne? How is North Melbourne being named after a suburb any different to the numerous other clubs doing the same thing? Aren't Melbourne in theory representing all of Melbourne, hence the name Melbourne? Strange, strange argument.

 

[vonn]

Re: North on the Brink

That's coz you died and got bought by the AFL.

This is the fact. You died, the AFL bought you. Don't lecture other clubs on surviving when you died.

For the record, I'll point out the hypocrisy of other club supporters.

Geez you don't need to get so defensive, when did I start lecturing?
The AFL itself was alot different then compared to now, espescially financially. Clubs generate much, much higher profit, their is much more interest in the game and membership $ and if North are raising those figures NOW in the 21st century, you have to wonder how long the AFL can keep supporting them for.