Power lose $514k

[RussellEbertHandball]

Cheers REH re: the cash vs accruals. Effectively what I was trying to say, I just couldn't do it as well.

No worries. Plenty of experience in preparing a set of accounts makes it easier to explain.

 

[RussellEbertHandball]

Sounds good, but like others have said or at least implied, it's worrying if we aren't breaking even BEFORE any wizard cup or finals payments. These should be the icing on the cake, used to invest in non-footy related investments to help 'average' (and increase) our cash flow whether we are having a good or bad year.

I agree but we can't be too choosey at the moment. We went after the 2001 and 2002 Wizard Cup with the combined reasons of playing good footy at the start of the year and getting the cash prize. We were losing money in 2000 + 2001 and made a small profit in 2002. If we don't have too many serious injuries through the pre-season we should aim to win the thing rather than just give all the kids a go. Play some, but play to win.

 

[sog35]

No worries. Plenty of experience in preparing a set of accounts makes it easier to explain.

I'm of the green pen variety, albeit without the CA intials just yet and the treatment of the lottery is definately conservative.

What I was trying to say is that although Financial Statements can be prepared on an accrual basis, certain types / line items of income can be recorded on a cash basis. Can't comment in detail what the taxman has to say about it all though.

 

[Crow-mosone]

stuff

it's been a long while since you wore that hat hasn't it?

we'll discuss a bit later.

 

[Crow-mosone]

Cheers REH re: the cash vs accruals. Effectively what I was trying to say, I just couldn't do it as well.

that's because he just repeated what I said originally re: certainty of recognition

 

[Crow-mosone]

I'm of the green pen variety, albeit without the CA intials just yet and the treatment of the lottery is definately conservative.

dude,
before it's too late, leave the green pen. go into corporate finance, or even advisory.

 

[sog35]

Are you sure? I thought your problem was whether it could actually be deferred?

Really haven't taken to corporate finance either.

 

[Eago77]

Why dont we just "write it off", everyone's doing it!

 

[Toots Hibbert]

Why dont we just "write it off", everyone's doing it!

That would relate to an investment gone sour wouldn't it? Not the same as an operating loss. Doubt I'm using the right terminology but I hope the meaning is correct.

 

[portentous]

If we can't make a profit when we're the reigning premier, when the hell will we??

 

[Ford Fairlane]

Seeing as the SANFL owns both licences I'm sure they could just redirect some of the crows profits to help out our 'ailing' club. I'm sure Trigg & co would be very pleased to know their money for just turning up is being wisely invested.

 

[Pinepower]

Seeing as the SANFL owns both licences I'm sure they could just redirect some of the crows profits to help out our 'ailing' club. I'm sure Trigg & co would be very pleased to know their money for just turning up is being wisely invested.

That would be interesting

 

[noddy]

Seeing as the SANFL owns both licences I'm sure they could just redirect some of the crows profits to help out our 'ailing' club. I'm sure Trigg & co would be very pleased to know their money for just turning up is being wisely invested.

Always willing to give a helping hand to those in desperate need who are less fortunate than ourselves at this time of the year.

 

[Ford Fairlane]

Always willing to give a helping hand to those in desperate need who are less fortunate than ourselves at this time of the year.

A heart bigger than a crate of 2 litre coke bottles.

 

[Crow-mosone]

Are you sure? I thought your problem was whether it could actually be deferred?

Really haven't taken to corporate finance either.

What I was saying is that IF there was certainty of receipt, I'd be surprised that you were entitled to defer it. As you have done so, I would wonder how certain the income is at this juncture, and if there wasn't certainty it shouldn't be added onto this years figures as an "adjustment".

just a discussion point, no one knows what the actual situation is, but you can infer some things from the treatment.

Nb. corporate finance rocks! Get yourself a copy of "Barbarians at the Gate", and tell me you don't want to be an investment banker.

try tax or advisory, but don't listen to the "auditing is a great grounding for other stuff" spin.

 

[Crow-mosone]

I am going to try and be brief here, as my overriding thought is that your post is about 3 times longer than it need be, and you must have too much time on your hands.

if I leave something out, you think I shouldn't have, let me know. but keep it brief, there is too much waffle here. along with some unsound conclusions

So let me put on my old chartered accounting hat on, one I don’t wear too often these days, and make some comments on the financial results and above comments. Let me say that I don’t have a copy of this years annual report in front of me

whilst that much is obvious, let's see how this statements stands up as we work through this.

With a net trading loss ok $514k and a $220k distribution to the SANFL our net assets have decreased by $734k from $5.984m to $5.25m. So the true bottom line was a loss of $734k but the $514k is the correct figure used to compare against other clubs, as only 3 of the other 15 have to make a distribution for a sub-licence. I don’t know where the $850k loss some have mentioned comes from.

The SANFL distribution over the period 2003 to 2006 was set at $1,060k, so far we have paid,
2002 $ 75k prepayment
2003 $225k
2004 $220k
2005 $220k
Total $740k , therefore $320k will be paid next year. It will be interesting to see what the SANFL negotiates for the crows whose fixed distribution was for the period 2003 to 2005, and then for us. I suspect they wont go back to a % dividend as they have survived so far without it for the last 3 years. I have argued in other threads that this is the correct thing to do and the WAFL has followed suit and decreased the Eagles and Dockers dividend pay out rate.

umm. wrong, wrong, and er wrong.

for a start the SANFL payment is not a dividend, it has no characters of a dividend. it is fixed, predetermined, paid irrespective of performance, and is not set by the directors.

the 514k is not correct to compare against others, as this is a regular license/royalty payment that needs to be paid regardless of results. It has nothing to do with dividends or the financing side of the business: ergo should be included in the final operating result. the loss for comparison is £730k . anything else is wishful spindoctoring

Many of you have said your not happy with the result, no one should be but you have to look at the whole picture to see if it’s poor management or unforseen circumstances that have accentuated the loss. ie where were the major variations from the budget. Port said that they had budgeted to make a small profit in 2005. I’ve never seen a figure, but I assume in meant less than last year and enough to cover the SANFL payment.

Lets look at last year’s result to start analysing this year.

Operating loss prior to finals ($584,00)
Profit on sale of investments $196,000
Profit from premiership
Incentives, prize money,
Merchandise sales $720,000

Profit prior to SANFL distn $332,000

Last year the club exceeded their revenue budget by the following amounts;
Merchandise $869,000 mainly due to purchases of premiership merchandise
AFL prize money and distributions $278,000
Sponsorship incentives $160,000.

I don’t know what the club budgeted for this year but these revenue streams didn’t produce the same income in 2005. From the AFL’s 2004 Annual report Port received $130k finals allowance and $265k prize money ($15k for Wizard cup). If the same amounts paid last year were paid this year, then they only received $70k + $80k+$15k for Wizard cup. So there’s $230k less than last year along with the $160k Scott’s and Vodafone didn’t have to fork out. Now if we budgeted for the same amount as last year then this would have been a poor management decision.

err lots of budget waffle, but it is irrelevant. we are not judging line managers performance, but the performance of the organisation as a whole. who gives a monkeys about budgets. the money still needs to be raised, paid out etc.

for external references, management planning is not a credible benchmark.

Performance management is about results, and with increased memberships and gate takings, the result is poor. who cares about a budget?

though I note you made a sizeable operating loss prior to the finals last year, disguised by abnormal merchandising revenues.

In 2001 Port had the 3rd lowest football operations expenses in the league and by the end of 2004 this had risen to the 3rd highest. The quest for the premiership costs money. This was a conscious decision taken by the board over the 3 years to increase the football operations department. With out knowing the full figures, it blew out last year and probably was on budget this year until the Primus payout.

I thought you cut back your operations dept heavily this year??

ps. stop with this budget clap trap.

So we start 2005 knowing it will be tight and if things go wrong on the field, then our results will suffer accordingly.

so you're on an unstable footing?

It will be interesting to see what has happened to total revenues and expenses in 2005. Maybe some of you who have the report can fill me in.

Our trading operations revenue had increased from $19.8m in ’02 to $21.5m in ’03 to
$23.2m in ’04. Other in come was $347k (’02), $84k (’03) and $429k. The growth in trading revenue was good and to my surprise higher than the crows turnover. Other income are one off’s such as sale of investments, fixed assets etc. With respect to Football, Marketing and Admin and Interest and Finance costs these have moved from $17.2m (’02) to $18.2m (’03) and then $19.9m (’04).

and yet the losses keep growing. so you can't control your costs. Now that is something to worry about.

PRIMUS PAYOUT
I’m not sure how much of this is for his payout but I would assume that it’s probably $300k+ of the $409k. When the budgets were set in October 2004 there is no way the club would have budgeted for this payout as he was under contract until 2006. I suspect that Pelchen’s redundancy probably had been budgeted for, but I don’t know if restructuring of the sales and marketing department expenses were as new General Operations Manager position wasn’t advertised until well into the football season.

Primus’ payout was extraordinary in layman’s term but abnormal in an accounting sense. An Abnormal item is so because of “reason of size and effect on the results for the reporting period.” Under the current CBA, Port did not have to make a termination payent to Primus!!!!
From Clause 12 of Schedule B of the CBA;

12. Termination Payment
12.1 An AFL Club shall be entitled to apply to the AFL to delete a Player’s name from its List and by written notice to the Player in accordance with the contract, terminate the contract upon the Player being delisted. In such case, the contract shall be at an end provided that the AFL Club shall pay the Player by way of compensation:
(a) the balance of the base payment payable for the year in which the Player was
delisted;……………..
(c) where the Player’s contract had one or more further years to run, the base
payment for each year following the year in which the Player was delisted;
and……….
……
12.3 The provisions of this paragraph shall not apply to a Player:
(a) who, by his agreement, is involved in a pre-draft transfer between AFL
Clubs which results in a transfer and such Player being listed with the
transferee Club;

(b) who has retired;

I have given up trying to work out if this payment is or isn’t out side the Total Player Payments and if so if it relates to 2005 or 2006. Prima Facie it appears to count for 2006 but I’m not 100% confident, as the CBA isn’t clear on this. There are probably AFL regulations that cover this situation. However, I figure the club would have got the relevant guidance from the AFL and they did the honourable thing by Primus and giving him a redundancy payment. This is a cost I believe the overwhelming majority of members are prepared to wear. I think that Shane Bond would have been the only other player in the 9 years in the AFL that Port would have made a termination payment but it’s a bit of a guess.

jesus dude, you needed about 1 paragraph for that.

In short you are obliged to pay him his base year payments.

are you suggesting that that you guys paid him money he wasn't entitled to???

don't be silly. that is a ludicrous explanation.

it was your contractual obligations - therefore not extraordinary, or abnormal.

You could argue that a company running at a loss, making a discretionary payments like this, could be accused of mismanagement. i.e. it wasn't discretionary.

At most it was a timing issue; probably paid in advance in return for Matty taking a discount on his entitlements.
that's just commercial reality of payouts, otherwise you would drip feed it to him under the terms of his contract.

So to say that a $300k termination payment to a player that wouldn’t have been budgeted for, is a smoke screen and is just a small part of the TPP, is an ill informed comment.

really?

BASIC ACCOUNTING RULES

Lets sort out this Cash Vs Accruals accounting issue. There is no law saying that you can’t mix cash and accruals accounting. It happens all the time in a majority of organisations in this country. A classic example is the receipt of passive income such as interest, dividends, royalties, rent etc. Most organisations which have an accruals accounting system only record these income streams on a cash received basis. They do this because of simplicity and the Tax Commissioner and case law have ruled that for most taxpayers they only have to account for this income on a cash basis. These rules don’t apply to banks, super funds and other businesses whose principle business is one of investment and receiving passive income. Also situations such as dividend reinvestment plans are when the cash basis is ignored.

For example, most small to medium businesses who work on an accruals basis will not show interest accrued if they invested say $100k in a term deposit for 6 months @ 6% on the 1st of May. They are unlikely to show accrued interest at 30 June of $1,000. Now if your BHP with $10bil in a term deposit thanks to our Chinese comrades, they will show accrued interest earned of $100m at 30th June because it’s a material amount.

What the Commissioner of Tax doesn’t allow is the accounting of normal trading sales on a cash basis and then claiming expenses on an accruals basis, or vice versa.

Accounting standards talk about being consistent with one form or another but in practice they are mixed. Examples I have seen are Research and Development expenses and Mining Industry expenses. Some expenses go straight to the P&L and others are capitalized and there is bugger all difference. The Auditors will only qualify the financial statements if they believe that the difference will cause a material impact on the financial result. So if the conservative approach is taken and these expenses go straight to the P&L the auditors are likely to give it a green tick.

blah blah, blah.

aside from the fact you are just wrong.
has something changed, do you not need to state the basis on which the accounts are prepared in the notes to the accounts?????

are there not statutory obligations to adopt accrual accounting in respect of companies of certain size?

as stated above in an earlier post, you can apply accrual principles to cash items, but that is not cash accounting.

Now on the tax issue, this is where you get really confused.
1. it is not about tax, in fact it is nothing to do with tax.
2. accounting principles are regulatory and take account of different tax treatments, and their timing effects (permanent in some cases of course).

tax arguments couldn't be less relevant to the discussion of proper accounting treatement; I am surprised a CA would suggest otherwise??

The green tick merchants don’t worry too much about recognising expenses early but they do have a problem with recognising revenue early. Oh, except for the auditors of Enron and HIH.

Really, that is why a number of closed cap insurance companies are carrying qualified accounts for over providing for potential losses, and reducing their incomes - and not caring? for tax shield purposes? (see if you can work out how this relates to the above paragraph)

ps. Enron was all about off shore structures and derivative based gains brought onto the balance and obligations held off it, nothing to do with green pen permissiveness - they didn't understand what was going on.

So the deferral of lottery income I’m confident is ok. If they have received the cash and Boulton is saying that they have deferred the recognition of income until 2006, then the other side of this entry is sitting in the Current Liabilities as Unearned Income. If you don’t know what the lottery is about, what the obligations attached to these funds are, what has been recognised in the balance sheet then you are just involved in idle speculation.

how is your sense of irony?

One offs, and/or abnormal items will occur each year. It’s all about the size and effect of these abnormal items and if they have been budgeted for that is important and how the club manages these unforeseen expenses, and that the management team effectively deal with them. There will be more next year and in the following years.

which is why they shouldn't be singled out as anything unusual.
especially those contractual payments to retiring players, which are not abnormal.

Last year we had cash reserves of $800k and interest bearing debt of $3.0m. Someone said our debt is now $3.8m. What’s the 2005 cash assets total?

how does this matter? you are 750K down on net assets by your own admission, so why does the sub analysis of cash assets matter? this decrease has to be funded from somewhere, and an increase in debt is a reasonable expectation.

Some people have said that we have record membership and increased crowds and have wonder why this hasn’t reduced the loss. I am skeptical about the record membership. Last year we had 36,340 members. Our highest figure is 38,305 in 1998.
I haven’t seen a final figure but I did see an early figure that was in the high 36k around the start of the season. Unfortunately the figures in the annual report don’t break down income from memberships. A rough guide is that it’s a $100 per membership. So our extra income from memberships this year was probably between $100k to $200k, a good increase but not great.

Remember our total membership is the addition of;
club members who aren’t season ticket holders or SANFL members, plus
club members who do have season tickets or are SANFL members, plus
season ticket holders only, plus
SANFL cat 1 members only, plus
SANFL cat 3 members only

Also Port has pushed to increase junior memberships. You only get $45 income from new junior members and $45 or $79 for the cheaper season tickets for kids. That’s why $100 per member is the rule of thumb used throughout the AFL. We also only get a small amount of the membership fee of SANFL members. So if the SANFL members have increased then this has a limited impact.

surely it is a rule of thumb that a flag = more memberships?

regardless of class, more members = more cash.

As someone said above we do a good job on the revenue side but we have to be tougher to controlling expenses. Some of these were unforeseen, some should have been managed closer. I heard Brian Cook from Geelong a couple of years ago say how important and powerful the word NO is. It could be time for our CEO to start saying this more often. It would have been tough for the new guy following Bucky to do this in his first year but he has to start doing it more often in 2006.

as mentioned above. and? if you can't manage costs, you might not as well bothered to raise revenues. if both go up at the same proportion you are no better off. however you might be getting worse?

So I take a realistic rather than pessimistic approach to our results. Not good but not disastrous.

an optimist always thinks he's the realist, and dissenters are the pessimists.

Myself I don't care, actually I'm rather pleased.

Ps. hope Bucky is enjoying his job, and has no intention of returning

 

[Toots Hibbert]

I'm sure it's probably just me but words like Wan*kel Rotary Engine came to mind when I read this post.

 

[Hodges 153!]

I


ergo should be included in the final operating result. the loss for comparison is £730k . anything else is wishful spindoctoring

Eh?

Perhaps working in the wrong units is the problem in your equation Mr Gerard.

 

[Powerstufff]

I'm sure it's probably just me but words like Wan*kel Rotary Engine came to mind when I read this post.

Not really fair in my eyes. I think Crow-mosone had done a fine non-partisan job in his posts on this subject and in fact I'd like to thank him for his efforts.
I don't know enough about accounting to argue the fine points. But as OneTel, Enron, HIH etc have shown neither do most accountants. The thing is we keep losing money and can't present any credible explanation of why. Either we make more or we spend less or we end up sucking on the teat of the Competitive Balance Fund.
All I see Crow-mosone doing is pointing out problems with some posters' logic.

 

[Toots Hibbert]

I don't object to dissenting opinions and one should weigh them up no matter where they come from. I think the state of our finances is something to be concerned about and the more I read about it from people who have a better understanding of financial matters than I the better informed I'll be. It just raises my hackles a little when a person giving his views has a firm grip on his member while doing so.

 

[Malibu#27]

jesus dude, you needed about 1 paragraph for that.

In short you are obliged to pay him his base year payments.

are you suggesting that that you guys paid him money he wasn't entitled to???

don't be silly. that is a ludicrous explanation.

it was your contractual obligations - therefore not extraordinary, or abnormal.

You could argue that a company running at a loss, making a discretionary payments like this, could be accused of mismanagement. i.e. it wasn't discretionary.


At most it was a timing issue; probably paid in advance in return for Matty taking a discount on his entitlements.
that's just commercial reality of payouts, otherwise you would drip feed it to him under the terms of his contract.

This is exaclty what has happened ... The club has paid him out in advance ... at a reduced level to the mutal agreement of both parties.

Obviously it makes this years books look worse than they would if they had elected to make the payment next year.

This means (simplistically) that next year our expected spend on players is reduced by this payment that was brought forward to Primus. ($280,000)

Also we may be saving some additional dollars in this area, depending on if all of the salary previously taken up by Primus (more than $280,00 and more like $400,000) has been reallocated to other players or not. Ie - I suspect our TPP next season may be reduced slightly given the relative ins and outs of our side:

Ie -
$400,000 - Primus
$300,000 - (est) Pickett (maybe more - he was reputedly one of the highes t couple paid at club)
$200,000 - Montgomery
$250,000 - James

Major money coming back in is $300,000 or so for Motlop and $150,000 or so for Lonie plus a pile of rookies. Lets assume a further $400,000 for upgrading of existing player contacts (total $850,000) leaving $300,000 plus the salaries of our other delisted players to cover the payments of our draft picks and rookies.

Lets assume we pay out $200,000 less next year on TPP (due to the retirement and moving on of some senior players and the addition of a lot of youngsters)

To rephrase - the exodus of 4 of our senior players (and their associated salaries next year is a huge gap in the salaries paid - which I believe will not be completely filled - unless the club is stupid) ... hence our player payments will be less.

So - in theory we have a saving on our costs next season (added to the $280,000 we wont be paying for Primus - because we have already paid it) and we have close to $500,000 saving on costs compared to this year purely on the playing list alone.

 

[Eago77]

That would relate to an investment gone sour wouldn't it? Not the same as an operating loss. Doubt I'm using the right terminology but I hope the meaning is correct.

Can MAtty's knee be considered a bad investment??

Anyway i meant it in jest (a Kramerism no less).

A loss can be explained away with fancy account etc, i'm more concerned with our assets, those being the team, the club and the player's facilities. More money cant get you better players, we're still paying the majority of the salary cap - just like all teams (min 95%), our training facilities are still among the best in the league and we have a decent clubroom (not a shed ) .

More money can get more coaches & support staff which can be important, if you pay peanuts you get Mickans, er monkeys, but good support staff dont have to cost the world and how many assistant coaches are really needed?

 

[RussellEbertHandball]

I am going to try and be brief here, as my overriding thought is that your post is about 3 times longer than it need be, and you must have too much time on your hands.

You’re the master of this subject given the number of posts per day and time you spend on here. Are you a bit cold and lonely there in the motherland and need a bit of the Aussie warmth coming through your computer??

umm. wrong, wrong, and er wrong.

for a start the SANFL payment is not a dividend, it has no characters of a dividend. it is fixed, predetermined, paid irrespective of performance, and is not set by the directors.

Where did I say the current SANFL distribution is a dividend??? I asked if it will go back to a % dividend and referred to the WA clubs distribution as a dividend. Now you know that nearly all licence fees are either a % of sales or a set fee rate. The SA licence fee’s were paid out of profit before they set a fixed fee, and the WA licence fees are paid out of profits. So the SA fee was, in the nature of a dividend, and the WA fee is. The questions is what happens next?

the 514k is not correct to compare against others, as this is a regular license/royalty payment that needs to be paid regardless of results. It has nothing to do with dividends or the financing side of the business: ergo should be included in the final operating result. the loss for comparison is £730k . anything else is wishful spindoctoring .

You obviously have or currently work in the finance field. Have you ever done an EBIT or EBITDA comparison of companies?? Ever compared revenues or expenses of different companies? Ever compare KPI’s? It’s not always just about the bottom line.

Let’s look at a couple of examples as to why it’s too simplistic to just look at the bottom line. WCE are expected to make a $4m profit and Collingwood $2.4m in 2005. I’m not sure what the new sliding distribution % is (did you like that word better?) but lets assume it’s the old 80%. Therefore, WCE’s bottom line is $800k and Collingwood’s is $2.4m. Is Collingwood run 3 x better than the WCE???

Let’s look at 2001 when the Crows made another $1m profit and the PAFC Ltd made a loss but the Port Club and the Port Foundation made profits which resulted in the Group making a $284k profit. Port didn’t pay the league a distribution because the footy club didn’t make a profit. If we assume that the Crow’s made $1.0m profit and distributed $800k then their bottom line is $200k. Was Port a better run club than the Crows in 2001 because it’s bottom line was bigger????

Now your just sh itstirring, you aren’t that dumb are you?

I understand your argument about a set fee but if you are going to compare apples against apples across the 16 AFL clubs you have to take into account the distributions the 2 SA and 2 WA clubs make to their state bodies which the other 12 clubs don’t.

err lots of budget waffle, but it is irrelevant. we are not judging line managers performance, but the performance of the organisation as a whole. who gives a monkeys about budgets. the money still needs to be raised, paid out etc.

for external references, management planning is not a credible benchmark.

Performance management is about results, and with increased memberships and gate takings, the result is poor. who cares about a budget?

though I note you made a sizeable operating loss prior to the finals last year, disguised by abnormal merchandising revenues.

You judge management performance on many levels. People here wanted to know what happened. Some things weren’t controllable, some were, that’s what I was pointing out.

Your right about the operating loss last year. Things were cranked up to win the premiership. It happened and the rewards came through last year and the start of this year.

I thought you cut back your operations dept heavily this year??

We cut back on staff, therefore wages expenses went down but I suspect other football expenses were increased in the bid to have another crack at the premiership.

so you're on an unstable footing?

No! The feet are stable but the path ahead is tricky.

and yet the losses keep growing. so you can't control your costs. Now that is something to worry about.

Correct. As I said above we cut some areas, but increased spending in others, (including the timing issue of redundancies) to have a crack at the premiership, with the net result being that there was no revenue windfall from another flag but the same costs as last year.

jesus dude, you needed about 1 paragraph for that.

In short you are obliged to pay him his base year payments.

are you suggesting that that you guys paid him money he wasn't entitled to???

don't be silly. that is a ludicrous explanation.

it was your contractual obligations - therefore not extraordinary, or abnormal.

You could argue that a company running at a loss, making a discretionary payments like this, could be accused of mismanagement. i.e. it wasn't discretionary.

At most it was a timing issue; probably paid in advance in return for Matty taking a discount on his entitlements.
that's just commercial reality of payouts, otherwise you would drip feed it to him under the terms of his contract.

What happens if a player who is contracted to the end of 2006, in the middle of 2005 just retires and says my body can’t take it anymore? Have you read the standard AFL contract? Is he covered to get 1.5 years of base payment because a contract is in place? Does he have any further obligations or is he guaranteed the payout of his base? Is it compulsory? I don’t know? That’s why I asked the question. Do you have 100% certainty.

Of course this was an abnormal item under the definition of abnormal items. You may not like it but stiff cheese. The size and effect of this termination payment fits into the definition.

If it is covered under the TPP, which I presume it is, then assuming it is a 300k payout it has turned the 2005 TPP from $6.3m to $6.6m and the 2006 TPP reduces from $6.3m to $6.0m. That’s a guaranteed $600k reduction in 2006 expenses, which is a bit of a start on reducing a net bottom line loss of $734k. If it’s a 350K payout then it mean’s a $700k improvement on costs. Plus a further $59k redundancies paid to staff which probably won’t occur again. Looks like a significant item to me.

are there not statutory obligations to adopt accrual accounting in respect of companies of certain size?

as stated above in an earlier post, you can apply accrual principles to cash items, but that is not cash accounting.

Now on the tax issue, this is where you get really confused.
1. it is not about tax, in fact it is nothing to do with tax.
2. accounting principles are regulatory and take account of different tax treatments, and their timing effects (permanent in some cases of course).

tax arguments couldn't be less relevant to the discussion of proper accounting treatement; I am surprised a CA would suggest otherwise??

I never said the Lottery’s issue is about tax treatment. Don’t waste your time giving me a lecture on accruals accounting, you need it to troll these boards.
What I was pointing out is, that not all organisations adhere to strict accruals accounting. You made the sweeping statement that everyone must adhere to accruals accounting for all items. More for the benefit of SOG35 and anyone else that was confused or interested I pointed out that small to medium organisations in practice don’t adhere to what you were saying. In practice, they mix the accounting for different items and tend to follow what the Tax Commissioner allows, rather than the accounting rules that are designed for multi billion dollar companies, as it’s easier and means less adjustments at tax time. In the attempt to try to simplify things I may have been a little loose with my explanations.

Statutory obligations don’t apply on the basis of size of companies but whether they meet the definition of a Reporting Entity.

Really, that is why a number of closed cap insurance companies are carrying qualified accounts for over providing for potential losses, and reducing their incomes - and not caring? for tax shield purposes? (see if you can work out how this relates to the above paragraph)

For an entity that doesn’t pay tax, such as Port, this becomes irrelevant. If it’s well known that insurance companies try to create tax losses I’m sure the green tick merchants prick up their ears. Maybe a little sweeping on my part.

ps. Enron was all about off shore structures and derivative based gains brought onto the balance and obligations held off it, nothing to do with green pen permissiveness - they didn't understand what was going on.

That’s one part of the story. Another part is that they regularly booked future income into the current period and guestimated current revenue on certain projects and got away with it. Go and watch the doco “The Smartest Guys in the Room” and/or read the book by the journo who first started poking holes into them. Bloody fascinating.

how is your sense of irony?

Probably better than yours. I deliberately put that phrase in there to see if you would bite, so I could remind you of the following post when Outback Jack was trying to compare the Crows expected result to WCE’s.

http://www.bigfooty.com/forum/showpost.php?p=4121422&postcount=31

why is anyone trying to imply anything or make comparisons, when we haven't even seen the actual statements from either club????

you can't know anything without these.?

So you haven’t seen the actual statement, don’t know the full meaning behind item just read what a couple people posted and then go through the whole process trying to justify that Port’s finance people don’t know what they are doing and you say “ I know what I‘m doing, I know it all, you're all wrong.”
So it’s not right that anyone speculates about your club but it’s ok for you to speculate about other clubs. Yes I love a sense of irony. Pity the Yanks don’t have one.

how does this matter? you are 750K down on net assets by your own admission, so why does the sub analysis of cash assets matter? this decrease has to be funded from somewhere, and an increase in debt is a reasonable expectation.

You’ve taken this out of context. In the next paragraph I corrected the people that said Boulton had stated we were going to make make $1.0m profit in 2007 when what he said was he wanted cash reserves of $1.0m by 2007. Yes I could have asked about cash + receivable – payables but I kept it simple.

surely it is a rule of thumb that a flag = more memberships?

Not for your club. If you win a flag you can’t fit anymore new members into Footy Park. Same situation for Brisbane in 2003 and 2004 and 2005 after their second and third premierships. So unless you jack up the membership fees no new revenue for you or Brisbane if you get another flag. Probably the same for WCE.

You finish 12th in 2004 and make $1,474k –$475k (SANFL Fee) =$999k and in
2005 finish 3rd/4th and make $1,518k - $450k =$1,068k. Great profits but minimal chance to surge ahead unless you win the flag and have huge merchandise sales or invest in non footy activies. I’d rather have your problem of being bullet profit to swings in form but, them’s the breaks.

regardless of class, more members = more cash.

Yep just trying to do a bit idle speculation here.

as mentioned above. and? if you can't manage costs, you might not as well bothered to raise revenues. if both go up at the same proportion you are no better off. however you might be getting worse?

If we do that we can copy most of those Vic clubs and go and stick out our hand for some Competitive Balance money. One way of getting our $4mil back.

Ps. hope Bucky is enjoying his job, and has no intention of returning

Maybe that’s why he left. After 13 years he didn’t want to the tough bastard who said NO all the time because he didn’t know how to. Don’t get me wrong people, I loved Bucky but he probably saw that it was time for some one else to take over the heavy lifting. He has done more than his fair share over the years.

 

[Mad Dog]

errr Mods....I am finding Crow-mo's and REH's posts offensive on account that they are making my brain hurt !

 

[Toots Hibbert]

errr Mods....I am finding Crow-mo's and REH's posts offensive on account that they are making my brain hurt !

You should spend more time here MD. You'd get used to intelligent discussion after a while.