Power lose $514k

[Ford Fairlane]

He'd know from the crows Board that REH button-holed Cro Mo in one with this quote ...

“ I know what I‘m doing, I know it all, your all wrong.”

I reckon Cro-mo's first words were "You're wrong" ... right Cro-Mo?

 

[RussellEbertHandball]

He'd know from the crows Board that REH button-holed Cro Mo in one with this quote ...



I reckon Cro-mo's first words were "You're wrong" ... right Cro-Mo?

....

 

[Crow-mosone]

The thing is we keep losing money and can't present any credible explanation of why.

that's the point, none of us know what is actually happening behind the scenes. what we can say, is that explanations offered by the club aren't very convincing.

From my heavily biased position this pleases me greatly, but you guys shouldn't accept paper thin excuses.

 

[Crow-mosone]

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.

theoretically you may be right; the hardest thing to predict though is the escalations in existing players contracts.

this is why every team supporter will always think they have big $ to lure other players, because they have full visibility on the salaries being saved, but no visibilty on the commensurate increases on current players.
it isn't often the case.

 

[DSL64]

We've already started making a profit by flogging off the crows gear we got the rookies to knock off from their equipment room!

Wouldn't have thought we'd get too much for that shyte though...

 

[Crow-mosone]

i'm going to bullet point this only.

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??

the unnecessary length of your post would be good for a week of jack's.

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?

where? it might have been in the section originally quoted.

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.

EBDITDA multiples are the work of the lazy.
value companies through free cash to the firm, adjust for capital financing, operating leases, changes in working capital. estimate your beta (bottom up), country risk premium, company specific market premiums over risk free rates, discount your equity at cost of equity and debt at Wacc; estimate terminal values using long term growth rates from ROCE x internal investment rate; calculate the value of the net operating losses, tax shield effects of interest; and you get a quick, down and dirty absolute valuation of the equity component of enterprise value.

So most days, actually ok every day.

ok let's get back to bullet points, but I found the above funny.

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???

what point are you trying make? there is no substance to your example if you are trying to illustrate operational efficiency.

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????

going round in circles here. why are you pitching your examples so low, that they don't have any purpose. are you trying to convince me, or teach a year 10 accounting class to the other readers?

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

i don't know, you don't seem to have refuted very much?

I understand your argument about a set fee

your comments about the dividend originally, suggest otherwise.

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.

poppy **** the figure used for comparison should come from the same level of the P&L statements. you are not comparing apples with apples:
if the freo profit (say) is the full value written to equity; and your number still has further deductions before getting to profit/loss written to equity; how are they comparable. this is the same as comparing EBIT with EBITDA.
how long ago did you qualify?

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.

i saw nothing that wasn't controllable. and highlighted such.

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.

you suspect? well i don't know. there you are, doesn't have much room in this debate does it.

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

why?
based on the reasons already stated, this is an unsound conclusion.

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.

I'm pretty sure you demonstrated that revenues were rising too.
how do you say there was no revenue windfall.

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.

what point are you arguing? that he was not entitled to the money?

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.

you'll need to actually address the above point, before subsequent, dependent issues can be assessed. mind you, are you going to address any of the points in my reply or go round in circles and hope no one notices?

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.

do you have any information on current players contract escalations?
and what new costs will replace, the old ones. no? neither do i.
idle speculation perhaps?

I never said the Lottery’s issue is about tax treatment. Don’t waste your time giving me a lecture on accruals accounting,

why? when you demonstrate an understanding, I'll stop. my points specifically referred to your claims.

What I was pointing out is, that not all organisations adhere to strict accruals accounting.

this has been explained.

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.

Sounds like the standards don't permit it?

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

doesn't companies house issue guidelines on this?

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.

maybe.

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

pretty funny for a guy who opened with I haven't seen the statements.

I don't remember referring to them, or stating anything not prefaced with IF. do you?

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.”

you do have a sense of irony. see above.

again, is there anything that isn't based on IF.
I may stop reading soon.

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.

losing the plot now I see. I believe most of my post was devoted to your unsound conclusions.

You’ve taken this out of context.

ok sure thing.

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.

very true. but I imagine, it will boost our sponsorship and merchandising income; and if not, i don't imagine we will post our worst financial result ever behind a thin veiled bunch of excuses.

but aren't you diverting off topic here?

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.

why are you taking off our distributions, I thought you said you had to compare apples with apples, and before distributions were the appropriate measure.

you're not mixing and matching to suit your argument are you?
poor form.

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.

Perhaps. wonder how many of your supporters who have been weened on the teat of constant success, would react to that though?

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.

it does seem someone has taken to saying yes a bit too much. which brings us full circle.

I won't replying if your next offering is as generic, and repetitive of earlier posts as this one. not much new brought to the table here.

 

[Crow-mosone]

He'd know from the crows Board that REH button-holed Cro Mo in one with this quote ...



I reckon Cro-mo's first words were "You're wrong" ... right Cro-Mo?

a bit premature again Ford, is this a recurrent issue for you

 

[Ford Fairlane]

a bit premature again Ford, is this a recurrent issue for you

The moment would have been so much more poignant if you had simply said "You are wrong" .. but I know it's what you meant ...

PS, to be fair Crow-mosone thought he was wrong once, but then realised he was mistaken ...

 

[portentous]

My head hurts

 

[Malibu#27]

theoretically you may be right; the hardest thing to predict though is the escalations in existing players contracts.

this is why every team supporter will always think they have big $ to lure other players, because they have full visibility on the salaries being saved, but no visibilty on the commensurate increases on current players.
it isn't often the case.

Yep - your correct ... escalations in contracts (and in fact contracts themselves) are hard to predict.

The forst point I was making is the $280,000 brought forward for Primus will not occur on a regular basis and its odds on that it wouldnt next season. Basically that would require one of our senior players with 2 years to run currently to have a career ender. As a result its a fair guess that we should be able to save that $280,000 (if we are doing our jobs properly).

The second point was that with Primus, Pickett, James, and Montgomery leaving, and only the one higher paid player (Motlop) arriving, I'd be dissapointed if we were paying the same TPP again next season, as I would consider something has gone wrong there.

 

[Toots Hibbert]

Yep - your correct ... escalations in contracts (and in fact contracts themselves) are hard to predict.

The forst point I was making is the $280,000 brought forward for Primus will not occur on a regular basis and its odds on that it wouldnt next season. Basically that would require one of our senior players with 2 years to run currently to have a career ender. As a result its a fair guess that we should be able to save that $280,000 (if we are doing our jobs properly).

The second point was that with Primus, Pickett, James, and Montgomery leaving, and only the one higher paid player (Motlop) arriving, I'd be dissapointed if we were paying the same TPP again next season, as I would consider something has gone wrong there.

On the other hand if players like Chaplin perform as hoped they'd be entitled to expect an increase in their contracts down the track. You've really got to assume that we will spend close to the salary cap every year. Anything less is not prudent (from a budget point of view) and the club needs to look at savings in areas other than the football department. That's what we're about after all!

 

[noddy]

My head hurts

Quite easy to understand for those of us in the know young lady.

 

[Malibu#27]

On the other hand if players like Chaplin perform as hoped they'd be entitled to expect an increase in their contracts down the track. You've really got to assume that we will spend close to the salary cap every year. Anything less is not prudent (from a budget point of view) and the club needs to look at savings in areas other than the football department. That's what we're about after all!

I agree and I disagree. In the case if a Chaplin (or anyone else) performs then he would expect an increase - and rightly so .... however we should not be spending the cap just because its there.

If for instance overnight you trade away or have retire close to 20% of your TPP, does that mean you should by default respend all of it. (remembering that a large portion of the list - at least the top earners were re-signed for contracts before the end of season delistings and retirements.)

I'm not advocating reducing spending on players as a means of saving cash ... I'm saying that coming off last year, and given the players we've had leave, and the players that we've had come in - I cannot see how we could be spending the same amount this year and saying we are managing the list well.

 

[Port01]

Maybe we should just get the AFL to give us a mill and declare a profit. I should be an accountant.

 

[Toots Hibbert]

I agree and I disagree. In the case if a Chaplin (or anyone else) performs then he would expect an increase - and rightly so .... however we should not be spending the cap just because its there.

If for instance overnight you trade away or have retire close to 20% of your TPP, does that mean you should by default respend all of it. (remembering that a large portion of the list - at least the top earners were re-signed for contracts before the end of season delistings and retirements.)

I'm not advocating reducing spending on players as a means of saving cash ... I'm saying that coming off last year, and given the players we've had leave, and the players that we've had come in - I cannot see how we could be spending the same amount this year and saying we are managing the list well.

It seems to me we agree in broad terms. I agree with you that next year's player payments should be less than this. Looking forward though if the team performs well we would expect to pay more.

What is the minimim percentage of the salary cap that club's have to spend?

 

[Portia]

If we have cap room, we should be front-loading contracts.

 

[Toots Hibbert]

If we have cap room, we should be front-loading contracts.

Not something that had occurred to me. Do we have any indication that Port have done this or whether it is a practice that occurs elsewhere?

 

[Portia]

The Alastair Lynch contract worked out a bit like that ($1mill over 10 years...at the end of it $100k was chicken feed for a player like him). While its not talked up much, I imagine its common practice. I'm pretty sure St Kilda used it with the Hamill and Gehrig deals. We probably did it with Wangas too, considering how little our other guys would've been paid in the first couple of years.

Any time a club ends up in TPP trouble, its invariably because of backloaded contracts. Thats why Carlton fell so hard, and its a lot of why you hear doomsday articles referring to players like Nick Holland being on $500,000 a year. Its the last year of a total contract payment that has been repeatedly deferred.

In theory you could replicate the Brisbane effect by going through a few years of front-loading so you have a bunch of players with two years to go on low wage, then backloading the contracts of some good imports.

At the end of it you'd be ********ed (having to delist decent players just because they're out of contract), but you could have a very good team for, oh, two or three years.

 

[Malibu#27]

If we have cap room, we should be front-loading contracts.

Actually not a bad thought.

 

[ClintEastwood]

To summarize Cro-mosone's "contribution" to this thread...

"Port lost money. Hahaha, you suck!!"

and

"I know soooo much about accounting, whereas your knowledge is insignificant".

Shut the door on your way out.

 

[RussellEbertHandball]

what point are you arguing? that he was not entitled to the money?

do you have any information on current players contract escalations?
and what new costs will replace, the old ones. no? neither do i.
idle speculation perhaps?

I am going to address the contract and Total Player Payments (TPP) part of your post for now and leave the rest to later when time permits. I might actually have my annual report by then. I’m not going to address player escalations because these are for later years, and I am only concerned with 2006 TPP and this ties in with the discussion by Malibu #27 and also for those reading who want to know what savings we can make next year.

In lieu of the Primus situation I would like to know some answers, which probably can only be confirmed by Port and/or the AFL, but I will ask the questions anyway. If I was attending the AGM I would ask them.

All contacts have rights and obligations. Under an AFL contract, a player has the right to receive his base payment + match payments. If he retires early for whatever reason, prima facie he has the right to receive his base payments for the rest of the contract.

The Collective Bargaining Agreement (CBA) contains issues relating to these contractual rights and obligations. The CBA specifically has a clause about termination payments. Logically this should tie in with the standard AFL contract. The termination clause, specifies the calculation of the amount of payment a player shall receive if he is delisted before his contract is complete. A club is relieved of making these termination payments if a player retires or has agreed in writing with his club to otherwise terminate his contract.

Now surely this clause in the CBA must relate to the standard AFL contract and line up with any right of payment the player has. To illustrate by way of example, Voss signed a 5 year contract a few years ago. If after one year he said, I’m jack of it all, I’m going to spend my days surfing, then surely Brisbane would not be obligated to make a termination payment of 4years x base salary as he has retired and isn’t fulfilling his obligations of making himself available to play. I might be wrong, but it doesn’t seem logical that Brisbane must make this payment.

Unlike the Voss example, Primus retired because of injury but the CBA doesn’t distinguish between reasons for retiring. The CBA does cover injury payments and provides for up to 30 consecutive match payments for any injuries.

The questions that I wanted answered are, is the Primus payment a voluntary redundancy payment which didn’t have to be paid thanks to the termination clause? Or is it a lump sum payment in lieu of 22 injury match payments?? If it is the former I think it’s outside the TPP, if it the latter, I think it’s inside the TPP. This is an important distinction. If the payment is incorrectly characterised and falls outside the TPP then this is a stuff up by management.

If it falls within the TPP then have the club ensured that it is part of the 2006 TPP? It may have made the payment in cash or it could have provided for it in the 2005 accounts but has the AFL approved of it as part of the 2006 TPP?

The TPP for both 2005 and 2006 is $6.3m giving a total of $12.6m that has to be paid over 2 years. Assuming we pay 100% for both years, the Primus payment is $300k and the AFL approves it as part of the 2006 TPP, then in the accounts the following happens;

2005 - TPP Expense = $6.3m 2005 TPP + $0.3m 2006 TPP = $6.6m
2006 - TPP Expense = $6.3m 2006 TPP - $300k prepayment = $6.0m

Therefore the $300k payment to Primus this year, means an improvement to the bottom line in 2006 of $600k. Also, add $109k of other redundancy expenses which shouldn’t occur again, and the 2006 bottom line improves by $709k over 2005.

[ if the primus payment was $280k, savings with other redundancies in 2006 are $129k + $280k x 2 =$689k.]

Sorry to bang on about this but this is as important an issue as any discussion about cutting expenses and finding new revenue. It leaves my debate with Crow-mo over SANFL distributions, lotteries, accruals accounting, idle speculation etc in it’s wake.

 

[Malibu#27]

The TPP for both 2005 and 2006 is $6.3m giving a total of $12.6m that has to be paid over 2 years. Assuming we pay 100% for both years, the Primus payment is $300k and the AFL approves it as part of the 2006 TPP, then in the accounts the following happens;

2005 - TPP Expense = $6.3m 2005 TPP + $0.3m 2006 TPP = $6.6m
2006 - TPP Expense = $6.3m 2006 TPP - $300k prepayment = $6.0m

Therefore the $300k payment to Primus this year, means an improvement to the bottom line in 2006 of $600k. Also, add $109k of other redundancy expenses which shouldn’t occur again, and the 2006 bottom line improves by $709k over 2005.

[ if the primus payment was $280k, savings with other redundancies in 2006 are $129k + $280k x 2 =$689k.]

Thats the point I was trying (badly) to make. Thanks for taking the time to do it properly.

 

[rubberman]

Cardigans all round.

 

[Steve Dore]

To summarize Cro-mosone's "contribution" to this thread...

"Port lost money. Hahaha, you suck!!"

and

"I know soooo much about accounting, whereas your knowledge is insignificant".

Shut the door on your way out.

Spot on Pred.

 

[portentous]

I heard that St Kilda backended Hamill and Gehrig's contracts.