Tasmania "You need 45 million" - Clubs that fail the Tasmanian Revenue Test.

[telsor]

This threshold would appear to be ignoring input costs. GWS having a breakeven of like 7k at their grounds should mean they need less money than clubs with more expensive stadia, for instance.

Fully agree with how input costs matter.

Another example is Pokies...If you get $15M in revenue, but it costs you $12M, then it's the $15M that gets put into the report, but from the perspective of the effect on the actual football operations of the club, there is only $3M is 'real' revenue. (although there are some benefits from things like cash flow, etc from the larger figure). On the other hand, it would seem that some stadium revenue clubs get is after costs have already been deducted.

Mind you, if you start using net figures across the board, it would really be a bit weird and not representative of the 'true financial state' of the club.


As I've said elsewhere, using any single figure to measure a club's financial health isn't very useful, but for a forum like what Gil was in, I can understand why he didn't go into a half hour presentation outlining all the financial variables.


As another example of how revenue alone can mislead...Brisbane..Revenue $51M, and one of, if not the, biggest financial basket cases in the comp.

 

[Prudster]

The other side of this is that it's $45m at the moment. Even if a Tassie team could reach that figure, what about in 10 years, or 20, or 100? Will a Tassie team be able to grow in line with other clubs? And if not, are we not just adding another club that needs support year in year out with very little chance to grow to a level that would allow them to stand on their own feet?

As mentioned above, some of those clubs below the $45m line would not be created if they didn't already exist. Being as big as a Saint Kilda is not the threshold required, because nobody wants to create another club at that level financially unless they have a chance for huge growth over time, or bring something important to the league.

 

[Arwib]

Clearly the answer is a Canberra team instead since our economy is one and a half the size of Tassie's...

 

[telsor]

Clearly the answer is a Canberra team instead since our economy is one and a half the size of Tassie's...

Yeah, but it's not just about the size of the economy...It's the amount of the economy that can be accessed.

Tas is a pretty serious football state, so you'd expect to be able to extract a decent percentage for supporting an AFL team.

ACT is, at best, 50/50 AFL/NRL, so while it might be 50% bigger, the accessible part is actually smaller.


Or in other words, it's not the size, it's how you use it...

 

[telsor]

The other side of this is that it's $45m at the moment. Even if a Tassie team could reach that figure, what about in 10 years, or 20, or 100? Will a Tassie team be able to grow in line with other clubs? And if not, are we not just adding another club that needs support year in year out with very little chance to grow to a level that would allow them to stand on their own feet?

As mentioned above, some of those clubs below the $45m line would not be created if they didn't already exist. Being as big as a Saint Kilda is not the threshold required, because nobody wants to create another club at that level financially unless they have a chance for huge growth over time, or bring something important to the league.

I think the $45M is actually including future growth prospects....Current figure is presumably more like $40M, but with slower growth, a buffer is needed. As GC & GWS demonstrate, the AFL looks long term when considering new clubs.

 

[Prudster]

I think the $45M is actually including future growth prospects....Current figure is presumably more like $40M, but with slower growth, a buffer is needed. As GC & GWS demonstrate, the AFL looks long term when considering new clubs.

The point still stands though. Even if Tassie can reach whatever arbitrary figure is set, over time they will fall behind as other clubs continue to grow.

 

[telsor]

The point still stands though. Even if Tassie can reach whatever arbitrary figure is set, over time they will fall behind as other clubs continue to grow.

I think that if you have a decent buffer, you're covered....If Tas isn't projected to drop below the 'magic number' for 50 years, I think we can live with that.

 

[Kwality]

True, but they do that already... A fair part of both Hawthorn & North deals is as sponsorship/advertising (although it's all bundled up), so while they can/will keep that part, there is still a lot of money 'lost'.

As for Perth...We'll see. I know that's the stated policy/aim, but lets face it, the Perth market is so under supplied the ground will be sold out without anyone flying in, and while I'm sure the WA government would like more tourism flowing from the stadium in theory, I doubt they'll lock many locals out to ensure there is space for tourists. I suspect the 'away team section' wont be big enough to require a lot of advertising to fill.

Roger that for Perth - hopefully they (who? Tourism WA) will bundle a match day experience (footy related) including great seats & accommodation with a trip down south or up Geraldton way & be very proactive. Around 2500 seats would be my uninformed guess.

For Tas, here is a today reference http://www.abc.net.au/news/2016-04-03/tasmanian-councils-tourism-operators-want-infrastructure-money/7291994

 

[Kwality]

Well this is an excellent question. Would you use an "expansion model" for Tasmania, a state that has more in common culturally with SA, Vic, WA than NSW and Qld, that doesn't have the population to demonstrate a massive boost in TV revenue (cos they pay for the game) and whose economic indicators are poorer than the mainland states?

It's not really an "expansion" location, is it?

Disclaimer: let's clear up some of the old Victorian/Hawthorn tropes than inevitably arise.

I support the extension of Hawthorn's arrangement with Tasmania and have supported the arrangement since the beginning. But I'd be happy from 2021 for the arrangement to cease so I can get 11 reserved seat games per year. It's run its race.

I lived in Tasmania for a couple of years and worked in the public health system, so I'm not ignorant of the economic challenges of the region.

Are reserved seats not available at make up games?

The business model question exposes Gils myopic $45mil & those who accepted it as meaningful.

 

[Prudster]

I think that if you have a decent buffer, you're covered....If Tas isn't projected to drop below the 'magic number' for 50 years, I think we can live with that.

It just seems ridiculous to me. Pour a heap of money into starting a club that will require continual money injections, and will add very little to the leagues bottom line, while also having very little chance of growing to the point it can stand on its own two feet.

Even assuming a Tassie team can make line, do you really think they would have a buffer that would sustain them for any reasonable amount of time? I mean look at how much some clubs have grown over the last 10 years. Now imagine how much those clubs will potentially grow in the next 50. Tassie will find it almost impossible significantly grow, let alone keep up with those clubs.

 

[Prudster]

Are reserved seats not available at make up games?

The business model question exposes Gils myopic $45mil & those who accepted it as meaningful.

I believe you can upgrade to a reserved seat, but that's an extra cost, and will presumably be going into the home clubs coffers.

Edit: You would also probably not get your usual reserved seat as you do at home games.

 

[telsor]

It just seems ridiculous to me. Pour a heap of money into starting a club that will require continual money injections, and will add very little to the leagues bottom line, while also having very little chance of growing to the point it can stand on its own two feet.

Even assuming a Tassie team can make line, do you really think they would have a buffer that would sustain them for any reasonable amount of time? I mean look at how much some clubs have grown over the last 10 years. Now imagine how much those clubs will potentially grow in the next 50. Tassie will find it almost impossible significantly grow, let alone keep up with those clubs.

I think the $45M is to ensure it wouldn't need continual money injections, and I'm not sure it would cost *that* much to set up initially.

I don't really think that a Tas team needs to ADD significantly to the AFL's bottom line. For a region that doesn't have a club, I think breaking even (both for itself and the AFL) would be plenty. The AFL is a sporting body after all, not a 'for profit' company. (even if they might act that way sometimes).

 

[telsor]

Roger that for Perth - hopefully they (who? Tourism WA) will bundle a match day experience (footy related) including great seats & accommodation with a trip down south or up Geraldton way & be very proactive. Around 2500 seats would be my uninformed guess.

For Tas, here is a today reference http://www.abc.net.au/news/2016-04-03/tasmanian-councils-tourism-operators-want-infrastructure-money/7291994

Love the bag of rubbish at the end of link

Mind you, the article is complaining about the stresses on infrastructure in Tas from getting ~85,000 more tourists over a year. It says a bit about the size of the Tas economy/infrastructure that so few has them bursting at the seams.

 

[Prudster]

I think the $45M is to ensure it wouldn't need continual money injections, and I'm not sure it would cost *that* much to set up initially.

I don't really think that a Tas team needs to ADD significantly to the AFL's bottom line. For a region that doesn't have a club, I think breaking even (both for itself and the AFL) would be plenty. The AFL is a sporting body after all, not a 'for profit' company. (even if they might act that way sometimes).

You're right, Tassie doesn't need to be some huge potential boon ala GWS, etc., but there's just very little room for growth at all down there. They'll start off a financial basket case, and will struggle to ever actually break even. It's like putting in teams in Canberra, or NT, or Ballarat. There's just not really a point to taking a risk like that for very little gain.

Maybe $45m would be good enough for a while, but Tassie would struggle to get to that level, and would definitely struggle to grow beyond that.

 

[Kwality]

The point still stands though. Even if Tassie can reach whatever arbitrary figure is set, over time they will fall behind as other clubs continue to grow.

I reject your view - a (one) Tas club will pick up some of the benefits displayed in Adelaide & Perth, a demand by both the footy club & business directing its marketing dollars thru the footy club. It is likely to be premium dollars paid at the top end, and seating will quickly be sold out (see Geelong).

The growth in the Melbourne market battles to feed the spending appetite for many clubs & pokies haven't been the bonanza many hoped.

 

[telsor]

You're right, Tassie doesn't need to be some huge potential boon ala GWS, etc., but there's just very little room for growth at all down there. They'll start off a financial basket case, and will struggle to ever actually break even. It's like putting in teams in Canberra, or NT, or Ballarat. There's just not really a point to taking a risk like that for very little gain.

Maybe $45m would be good enough for a while, but Tassie would struggle to get to that level, and would definitely struggle to grow beyond that.

I think the idea is that if they could get $45M, then they wouldnt 'start off as a financial basket case'.

 

[Kwality]

Love the bag of rubbish at the end of link

Mind you, the article is complaining about the stresses on infrastructure in Tas from getting ~85,000 more tourists over a year. It says a bit about the size of the Tas economy/infrastructure that so few has them bursting at the seams.

The numbers are pure, not %s & its true of WA too. Interstate visitors for the year ended December 2015 was 1,075,000 so if footy can keep them an extra couple of days it adds to the economy & getting them out to Rotto or the Swan Valley, down South ...
http://www.tourism.wa.gov.au/Public...h and reports/Fast Facts YE December 2015.pdf

 

[Prudster]

I reject your view - a (one) Tas club will pick up some of the benefits displayed in Adelaide & Perth, a demand by both the footy club & business directing its marketing dollars thru the footy club. It is likely to be premium dollars paid at the top end, and seating will quickly be sold out (see Geelong).

The growth in the Melbourne market battles to feed the spending appetite for many clubs & pokies haven't been the bonanza many hoped.

Eh, longer term they will still have massive issues. Tassie's population projections do not look good for a football club trying to grow support, and the financial projections don't look great for a club trying to get local sponsors.

I just don't see how they compete with the bigger Victorian clubs, or the growth of the other interstate clubs who have access to far more potential support, both through fans and the local economy. They might be competitive with the smaller clubs currently, but do we really want another struggling club requiring long term support?

Comparing them to Victorian teams, again, if Saint Kilda, the Western Bulldogs, Melbourne, and North didn't exist, would any of them be the next expansion clubs?

 

[Kwality]

Eh, longer term they will still have massive issues. Tassie's population projections do not look good for a football club trying to grow support, and the financial projections don't look great for a club trying to get local sponsors.

I just don't see how they compete with the bigger Victorian clubs, or the growth of the other interstate clubs who have access to far more potential support, both through fans and the local economy. They might be competitive with the smaller clubs currently, but do we really want another struggling club requiring long term support?

Comparing them to Victorian teams, again, if Saint Kilda, the Western Bulldogs, Melbourne, and North didn't exist, would any of them be the next expansion clubs?

Be sure I don't buy additional clubs for the reasons you outline, we've already got more clubs than the game has AFL footballers, & that is because the AFL squibbed the hard decisions (stripping current clubs of their AFL licence).
Tas is not a Collingwood or West Coast in the makings in terms of support & dollars.
In my world its not another struggling club, one goes to make room. You've listed the field of starters & taking the Tas dollars out of Melbourne leaves stress on the sponsorship dollars.

 

[Bunk Moreland]

I think medium-long term the answer will be North playing 3 games in Hobart, 3 in in Launceston and 5 in Melbourne.

It was the AFL's preferred model until Hawthorn cocked it up by re-signing with Tassie.

 

[telsor]

Be sure I don't buy additional clubs for the reasons you outline, we've already got more clubs than the game has AFL footballers, & that is because the AFL squibbed the hard decisions (stripping current clubs of their AFL licence).
Tas is not a Collingwood or West Coast in the makings in terms of support & dollars.
In my world its not another struggling club, one goes to make room. You've listed the field of starters & taking the Tas dollars out of Melbourne leaves stress on the sponsorship dollars.

Why take away one to 'make room', at a cost of tens of thousands of fans lost to the game, only for the replacement to most likely be just as small/poor?

The AFL didn't 'squib the hard decision', it's just not a decision that's in it's power to make.

Oh, and as discussed elsewhere, the talent pool for AFL footballers has been growing faster than the number of teams.

 

[Rob]

This threshold would appear to be ignoring input costs. GWS having a breakeven of like 7k at their grounds should mean they need less money than clubs with more expensive stadia, for instance.

Break even of 7k? LOL, they would have lost about $10 million if not for AFL assistance.

 

[telsor]

Break even of 7k? LOL, they would have lost about $10 million if not for AFL assistance.

I'm pretty sure he was just talking about the stadium costs/revenue.

 

[The Blue Baggers]

Surprised madmug hasnt weighed in on this yet, but this is a pretty valid point for the Tasmanian camp


http://www.abc.net.au/news/2015-08-...fl-team-afl-ceo-gillon-mclachlan-says/6708932


http://www.heraldsun.com.au/sport/a...n/news-story/c772d872ecc5881c550a3bf32f434335


http://www.theage.com.au/afl/afl-ne...-mclachlan-20150819-gj2qla.html#ixzz44YKGou00

2015 Club Revenues

• Hawthorn – $70,986,527
• Collingwood -$66,259,649
• West Coast – $60,007,059
• Essendon – $58,202,992
• Carlton – $54,052,486
• Fremantle – $52,246,137
• Brisbane – $51,015,088
• Port Adelaide – $50,794,644
• Geelong – $49,652,524
• Richmond – $46,706,020
• Sydney – $45,373,168

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

• Melbourne – $44,522,144
• Adelaide - $$44,492,629
• W.Bulldogs – $41,321,293
• Nth Melbourne – $37,459,111
• GWS – $35,824,982
• Gold Coast – $34,980,778
• St Kilda – $32,605,028

It does seem to be a little bit of a high standard to ask.

Great post !!

 

[Prudster]

Be sure I don't buy additional clubs for the reasons you outline, we've already got more clubs than the game has AFL footballers, & that is because the AFL squibbed the hard decisions (stripping current clubs of their AFL licence).
Tas is not a Collingwood or West Coast in the makings in terms of support & dollars.
In my world its not another struggling club, one goes to make room. You've listed the field of starters & taking the Tas dollars out of Melbourne leaves stress on the sponsorship dollars.

The amount of money it would cost to destroy a new club and start up a new one is not really worth it if the new club will be just as shit and just as poor as the old club. Not to mention all the fans and history lost to the game, and how bad it looks on the league when they destroy a club just to make way for an equally shit club.

Destroying a club is really not a path that i think should ever be an option.