How Cats beat 50 years of debt

[Mr Miyagi]

I'm not a subscriber -- any mention of Eddie helping Geelong with sponsorships for their stadium? I'm hazarding a guess there's nothing.

https://www.heraldsun.com.au/subscribe/news/1/?sourceCode=HSWEB_WRE170_a&dest=https%3A%2F%2Fwww.heraldsun.com.au%2Fbusiness%2Fhow-cats-clawed-their-way-out-of-half-a-decade-of-debt%2Fnews-story%2Fad4cd67e4ecbce592bf3bcb33b0e6687&memtype=anonymous&mode=premium&v21suffix=64-a

[stui magpie]

No, nothing about Eddie.

They're doing a series it seems on a few clubs. They've also done Essendon and Collingwood. Here's ours

https://www.heraldsun.com.au/business/how-collingwood-makes-the-money-to-run-football-empire/news-story/ad7d51ff6a3cbcb1c9468a74eacac9b8

[Bucks5]

Nothing about Eddie.

Here is the text

How Cats clawed their way out of half a decade of debt

Geelong doesn’t have the giant supporter base of a Richmond or Collingwood to tap into, but the Cats have been a model for how to run a successful footy club. Finally on the verge of being debt free, how can Geelong secure its future?
Jeff Whalley, Herald Sun
Subscriber only
|
When $90 billion bank Westpac needed a tough mind to cast an eye over their alleged 23 million breaches of money laundering regulations it is not surprising they asked for help from Cat’s president Colin Carter.

Under Carter – a founding partner of Boston Consulting in Australia and Lendlease director – the Cats have been a model footy club business.

They refused to “bottom out” to get draft picks. Like investment guru Warren Buffett looking for cheap stocks, the Cats have been frugal in finding and developing their own talent (but also having a big enough war chest to splurge when they need to).

The Cats are now on the way to clearing debt for the first time in 50 years, have hit record member numbers, have launched an AFLW team and last year got within a game of the Grand Final.
Geelong is hoping to secure 70,000 members in 2020.
Geelong is hoping to secure 70,000 members in 2020.

WHERE DOES GEELONG GET CASH

Late last year Carter announced a narrow profit of $28,952 – down from the net profit $3.9m the year before.

But the revenue of the club hit $60 million up from $56m the year before.

While the Cats have struggled to attract the membership level of clubs like the Tigers and the Pies, it still attained a record number of members in the last year.

It hit a membership of 66,768, compared to 65,419 the year before.

This raked in $19.7m in revenue compared to $18m the year before.

In other revenue highlights:

– AFL distributions and prize money came in at $12.6m, up from $11.8m. The increase was to assist in fielding their inaugural AFLW Team

– Food and beverage sales came in at $10.4 million, up by about a million dollars.

– Sponsorship, advertising and fundraising – with major sponsors including Ford, Deakin, and Viva Energy – was at $12.7m compared to $11.9m the year before.

– The club also reaped $1.65m from philanthropic donations, compared to $2m the year before.

NO MORE POKIES

During last year the Cats took the big move of deciding to offload its pokie venue The Brook Point Cook into “discontinued operations”.

This means its $7.3m in revenue and $776,471 in profits were also excluded from the club’s results. The club also forwent revenue in its stadium by stopping gambling advertising at GMHBA stadium.

Carter says it is worth it.

“In the years ahead revenue from these ventures will be seen in an even more negative light.”

“We expect to be out of gaming and gambling by the end of the year (2019), and at the same time will have retired all of our debt for the first time in around 50 years.”

The club will finalise the sale in coming weeks and pay down that debt.

Geelong also last week revealed the latest step in diversifying off-field revenue, by purchasing ‘Geelong’s Gym’, which operates across the road from GMHBA stadium.

It is also continuing to expand its award-winning hospitality business Higher Mark.

WHAT DOES IT COST TO RUN GEELONG

In the last year the cost of putting Geelong teams on the field hit $27.2m compared to $25.9m the year before, driven by the introduction of their inaugural AFLW team.

Commercial activities cost $18.9m, up from $17.7m.

A big constant whack to the Cats is what it pays to adjust the value of its assets (IE things like GMHBA stadium). This came in at a hefty $3.4m last year and was $3.3m the year before.

Geelong is lucky to be asset rich, but being asset rich can be costly.

It also pays about $1m a year to cover the lease of using GMHBA (it has about 26 years remaining on the lease for Kardinia Park).

“The Club continues to make significant investments into a range of assets and capital projects to ensure the long-term future of the Club. The Club will continue to work with the Kardinia Park Stadium Trust on Stage Five to finish the Stadium and continue to lobby the AFL for a greater number of home games at GMHBA stadium.”
Geelong have continually pushed to host more home games and finals at GMHBA stadium.

To keep developing GMHBA the club has previously borrowed $3.2m to continue work on the Players Stand and invested significant club operating cash flows over the years.

At October 2019, the debt balance decreased to $2,174,130.

This will be paid down in coming months.

WHAT DANGERS COULD GEELONG FACE

While Buffett seeks to take the emotion out of the market (famously saying when investing it was good to “be fearful when others are greedy and greedy when others are fearful”), the Cats seem to be wanting to take the emotion out of footy finance.

After last year’s finals ousting by the Tigers, Carter pleaded with fans.

“As supporters we hunger for success – and that is reasonable. Clearly premierships are very hard to win because, on average, each club will win one flag every 18 years. Just how hard they are to win is perhaps best illustrated by the fact that the AFL’s richest and biggest club, Collingwood, has won just two premierships in over 50 years,” Carter said, channelling Buffett.

Buffett has been successful in his goal, the success of the Cats’ finances will depend on whether fans stay patient. Footy unlike finance, is all about emotion.

[K]

[Bucks5]

The Collingwood version. The TLDR version is that a Collingwood supporter and their money are soon parted


How Collingwood makes the money to run football empire

Collingwood has always had hordes of fans but it was under Eddie McGuire that the club transformed into a financial powerhouse. So how do the Pies make their money and can they really be called the AFL’s biggest club?
Jeff Whalley, Herald Sun
Subscriber only


Collingwood president Eddie McGuire has been in the top job 21 years – in a world in which most corporate CEOs and chairs last about four years it’s a remarkable stint.

His term has delivered a premiership, a move from Victoria Park to a base in the heart of the city’s sporting precinct and engaged an enormous supporter base.

But he knows the club needs to stay on a strong financial footing to make sure the team hums along.

Last year the Pies made a net profit of $3.87m for its year ending in October.

But the real story for perhaps the league’s best run club is taking the bold move to offload its pokies.

The Magpies can count on their passionate fanbase stumping up for memberships and tickets. Picture: AAP Image

The cash, instead of going into profits, went into its paying down debts and into the club’s asset bases and funds for the future — something which gives the club an even more formidable war chest.

It also helped make sure the club was debt free.

WHERE DOES COLLINGWOOD GET ITS CASH?

McGuire attributes much of the Pies success in the last year to its fans and their willingness to stump up for memberships and go to games.

The revenue of the club last year hit $72 million up from $66 million the year before.

The Pies hit a membership record of 85,226 which was an improvement of 9,490 members.

They had an average home game attendance of 58,975, an improvement of 9,077.

This saw membership and match-day revenue leap up $7.1 million to a sweet $30.9 million from $23.8 million the year before.

It also got $11.5 million in distributions from the AFL, steady on the year before.

The club’s function centres raked in $7.7 million which was a solid 8.5 per cent leap on the year before.

But the boon for the year was the off-loading its pokies operations — selling the leasehold for “The Coach & Horses” in Ringwood and “The Club” in Caroline Springs — in December 6, 2018.


The Melbourne Racing Club agreed to buy them – and their 156 gaming machines.

The club also used the sale to pay down a $1.6m loan but it also set aside the profits for its war chest.

It is now sitting on an arsenal of net assets of $44.72m compared to $32.69m in 2018.

“(This is) an increase of $12.03 (million) due to the profit on sale of the Club’s gaming interests and the strong 2019 profit result,” the club’s annual report says.

It also has strong sponsor deals with Emirates, CGU, Holden and La Trobe Financial.

Notable is that last year Emirates extended their partnership with the club in 2019 for a further five years.

This will take the club to a 25-year partnership with the airline, the longest deal the airline has done with a sporting club worldwide.

The club also partnered with Coles who came on board to work with it by investing in Collingwood’s community program

WHAT DOES IT COST TO RUN COLLINGWOOD?

A machine like Collingwood requires spending to keep the wheels turning. And boy do the Pies know how to spend it.

Clearly its biggest expense is the cost of keeping its various teams on playing fields.

Last year it cost a whopping $30.8 million to fund “teams expenses” (the club now has seven sporting teams, four of these being women’s teams, with around 120 athletes).

This is basically unmoved from $30.6 million the year before.

Cash spent on “commercial activities, membership and match day expenses” comes next at $22.3 million. This was up from $21.4 million the year before.

WHAT DANGERS COULD THE PIES FACE?

On field success is crucial to the Pies who need the cash of an enthused fan base to fund operations.

When the team finished in 13th place in 2017 the club made a $2.73 million loss. The year before it finished in 12th and recorded a $2.6 million loss.

(To be fair though, McGuire pointed out in 2017 that the club still had 75,985 members — still a strong result for an AFL club).

The Pies had $2.8 million of depreciation on assets in the last year, the year before that the depreciation was $2.9 million.

The club may be rich in facilities — with the Glasshouse and Holden Centre — but it has to keep updating them and that is costly.

[think positive]

Some teams seem to get favouritism everywhere, even with the press, you can paint a story two ways. I never understand why we never seem to get the good stuff. We have played a major part in keeping the game alive, but rarely to we get the juicy bone

[Rd10.1998_11.1#36]

“...can [Collingwood] really be called the AFL’s biggest club?“

Never mentioned again in the article, great journalism

[Mr Miyagi]

Well that's disappointing but not surprising from the media. Our El Presidente did a lot to help Geelong with their stadium sponsorship deal and keep them in the game (geez who was the Cats President back then, Collins?). Did the same for the Bulldogs too with David Smorgon. And of course the article on Collingwood has to be a more negative slant, doesn't it?

[23 YIPPEE!!!]

The media are similar to the afl they reap the rewards of the pies but always are negative toward us bugger them.

Really need to pay credit where credit is due.

Media and afl like to sponge off us its their favourite past time.

[23 YIPPEE!!!]

I hate geelong too.

[Hiss]

And bloody disgraceful Collingwood refuses to build a decent Social Club or provide acceptable match day facilities. Pop up rent a room crap are the only things fans receive. Victoria Park provided fans with the greatest experience ever. Our Social Club was the best and exclusive. The modern business leader only ever understands their excel spreadsheet business models and pushes the devaluation of the customer experience as far as possible to where it often results in failure. Look at the story of dumb Australian retail. I would contend that Collingwood supporter loyalty is very fragile and unless we maintain constant on field success (impossible) then the lack of supporter facilities will see balance sheet catastrophe if there is the inevitable economic downturn and or on field failure. Serves them right.

[Rd10.1998_11.1#36]

[Wonka]

[Rd10.1998_11.1#36]

^I donated to Save Our Skins, does that make me a Richmond supporter?