Even pies have debt

[7-UP 107]

http://www.heraldsun.com.au/sport/afl/magpies-debt-slashed-in-boom-year/story-e6frf9jf-1225956962679

After seeing this article i realise how important to be debt free, recent weeks i figure out richmond, north melbourne and collingwood still have debts in their hand, and in melbourne point of view we should be really proud of our self.

[agent_orange 0]

http://www.heraldsun.com.au/sport/afl/magpies-debt-slashed-in-boom-year/story-e6frf9jf-1225956962679

After seeing this article i realise how important to be debt free, recent weeks i figure out richmond, north melbourne and collingwood still have debts in their hand, and in melbourne point of view we should be really proud of our self.

Our problem was that we had very little assets - while collingwood is in debt, the net worth is more than us.

[13thflag 0]

Yes what our club has done is just fantastic. To be debt free is very important in moving from bleak past, and moving forward to a much brighter future. It is also important that as members we help to keep our club debt free with buying our memberships, and if possible buying items from the demon shop, so the money goes straight to the club. So with Christmas coming up and new jumpers coming out lets continue to keep up the good work.

[BAMF 4,301]

Our problem was that we had very little assets - while collingwood is in debt, the net worth is more than us.

This is correct. While Collingwood have debt, they have a hell of a lot more incoming money than we do. Getting into debt isn't a problem for them like it was for us. For them getting into debt was to be used for investment, which they thought would eventually pay itself off (it hasn't ha ha)

[e25 5]

Yeah, the debt comes because they had the spare cash to buy a handful of hotels.

They have gone into debt after losing a lot of money on a bad investment, but their situation is very different to ours.

The article also tells us very little.

We are in a position where we need to find ways to build our asset base & become relatively self-sufficient, to ensure we stay out of debt.

[agent_orange 0]

Yeah, the debt comes because they had the spare cash to buy a handful of hotels.

They have gone into debt after losing a lot of money on a bad investment, but their situation is very different to ours.

The article also tells us very little.

We are in a position where we need to find ways to build our asset base & become relatively self-sufficient, to ensure we stay out of debt.

I am sure Cam is onto it. We do have the red and blue foundation which is tax deductable.

We hve done the debt demolition, now we need to concentrait on asset accumulation.

[Little Goffy 14,463]

Debt free is fear free.

Until we cleared it, the club was going to stay in its rut of 'small target' strategy mixed with 'panacea' dreams.

Now, with the debt cleared by the Foundation Heroes and a methodical and focused leadership, and I'm particularly looking at Schwab with that, we are definitely going the right way.

[Spaghetti 264]

Problem is, it will be very difficult for us to build income-earning assets without going back into debt. There is nothing wrong with that in business, but not sure if it would be an easy message to sell to members/media.

[Sir Why You Little 36,985]

Going into debt is fine as long as you can service the debt repayments (and more) each month.

Getting behind in debt repayments is the killer when you are paying off large asset loans.

This is why i believe something equivalent to debt demolition is still needed for a few years. The club must be transparent with the members.

This time we want to set ourselves up to be able to compete with the big clubs. It can work. We are the name of this city.

Winning consistently on field also is a big part of it.

[george_on_the_outer 7,577]

Our problem was that we had very little assets - while collingwood is in debt, the net worth is more than us.

And Collingwoods debt is used to service external income producing assets. Ours was used to run the football operations.

Thankfully, they are atrocious business operators and have twice in the past 15 years squandered multi-million dollar opportunities. Remember Maggie-land? If Rose & Eddie hadn't sold the land when they were running the show arrived, they would be sitting on a fortune today. Second chance was the money lost on the Hotels...basically overpaying at the top of the market.

North are in diabolical trouble financially. Footscray are close to bankrupt if not already, and are dependant upon the goodwill of their banker. Richmond has been cooking the books for years ( wait for this years financial report, when they have to bring building costs to account for the first time).

We are at Zero. After 150+ years we are at Zero. Unfortunately, for 130 of those years, the MCC accumulated all the assets, and left the MFC with nothing to operate on their own. That has now changed, but at least under the Stynes-McClardy-Schwab administration we can now actually build the club.

[Rhino Richards 1,467]

Debt is not the problem, cash flow is, but for many that is a very hard thing to understand.

Correct.

The issue is also for MFC to build sustainable profitable business for the future.

[Adzman 2,154]

Collingwood's debt had to do with the expansion of their assets, not an operating loss due to poor revenue and sub par sponsorship deals.

The other clubs are struggling due to some of these factors. We should be proud of where we stand, but the MFCs finances are now way near the level of Collingwood's, even if they are still 3mil in the red.

[1858 285]

It is simply scary how strong Collingwood have become financially.

They have a revaluation decrement of 4.35 mill on non-current assets and still manage a net profit of 1 mill. They also have significant cash reserves/flow from increased revenue to smash 8mill of debt within one period (or at least that is the way it reads, perhaps part of that 8mill includes previous payments - either way it's insane).

2.2 mill simply from increased membership revenue.

[1858 285]

Debt is not the problem, cash flow is, but for many that is a very hard thing to understand.

Not sure the bank/s would have agreed with that when we no doubt were pushing our debt covenants to the limit and needed the AFL to bail us out to stop them from taking action.

Obviously cash flow is the life blood of day to day operations, without a strong cash flow you become insolvent but debt nearly made us extinct and the interest on our debt would have affected our cash reserves in any case.

[1858 285]

Problem is, it will be very difficult for us to build income-earning assets without going back into debt. There is nothing wrong with that in business, but not sure if it would be an easy message to sell to members/media.

Nigh impossible which is why I hope we consolidate brieftly before branching out but obviously the club knows what it's doing. At least it will be good debt rather than bad debt (unless the investments themselves turn bad - but hopefully that is a "Collingwood thing" ).

35k+ members (and growing) this coming season would do wonders for our stability so we can start thinking about long term investments.

Some members may misunderstand but I think the media aren't that silly. They know that building an asset base is crucial for modern AFL clubs and I dare say they would view this as progress for us - although there is nothing to stop them from speculating on the type of investments we make I suppose.

[Nasher 33,607]

Not sure the bank/s would have agreed with that when we no doubt were pushing our debt covenants to the limit and needed the AFL to bail us out to stop them from taking action.

The banks' opinion would've been that it was fine so long as your cash flow is sufficient to cover your repayments.

Actually, the banks in general want businesses to go in to debt so they can make a fortune from the interest.

Removal of our debt frees up a heap of cashflow that would otherwise have disappeared down the toilet. As has been said, debt only becomes a problem if it restricts your cash flow to the point that continued operation becomes difficult. Otherwise debt is usually a necessary evil that businesses need to grow their asset base.

[1858 285]

The banks' opinion would've been that it was fine so long as your cash flow is sufficient to cover your repayments.

Our debt was increasing, do you think our cash flow was adequate to cover our repayments?

Debt covenenants exist for a reason, sure they would have loved taking us to the cleaners while the AFL was propping us up but take out the assistance from the AFL and sooner or later they would have marked us as a bad investment.

Actually, the banks in general want want businesses to go in to debt so they can make a fortune from the interest.

They also like secure investments that don't need to be wound up. CBA are trying to get a lot of risky loan holders off their books atm.

[1858 285]

Otherwise debt is usually a necessary evil that businesses need to grow their asset base.

Of course, good vs bad debt. Only 3 years ago we weren't growing our asset base were we? We were struggling to come to terms with football operations and the interest was making a bad situation worse. We had bad debt to the tune of about 5 mill.

[GOLF 13]

And never forget the AFL guarantees of our debts. If those had not been in place, the club would have been trading while insolvent, a situation from where you do not pass GO or collect $200.

[Nasher 33,607]

Of course, good vs bad debt. Only 3 years ago we weren't growing our asset base were we? We were struggling to come to terms with football operations and the interest was making a bad situation worse. We had bad debt to the tune of about 5 mill.

Indeed, we're in furious agreement here. This line of conversation started with Peanuts refuting the general "vibe" that all debt is bad debt, when it isn't necessarily the case. I don't reckon you'd find much disagreement to the fact that our specific debt was hurting us.

[Nasher 33,607]

Of course, good vs bad debt. Only 3 years ago we weren't growing our asset base were we? We were struggling to come to terms with football operations and the interest was making a bad situation worse. We had bad debt to the tune of about 5 mill.

Indeed, we're in furious agreement here. This line of conversation started with Peanuts refuting the general "vibe" that all debt is bad debt, when it isn't necessarily the case. I don't reckon you'd find much disagreement to the fact that our specific debt was hurting us.

[1858 285]

Indeed, we're in furious agreement here. This line of conversation started with Peanuts refuting the general "vibe" that all debt is bad debt, when it isn't necessarily the case. I don't reckon you'd find much disagreement to the fact that our specific debt was hurting us.

If that was his specific point then fair enough Nasher.

FWIW I think such a generic post would have left those posters he was addressing none the wiser but anyway it's all good.