No Debt - Future Fund Idea

[Rhino Richards 1,467]

My point is that we can survive small against the Giants and very slowly and carefully build.

No Your points were made below and you have not substantiated. How does Melbourne commit to the same resources as a Giant and still turning a profit on a small cash flow without double counting

why you little, on 26 November 2010 - 09:34 PM, said:

Big is not always better, but to compete with these Giants & Beat them we still need the same resources within our club

why you little, on 28 November 2010 - 11:09 AM, said:

Using assets wisely can be more beneficial than a large Cash flow in many situations.

You moved the goal posts again.

The 2008 MFC could never survive because the debt was taking our cash flow (and more) The Club had to swallow its pride & go to the members and to its original Parent and reconcile.

By clearing the Debt we can now start to grow. Before that we were Gone.

While I stand to be corrected, the MFC debt at its peak was $5.5 million. Interest on unsecured debt over the years prior to the Debt demolition would have been around approx. 12%. So there's about $660,000 of cashflow (not taking our cashflow and more). And while the reduction of the debt has been an important step for MFC it has only resulted in the interest saved by absorbed by the business in order to partially compete with other Clubs. We are still well short of competing with the resources of the bigger players. And the prudent management you pride in a small club is the prudent management that can very much exist in a bigger club who can afford the best talent on and off the field, provide them with resources to achieve their objectives and provide that talent with greater scope for development in a diversified business with a range of cashflow sources.

[Rhino Richards 1,467]

Whatever Rhino.....Your answers are always so predictable.

Do you think the MFC will survive in its own right going forward??

Since my answers are so predictable, why ask that question?

Would my answer either way go to some strange vindication of whatever is your floating argument?

[Sir Why You Little 36,985]

No Your points were made below and you have not substantiated. How does Melbourne commit to the same resources as a Giant and still turning a profit on a small cash flow without double counting

why you little, on 26 November 2010 - 09:34 PM, said:

Big is not always better, but to compete with these Giants & Beat them we still need the same resources within our club

why you little, on 28 November 2010 - 11:09 AM, said:

Using assets wisely can be more beneficial than a large Cash flow in many situations.

You moved the goal posts again.

While I stand to be corrected, the MFC debt at its peak was $5.5 million. Interest on unsecured debt over the years prior to the Debt demolition would have been around approx. 12%. So there's about $660,000 of cashflow (not taking our cashflow and more). And while the reduction of the debt has been an important step for MFC it has only resulted in the interest saved by absorbed by the business in order to partially compete with other Clubs. We are still well short of competing with the resources of the bigger players. And the prudent management you pride in a small club is the prudent management that can very much exist in a bigger club who can afford the best talent on and off the field, provide them with resources to achieve their objectives and provide that talent with greater scope for development in a diversified business with a range of cashflow sources.

Interest of 12% which sounds about right, is also growing enormously on a daily basis when you are 5.5 Million in debt

so if we still had that debt today it wouild be getting near 10 million.

So i consider it an incredible plus that it has been eradicated.

For the next 5-10 years i would be happy if this club had zero money in the bank. Spend all the cash, flow grow the Brand, BUT make sure the Bills are paid. Keep the Debt at zero each month.

The Giants have money in the Bank, at present we cannot compete with that. But if we can stay debt free we can compete on the field while growing slowly off field.

Keeping the debt down right now is crucial.

[Rhino Richards 1,467]

Interest of 12% which sounds about right, is also growing enormously on a daily basis when you are 5.5 Million in debt

so if we still had that debt today it wouild be getting near 10 million.

So i consider it an incredible plus that it has been eradicated.

So are you now saying that MFC were not paying the interest and that it was being accumulated in the actual debt balance?

If so, you are greatly mistaken. No financial institution would allow an entity like MFC with poor cash flow to accumulate debt by capitalising the interest. Secondly, the AFL would not have allowed this to go unchecked.

It was an important step to repay the debt but dont overcook it. And you are definitely cooking the facts

For the next 5-10 years i would be happy if this club had zero money in the bank. Spend all the cash, flow grow the Brand, BUT make sure the Bills are paid. Keep the Debt at zero each month.

The Giants have money in the Bank, at present we cannot compete with that. But if we can stay debt free we can compete on the field while growing slowly off field.

Keeping the debt down right now is crucial.

Now the debt has been repaid, its not the issue going forward. You must have had a bad personal experience with debt, you dont understand how it works and you are taking it consistently out of context.

If MFC has zero money in the bank for 5 to 10 years then they are barely break even. If thats the case then we cant grow the Club. Over that same period of time the costs of running a football will increase. While we struggle for break even, the richer Club are both investing in the best people/resources/facilities while diversifying their business that further improves their brand and their cashflow. The gap between the rich and poor clubs will widen despite the salary cap and the draft.

So your comments made earlier and listed below are a fallacy:

why you little, on 26 November 2010 - 09:34 PM, said:

Big is not always better, but to compete with these Giants & Beat them we still need the same resources within our club

why you little, on 28 November 2010 - 11:09 AM, said:

Using assets wisely can be more beneficial than a large Cash flow in many situations.

So after naively suggest we could compete with the Giants and that there are many situations where using assets wisely can be more beneficial than a large cashflow, you have now morphed into a fight for survival. And that indeed is what it is for MFC. And no matter how you glorify the current administration, the big challenge for them is to develop a sustainable model that allows us to survive and compete.

In your recent posts and your record store example it is definitely better to be bigger otherwise its a matter of clinging for survival.

[Nasher 33,607]

Interest of 12% which sounds about right, is also growing enormously on a daily basis when you are 5.5 Million in debt

so if we still had that debt today it wouild be getting near 10 million.

So i consider it an incredible plus that it has been eradicated.

For the next 5-10 years i would be happy if this club had zero money in the bank. Spend all the cash, flow grow the Brand, BUT make sure the Bills are paid. Keep the Debt at zero each month.

The Giants have money in the Bank, at present we cannot compete with that. But if we can stay debt free we can compete on the field while growing slowly off field.

Keeping the debt down right now is crucial.

You are just proving that you have no idea about how debt works. Debt only grows like that if you're not making the payments, in which case you're completely cactus because the banks will foreclose on your assets faster than you can say "accepting mediocrity". This would have happened months or years ago; the fact that the MFC is still operating (or more to the point, no mass bailout was required from the AFL) means that this clearly wasn't the case.

If you're making the payments, the worst case scenario is that you treat water on the debt and it doesn't come down at all i.e. you're just paying off the interest and none of the capital. This is why it's such a drain on cash flow. But the debt won't snowball in the manner you're talking about.

[Sir Why You Little 36,985]

You are just proving that you have no idea about how debt works. Debt only grows like that if you're not making the payments, in which case you're completely cactus because the banks will foreclose on your assets faster than you can say "accepting mediocrity". This would have happened months or years ago; the fact that the MFC is still operating (or more to the point, no mass bailout was required from the AFL) means that this clearly wasn't the case.

If you're making the payments, the worst case scenario is that you treat water on the debt and it doesn't come down at all i.e. you're just paying off the interest and none of the capital. This is why it's such a drain on cash flow. But the debt won't snowball in the manner you're talking about.

Yes Debt grows when the cash flow slows or stops, whilst the business continues to attempt to trade. The only thing not known here is what the Bank Debt limit was, I am quite certain there was one there and i am guessing the MFC was getting close, hence why rumblings from Vlad were made. Glad he said those words because it fired the place back up.

[Rhino Richards 1,467]

Yes Debt grows when the cash flow slows or stops, whilst the business continues to attempt to trade. The only thing not known here is what the Bank Debt limit was, I am quite certain there was one there and i am guessing the MFC was getting close, hence why rumblings from Vlad were made. Glad he said those words because it fired the place back up.

No you are wrong. The business stops if it cant meet its bills. Banks wont allow an entity to continue to mount accumulating debt if they show no capacity to be able to finance the interest charges and ultimately repay the debt.

In addition, its also illegal for a company to trade while insolvent. And how is the MFC directors going to continue to operate with a debt spiralling to 10 million as you claim? This is why I said the AFL wouldn't allow it. They were also looking closely at MFC with the cost blowouts under Steve Harris.

So you have proven you have no understanding about the mechanics of debt and the issues surrounding it.

[Sir Why You Little 36,985]

No the business stops if it cant meet its bills. Banks wont allow entity to continue to mount accumulating debt if they show no capacity to be able to finance the interest charges and ultimately repay the debt.

In addition, its also illegal for a company to trade while insolvent. And how is the MFC directors going to continue to operate with a debt spiralling to 10 million as you claim? This is why I said the AFL wouldn't allow it. They were also looking closely at MFC with the cost blowouts under Steve Harris.

So you have proven you have no understanding about the mechanics of debt and the issues surrounding it.

I understand insolvent issues RR don't worry. The MFC interest payments were starting to spiral. The hand brake had to be applied, glad they were.

[Rhino Richards 1,467]

I understand insolvent issues RR don't worry. The MFC interest payments were starting to spiral. The hand brake had to be applied, glad they were.

I am not worried and you dont understand. The interest payments were starting to spiral because we drew down on the debt as a consequnece of poor operating conditions that ultimately lead to Steve Harris being given the axe in 2007.

But it was never going to get to $10 million as you have naively claimed.

[Sir Why You Little 36,985]

I am not worried and you dont understand. The interest payments were starting to spiral because we drew down on the debt as a consequnece of poor operating conditions that ultimately lead to Steve Harris being given the axe in 2007.

But it was never going to get to $10 million as you have naively claimed.

I wouldn't be so sure on that if action had not been taken when it was, once you start drawing on a Debt it multiplies tenfold very quicky.

I do understand B)

[Rhino Richards 1,467]

I wouldn't be so sure on that if action had not been taken when it was, once you start drawing on a Debt it multiplies tenfold very quicky.

I do understand B)

Wrong wrong wrong. The debt wont multiply because neither the bank would extend it nor would the AFL allow it. If MFC had not acted the other parties would have. And I know for a fact the AFL would not have waited for the banks.

You understand so little its scary.

Debt is the Biggest problem the average person knows nothing about!! This stuff should be taught in schools as much as English.

Clearly a self reflection there WYL. And for once I agree and you've proven that statement in spades. Did you do any better in English?

[Sir Why You Little 36,985]

Wrong wrong wrong. The debt wont multiply because neither the bank would extend it nor would the AFL allow it. If MFC had not acted the other parties would have. And I know for a fact the AFL would not have waited for the banks.

You understand so little its scary.

Clearly a self reflection there WYL. And for once I agree and you've proven that statement in spades. Did you do any better in English?

You are just a rude arrogant man RR, i have tried to be reasnoable with you, but it is the same as smashing ones skull against a brick wall.

YES THE AFL ACTED, i am aware of that. That is why Vlad made the statement "The Melbourne Football Club stands for nothing" from that moment things have changed dramatically.

[H_T 3,043]

You are just a rude arrogant man RR, i have tried to be reasonable with you, but it is the same as smashing ones skull against a brick wall.

WYL reading your posts can be like that too. Trouble is, you fail to recognise the argument put against you time and again. You do not argue direct quotes, instead you go off on (what I call) tangent(s) with other content not necessarily in line with the original argument; to suit yourself. It happens when you: -

a/ Do not understand or

b/ Off with the fairy's in WYL's world.

[Dinosaur Rover 197]

You are just proving that you have no idea about how debt works. Debt only grows like that if you're not making the payments, in which case you're completely cactus because the banks will foreclose on your assets faster than you can say "accepting mediocrity". This would have happened months or years ago; the fact that the MFC is still operating (or more to the point, no mass bailout was required from the AFL) means that this clearly wasn't the case.

If you're making the payments, the worst case scenario is that you treat water on the debt and it doesn't come down at all i.e. you're just paying off the interest and none of the capital. This is why it's such a drain on cash flow. But the debt won't snowball in the manner you're talking about.

This really is the crazy end of the season when we get to discussing finance.

I agree with Nasher. My only proviso is that you need to be in a position to sustain a financial shock - financial wonks will look at "quick ratios", debt service ratios and the like to evaluate the financial resilience of the organisation. The argument - no debt good / debt bad - is too simple. No debt can be bad - the concept of the "lazy balance sheet" is that where there are good investment opportunities and subject to the ability of an organisation to sustain financial shocks - debt to fund good investments are to be commended. If the owners of the company only wanted to collect interest on cash then they can invest in cash themselves - they dont need to invest in the company. Of course if this translates much to the demons I cant say I dont know the ownership structure. If however there are no worthwhile investments to make another course of action might be recommended.

I understood one of the MFCs major issues to be the capacity of the MCG in that people can get a seat. Membership isnt a prerequisite for seeing the demons like it is for say the Eagles - or so the CEO says.

[Rhino Richards 1,467]

YES THE AFL ACTED, i am aware of that. That is why Vlad made the statement "The Melbourne Football Club stands for nothing" from that moment things have changed dramatically.

I'll ignore your abusive tone.

So we agree there was no way the debt would have spiralled to $10m. So the eradication of the debt was important for a number of things. However as you also agree at the time of the debt demolition it represented $660k of cashflow out of a total annual revenue of $29 million. Not to be sneezed out but not big bickies in the total turnover.

And despite your hyperbole and drama, MFC still dont have a sustainable business model that generates regular profits. There have been lots of smaller initiatives that the current administration have completed from the previous administration (eg Casey Alliance) to the reparation of the MCC relationship (Stynes/Schwabs efforts). Nice to haves but not big ticket.So things have not changed dramatically. You just fantasise that they have.

WYL reading your posts can be like that too. Trouble is, you fail to recognise the argument put against you time and again. You do not argue direct quotes, instead you go off on (what I call) tangent(s) with other content not necessarily in line with the original argument; to suit yourself. It happens when you: -

a/ Do not understand or

b/ Off with the fairy's in WYL's world.

c/ or being exposed for talking absolute rubbish.

[Sir Why You Little 36,985]

I'll ignore your abusive tone.

So we agree there was no way the debt would have spiralled to $10m. So the eradication of the debt was important for a number of things. However as you also agree at the time of the debt demolition it represented $660k of cashflow out of a total annual revenue of $29 million. Not to be sneezed out but not big bickies in the total turnover.

And despite your hyperbole and drama, MFC still dont have a sustainable business model that generates regular profits. There have been lots of smaller initiatives that the current administration have completed from the previous administration (eg Casey Alliance) to the reparation of the MCC relationship (Stynes/Schwabs efforts). Nice to haves but not big ticket.So things have not changed dramatically. You just fantasise that they have.

c/ or being exposed for talking absolute rubbish.

I am well aware that the club has yet to have a sustainable Business Model, we had to clean up the backyard before building the future. The first priority should always be to clear debt-Look at Geelong as an example.

Our model can never be quite the same as theirs but what they have done is to be respected. You only have to look at what a clean stadium deal can do rather than the the Docklands fiasco for different clubs.

I consider clearing our debt a Big Ticket item, I have no fantasies, & i certainly expect the Board to work dam hard or they to will not last-But more has been done with this club in the last 3 years than ever before in my time of supporting, and yes i do give credit to the previous board for certain things done-But at the same time so many things went so wrong, we did nearly lose the old Girl.

[Sir Why You Little 36,985]

This really is the crazy end of the season when we get to discussing finance.

I agree with Nasher. My only proviso is that you need to be in a position to sustain a financial shock - financial wonks will look at "quick ratios", debt service ratios and the like to evaluate the financial resilience of the organisation. The argument - no debt good / debt bad - is too simple. No debt can be bad - the concept of the "lazy balance sheet" is that where there are good investment opportunities and subject to the ability of an organisation to sustain financial shocks - debt to fund good investments are to be commended. If the owners of the company only wanted to collect interest on cash then they can invest in cash themselves - they dont need to invest in the company. Of course if this translates much to the demons I cant say I dont know the ownership structure. If however there are no worthwhile investments to make another course of action might be recommended.

I understood one of the MFCs major issues to be the capacity of the MCG in that people can get a seat. Membership isnt a prerequisite for seeing the demons like it is for say the Eagles - or so the CEO says.

That's the whole crux of this discussion-by 2008 we were in no position to sustain financial shocks-The Band Aids were not working anymore.

Thanks P.B. nice read.

[Rhino Richards 1,467]

I am well aware that the club has yet to have a sustainable Business Model, we had to clean up the backyard before building the future. The first priority should always be to clear debt-Look at Geelong as an example.

Our model can never be quite the same as theirs but what they have done is to be respected. You only have to look at what a clean stadium deal can do rather than the the Docklands fiasco for different clubs.

I consider clearing our debt a Big Ticket item, I have no fantasies, & i certainly expect the Board to work dam hard or they to will not last-But more has been done with this club in the last 3 years than ever before in my time of supporting, and yes i do give credit to the previous board for certain things done-But at the same time so many things went so wrong, we did nearly lose the old Girl.

Why raise Geelong as an example and then say our model can never be same as there?

Financially I have shown you that clearing the debt saves us $660k. Your fantasy of the debt accumulating up to $10million illustrate how little you know about finance and how unaware you are of the true situation at the Club. You try to cover it by generalisations and irrelevancies that only reinforce the initial impression.

And we have been closer at the other times to going out of existence outside 2008 and we werent close. Another fantasy. But it was clear things had to change. The debt demolition was necessary because it was the only way to clear the debt. But we have taken only baby steps.

That's the whole crux of this discussion-by 2008 we were in no position to sustain financial shocks-The Band Aids were not working anymore.

And we are still not in a position to sustain a financial shock. We continue to live hand to mouth.

[Sir Why You Little 36,985]

Why raise Geelong as an example and then say our model can never be same as there?

Financially I have shown you that clearing the debt saves us $660k. Your fantasy of the debt accumulating up to $10million illustrate how little you know about finance and how unaware you are of the true situation at the Club. You try to cover it by generalisations and irrelevancies that only reinforce the initial impression.

And we have been closer at the other times to going out of existence outside 2008 and we werent close. Another fantasy. But it was clear things had to change. The debt demolition was necessary because it was the only way to clear the debt. But we have taken only baby steps.

And we are still not in a position to sustain a financial shock. We continue to live hand to mouth.

What was Geelong's debt during the early part of this decade Rhino?

I think it is quite relevent in terms of what they did & how they achieved it.

I don't think we are going to ever agree so let's just let it lie. I know quite a bit about Debt & how it manages peoples lives don't you worry, so may you-we just come from different corners.

When have i ever said this club is out of trouble, i wish you would stop repeating that. It is not true. We may have reached first base right now, that's all. But it is light years away from 2008. I hope even you concur that point.

[Guest Thomo]

Why raise Geelong as an example and then say our model can never be same as there?

Financially I have shown you that clearing the debt saves us $660k. Your fantasy of the debt accumulating up to $10million illustrate how little you know about finance and how unaware you are of the true situation at the Club. You try to cover it by generalisations and irrelevancies that only reinforce the initial impression.

And we have been closer at the other times to going out of existence outside 2008 and we werent close. Another fantasy. But it was clear things had to change. The debt demolition was necessary because it was the only way to clear the debt. But we have taken only baby steps.

And we are still not in a position to sustain a financial shock. We continue to live hand to mouth.

You had him two pages ago, he doesn't understand, let it go.

[Rhino Richards 1,467]

You had him two pages ago, he doesn't understand, let it go.

Agree. I have deleted my response to the Geelong absurdity. Not a clue.

[Dreamin' Demon 10]

I'm really enjoying this discussion on Micro Economics

If I ever start up an University, I will know where to look for lecturers

Can I suggest we start a new thread on "Brain Surgery in the 21st Century"?

Excellent choice. I'm off to the medical library to do some in depth research & then begin a new thread.

Silly season is so educational.