Hey guys, I was reading an article on Norths considerable Debt and the large amounts of interest they pay annually to service this debt.

It got me thinking about our current level of debt. After Debt Demolition, we were debt free, but I recall that we went back into debt when we acquired the Bentleigh Club.

Does anyone have/know of the figures involved?

Off the top off my head we took on bentleigh clubs liability of around 1mil, the asset was valued around 9mil? That's off the top of my head. Someone feel free to correct me if they have the figures at hand.

$1.8m I believe.

It should be noted that we acquired a rather large asset with that debt.

And the talk was that the Bentleigh, properly run, will pay down it's own liability.

But that is not as easy as it sounds...

Debt in and of itself is not the issue. If you go into debt spending money on items that do not cover the accrued debt with either income or asset recoupment, you are on the highway to ruin. The Bentleigh club acqusition covers the debt on the asset side many times over, and has promise to do so with income as well. It is simply not a problem. The Filth have an enormous debt by any other club's standards, but it is not a problem to them as the assets acquired by the debt cover the costs.

From the article on the Melbourne FC website

"Melbourne will now add more than $9m to its balance sheet. These assets are offset by $1.8m of debt taken over and $1.2m in gaming machine entitlement obligations. But in a net sense the improvement on the balance sheet will be at least $6m."

"It is important to point out that the projections we have done for our gaming operations indicate that the debt assumed under the merger can be repaid from the profits of the venues - not from any other activities of the club."

It's hard to see a downside to any of that.

From the article on the Melbourne FC website

"Melbourne will now add more than $9m to its balance sheet. These assets are offset by $1.8m of debt taken over and $1.2m in gaming machine entitlement obligations. But in a net sense the improvement on the balance sheet will be at least $6m."

"It is important to point out that the projections we have done for our gaming operations indicate that the debt assumed under the merger can be repaid from the profits of the venues - not from any other activities of the club."

It's hard to see a downside to any of that.

has anyone been down to Bentliegh lately? Has the place changed much since it was aquired?

From the article on the Melbourne FC website

"Melbourne will now add more than $9m to its balance sheet. These assets are offset by $1.8m of debt taken over and $1.2m in gaming machine entitlement obligations. But in a net sense the improvement on the balance sheet will be at least $6m."

"It is important to point out that the projections we have done for our gaming operations indicate that the debt assumed under the merger can be repaid from the profits of the venues - not from any other activities of the club."

It's hard to see a downside to any of that.

Those are only projections. I believe the Bentleigh club was struggling to pay its way when they merged with the MFC.

I'm not saying the merger was a bad thing; we had by far the lowest asset base of any Melbourne based club and we needed to get bigger.

This deal should work, provided we manage the debt and we don't get a burst in the property bubble.

not as bad as north thats for sure

Those are only projections. I believe the Bentleigh club was struggling to pay its way when they merged with the MFC.

Yeah, that's a fair point. They're expecting the club to be more profitable when the gambling/machine laws change in 2012. They anticipate to be treading water until then.

Also those projections were before the new recently proposed gambling reforms for poker machines. I wonder what affect, if any, that would have made on our decision to merge.

Edited November 10, 201113 yr by Jack Jack

Thanks for the info guys. I wasn't saying that I thought the merger was a bad idea, I completely understood why the club did it. I was just curious as to how much interest the club would be paying on the debt we incurred as a result of the merger.

If the debt is 1.8 million, then it would be somewhere between 100,000 to 180,000 p/a I assume.

Edited November 10, 201113 yr by Mallee Bull