Jump to content

Sign in to follow this  
Queanbeyan Demon

The business case

Recommended Posts

Posted (edited)

The business case explained

There’s been a lot written here and elsewhere about Goodwin’s contract length and immediate short-term tenure. Here are four facts, and two estimates, that I would suggest will drive the thinking of the Club’s board over the next 12 months. The figures quoted are in the Club’s 2018 Annual Report and are the most recent publicly available.

Fact 1
Melbourne’s revenue in 2018 from football related actives was $44.8M. 

Fact 2
The AFL guarantees to cover player costs and other related expenses regardless of on-field performance. In 2018 this figure was $16.3M

Fact 3
Revenue in 2018 from Football related activities that the club has influence over, by dint of its on-field performances, was $27.5M. Here’s the breakdown.

  • Gate receipts $6,180,742
  • Merchandise $1,081,232
  • Membership, annual reserved seating and general fundraising $9,009,525
  • Sponsorship & corporate hospitality $11,287,779
  • Other revenue $922,363

The financial impact of 2019’s poor on-field performance could well be felt by drops in revenue across four of the line items above (i.e. gate receipts, merchandise, membership/reversed seating/gen fundraising and sponsorship/corporate).

Estimate 1
According to reports today, Ross Lyon’s contract in 2019, based on Freemantle’s on-field performance, is worth 600K. It wouldn’t be unreasonable to assume Goodwin is receiving something similar.  

Estimate 2
The cost of paying Goodwin out, should the Club move on him in the next 12 moths, would be somewhere between $1.2 and $1.8 million. This estimate assumes that the pay-out would be the equivalent of the contact's balance (assuming base payment).

Discussion
The Club’s on-field performance directly effects, or puts at risk, part of the $27.5M in revenue (based on 2018 figures). We can assume that a good year may well increase this revenue while a poor year will almost definitely have a negative consequence. By any measure 2019 has been a poor year and it would be reasonable to anticipate that revenue from club related activities will fall. The question is, by what amount? A five per cent fall in 2019 will mean a loss of $1.377M against the 2018 figure, while a 10 per cent fall will mean $2.755M. And this doesn't factor in opportunity costs . . . that is, revenue anticipated over and above the 2018 result that will also be foregone.

The problem the Club has is that this is now a ‘sunk-cost’. That is, the money is already gone and removing Goodwin now will not recover the 2019 financial situation. 

However . . . and presumably this is the Board’s current focus . . . 

If the Club doesn’t improve its on-field performance in 2020 by a substantial amount, the financial losses seriously mount. Another year where revenue is likely to be seriously down on 2018 levels makes the financial case for removing the coach pretty strong. It simply becomes a business decision. That is, the cost of keeping the coach versus removing him in order to stem the bleeding. For example, if the club has a poor year again in 2020, the potential losses over 2019/20 seasons compared to the 2018 season could well be in excess of $2.7M. It makes the case for removing the coach at a cost of $1.5M (assuming he goes during the bye in 2020) a no-brainer. 

Conclusion
Few people want harm to come to the Club or Goodwin. However, a year like this one in 2020 is going to be traumatic for one party or the other. 

And that’s fact number four.

 

Edited by Queanbeyan Demon
Typos and clarity
  • Like 6
  • Thanks 2

Share this post


Link to post
Share on other sites

Great post. Of course, there are many other variables and impacts, and I would suspect the revenue impact would be a better reflection next to projections as well as comparatively vs 2018. I suspect the club expected a 25%-40% increase in revenue given favourable draw, reach, marketing, interest, exposure, and attendance. Instead we are looking at probably something closer to a 3%-5% increase (I think we'll still see an increase overall). So growth has hit a major speed bump and stands to move into the negative over the summer and into 2020. The old "doom loop".

Goodwin and co. have a lot banking on them turning this around.

  • Like 1

Share this post


Link to post
Share on other sites

Estimate 2 bit hard to estimate as we aren't privy to the contract and all its clauses. 

 

2019 financials will be interesting, gates should be down a bit given our form and also we didn't host Anzac Day Eve or Queens Birthday

  • Like 1

Share this post


Link to post
Share on other sites

I think the thread should be titled "the business case for sacking Goodwin". That's what it's about.

  • Like 1
  • Shocked 1

Share this post


Link to post
Share on other sites
6 minutes ago, Moonshadow said:

I think the thread should be titled "the business case for sacking Goodwin". That's what it's about.

As it should be!

 

  • Thanks 1

Share this post


Link to post
Share on other sites

57 minutes ago, roy11 said:

Estimate 2 bit hard to estimate as we aren't privy to the contract and all its clauses. 

 

2019 financials will be interesting, gates should be down a bit given our form and also we didn't host Anzac Day Eve or Queens Birthday

its very poor by the ALF  re Anzac and Queens BD , we should host one each year , or are we planning on have a good year the crap year again .....  like the 90's one up one down ! 

  • Like 3
  • Sad 1

Share this post


Link to post
Share on other sites

top analysis QB - pity more have not read this.

I think all our games at MCG should be home games as: we invented the game and the MCG - No Dees = No AFL.

thanks

PS I can't stand Collingwood

Share this post


Link to post
Share on other sites
9 minutes ago, Anti-Saint said:

top analysis QB - pity more have not read this.

I think all our games at MCG should be home games as: we invented the game and the MCG - No Dees = No AFL.

thanks

PS I can't stand Collingwood

Or, I assume, St Kilda, based on your name.

Share this post


Link to post
Share on other sites

Nice analysis @Queanbeyan Demon

I wonder which Department you're currently contracting to as a BA ... 

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • Social Media

  • Match Previews, Reports & Articles

    THE TRADING CHRONICLES 2019

    PART ONE - OVERTURE  I have a disclaimer at the outset. I’m not a fan of the races - be they horses or motors of any kind. Once the final siren sounds on the football season, I find the month or so that follows and corresponds roughly with the Spring Racing Carnival to be the most boring time of the year for sports fans. You turn on the radio and you’re confronted by the monotonous drone of a self-proclaimed racing expert or by the nasally twang of an ex-jockey banging on about the equine p

    Demonland
    Demonland |
    Special Features 8

    CHANGES 2019 by The Oracle

    PART 1 - IT’S A LITTLE MORE COMPLICATED THIS TIME This year’s free agency, trade and draft period will see the usual drama and upheaval as the AFL’s 18 clubs seek to better their lists in order to challenge for finals and possibly premiership honours. Long before the final siren sounded on the season just over a week ago, the maneuvering was under way with player agents and clubs discussing possible player movements and in some cases, deals had already been done.  Yesterday, the r

    Demonland
    Demonland |
    Special Features 1

    HOW FAR SOUTH? by George on the Outer

    It was appropriate that Melbourne was playing its last game of season 2019 in Hobart.  After all, how much further south could the team go? And much as it has done in many of the previous 22 games, the side managed to extract a loss from a winning position by simply giving the ball back to the opposition time and time again. In fact, they gave it back to the opposition to the tune of 53 points from turnovers while, by way of contrast North Melbourne contributed  only 17 points to their oppo

    Demonland
    Demonland |
    Match Reports

    COOKED by The Oracle

    I can vividly remember when the Demons ventured onto Blundstone Arena for the first time in early 2016 only to lose to the Kangaroos by 20.11.131 to 21.10.136.    Melbourne was then a team on the up and up: young, enthusiastic and bold. It gave up a huge quarter time deficit after kicking against a strong wind but made that up by half time and fell dramatically short after an exciting high scoring affair.  The team lost no fans that day - they were willing to take the game on and attac

    Demonland
    Demonland |
    Match Previews

    HELP by KC rom Casey

    The Casey Demons finished off their home and away season against Frankston at Skybus Stadium on Sunday with a narrow, unconvincing 6-point victory that left the door slightly open for a top eight berth when the VFL finals begin in a fortnight’s time. While sunny skies prevailed over Frankston in the morning, the skies became overcast by noon and heavy waves pounded the bay nearby as the rains came in to greet the players as the game started. And conditions stayed dark and dreary for the rem

    Demonland
    Demonland |
    Casey Articles

    THANKS BUT NO THANKS by George on the Outer

    Thanks, but no thanks! In a round where the club was supposed to thank their fans for the support during the year, the Melbourne Football Club chose to do otherwise with a 53 point loss to a team that sat 15th on the ladder.  Don’t give us cheap jumpers that can’t be sold in the Demon shop.  Don’t give us vouchers to shop there, give us something on the field, which is why we come to the football in the first place. It was a disgraceful performance, which started with a disgracefu

    Demonland
    Demonland |
    Match Reports

    SLEEP OUT AT THE MCG by The Oracle

    Around about 12 months ago Melbourne and Sydney fought out an epic battle between two top eight teams fighting for the best possible ladder position in the lead up to the finals. The Swans triumphed by 9 points at the MCG after the Demons came back from five goals down at three quarter time. But for its poor kicking for goal, Melbourne might well have won the game and finished in the top four. Who knows what might then have happened for the club in September? As a consequence, the person re

    Demonland
    Demonland |
    Match Previews

    A LITTLE RAY OF SUNSHINE by KC from Casey

    Two clubs that have been hard hit by injury recently took part in a dour battle under dark clouds and, with intermittent showers falling, it wasn’t a pretty game at Victoria Park on Sunday. Despite all that, the Casey Demons added a little ray of sunshine to their day to get the job done over a "traditional" rival with a 15 point victory over Collingwood VFL that breathed life back into their season. There were a few highlights at the ground that in past days has seen many titanic batt

    Demonland
    Demonland |
    Casey Articles

    THE RETRO ROUND by George on the Outer

    We have seen it all before… Yes, a wonderful idea to showcase what used to be in football.  Big crowds, umpires who knew how to apply the rules and not opinions, high marks, skilful players. But for the Melbourne supporters their retro is what it has been like for the past 10 years. Losing games, end on end, year after year.  Opportunities squandered in front of goal. VFL standard players running around at the MCG. Just more of the same, and the game against Collingwood was no ex

    Demonland
    Demonland |
    Match Reports

    THE PEOPLE SPEAK by The Demonland Crew

    Thanks to Demonlanders for their input into this week’s preview. Ralphius Maximus is short and bittersweet: We'll crack in at the bounce to create a contest, win our share of the ball, butcher the forward movement and get scored on easily from the intercepts. Not that hard to predict. Big Demon says: Unfortunately Collingwood will win because they have a lot more to play for. We will be good in parts but really the season is well over so we will have to put up with those bell

    Demonland
    Demonland |
    Match Previews

    WHAT, NO BLOOD? by George on the Outer

    The feeling when turning up to the MCG on a Saturday night to play a top four side in Richmond, while the Melbourne sits cemented in close proximity to the bottom of the table is like attending the Colosseum in Ancient Roman times. The expectation is that a bloodbath is about to occur. There are 100,000 Richmond members and 50,000 Melbourne members, and despite the fact that it turned out to be a wet night after half-time, a crowd of only 37K bothered to turn up. That should never have happ

    Demonland
    Demonland |
    Match Reports

    A MAN’S ERRAND by KC from Casey

    A young and undermanned Casey Demons were sent out on Saturday to the Swinburne Centre in the shadows of the MCG on a man’s errand against a very experienced Richmond VFL combination which is the clear ladder leader and fielded no less than 18 AFL listed players. It was expected to be a rout and the Tigers made easy work of it in the early stages when they held a 26 point lead by quarter time. To their credit however, the Demons weathered the storm and kept their opponents within the range

    Demonland
    Demonland |
    Casey Articles

×
×
  • Create New...