MFC Debt Free in 2021

[FireInTheBennelly 4,026]

Some of those numbers say a couple of things to me.

Firstly anyone who is still a member is going nowhere, it's pretty much the bare minimum considering what supporters have been through.

Secondly, the $100k increase in memberships from one win over the Pies suggests there is a massive supporter base out there still following the club and ready to jump on board with sustained success.

I reckon these numbers deserve a show of respect from the AFL and help move us up into the top bracket of power clubs. If we keep winning games this year and go deep into finals I'm holding out hope for a massive draw next year of prime time slots. 2021 Could be a huge year for us financially.

 

[Demons1858 1,662]

great to see we are continuing to support the club with membership, sponsors are hanging tough, we have made 1 mill in donations, and renegotiations have saved money.  

am confused a little about our financial position however. any accountants out there that can clarify? didn't most or all the debt get cleared because we simply sold down our assets and longer term doesnt that affect our ability to generate revenue from those proceeds?

Edited August 21, 2020 by Demons1858

[Binmans PA 26,287]

7 hours ago, Skuit said:

John Trotter: ex-Deloitte Global Managing Partner for Risk Services and Managing Partner of Deloitte Victoria. Seems a pretty safe pair of hands. "Chair of the Club’s Risk and Audit sub-committee. He is also Chair of the Bentleigh Club sub-committee. He has particular involvement at the Board level on the governance structures, risk management and finance operations of the club".

Given our recent history it's almost impossible to imagine we're in a strong financial position. But he may be a clue. 

Well, most of the board are accountants, so you'd expect they'd bring various financial skills to the table.

[Lucifers Hero 37,207]

6 hours ago, Demons1858 said:

great to see we are continuing to support the club with membership, sponsors are hanging tough, we have made 1 mill in donations, and renegotiations have saved money.  

am confused a little about our financial position however. any accountants out there that can clarify? didn't most or all the debt get cleared because we simply sold down our assets and longer term doesnt that affect our ability to generate revenue from those proceeds?

Yes, it does.

imv being debt free isn't such a big deal with near zero interest rates.  

Would much rather we use any revenue from sale of assets to invest in new facilities than pay down debt or worse use it for operating expenses/avoid making a loss.  

But I think we are in good financial hands and hopefully the club doesn't trade off our long-term financial position for the short-term.

[Diamond_Jim 11,921]

8 hours ago, FireInTheBennelly said:

Secondly, the $100k increase in memberships from one win over the Pies suggests there is a massive supporter base out there still following the club and ready to jump on board with sustained success.

It's MCC renewal time so I expect that explains the little bump in membership

[Demons1858 1,662]

37 minutes ago, Lucifer's Hero said:

Yes, it does.

imv being debt free isn't such a big deal with near zero interest rates.  

Would much rather we use any revenue from sale of assets to invest in new facilities than pay down debt or worse use it for operating expenses/avoid making a loss.  

But I think we are in good financial hands and hopefully the club doesn't trade off our long-term financial position for the short-term.

then is the narrative from the board and ceo misleading or at best not  being transparent?

[Lucifers Hero 37,207]

1 minute ago, Demons1858 said:

then is the narrative from the board and ceo misleading or at best not  being transparent?

Not sure what that refers to.  More info, please...

[george_on_the_outer 7,015]

41 minutes ago, Lucifer's Hero said:

Yes, it does.

imv being debt free isn't such a big deal with near zero interest rates.  

Would much rather we use any revenue from sale of assets to invest in new facilities than pay down debt or worse use it for operating expenses/avoid making a loss.  

But I think we are in good financial hands and hopefully the club doesn't trade off our long-term financial position for the short-term.

Exactly, but the term "debt free" is a bit of a misnomer in the sense that assets are being sold to pay down the same debt, with a fair bit of that debt associated with the remaining pokies licence fees. 

From the article:

"The sale of the Leighoak gaming venue – following the 2018 decision of president Glen Bartlett's board to withdraw from gaming – had netted more than $10 million, which was used to create a $7.5 million investment portfolio that the club can draw down on."

So I would think the other $2.5 M is used to pay down debt. .....voila debt free!

Trouble is with the sale of Bentleigh and Leigoak, the revenue bases have/will also disappear.  What is going to replace them?  

 

[Demons1858 1,662]

23 minutes ago, Lucifer's Hero said:

Not sure what that refers to.  More info, please...

they way the article is written and other prior messages from Bartlett and Pert seems to imply they have reduced debt themselves - not sure that is accurate - l can sell my car and reduce debt but have l really moved the needle on our financial position and should l take credit for that? lm not an accountant but feels like we are being mislead a little

Edited August 22, 2020 by Demons1858

[Lucifers Hero 37,207]

30 minutes ago, george_on_the_outer said:

Exactly, but the term "debt free" is a bit of a misnomer in the sense that assets are being sold to pay down the same debt, with a fair bit of that debt associated with the remaining pokies licence fees. 

From the article:

"The sale of the Leighoak gaming venue – following the 2018 decision of president Glen Bartlett's board to withdraw from gaming – had netted more than $10 million, which was used to create a $7.5 million investment portfolio that the club can draw down on."

So I would think the other $2.5 M is used to pay down debt. .....voila debt free!

Trouble is with the sale of Bentleigh and Leigoak, the revenue bases have/will also disappear.  What is going to replace them?

I agree the $2.5m of the Leighoak sale was used to pay down debt.   My read of the article is we still have debt so to be debt free in 2021 we need to use more of the remaining $7.5 Leigoak/investment portfolio 

The article also says we will make a loss of $3.5m this year so I am assuming that another chunk of the remaining $7.5 Leighoak/investment portfolio will be used to fund that shortfall.

Very good question about the Bentleigh and Leighoak lost revenue.  My recollection of the sale announcements was that we would get commercial income from our new facilities (rental, signage etc etc) and growth in memberships.  My concern is if we use proceeds from their sale to pay down debt and fund operating losses we won't have the money for the new facilities to get that commercial income that was hoped for.

I don't mind paying down debt but don't see a lot of value if interest rates are near zero.  I'm more worried about asset sales being used to fund operating losses.  So from that view I would like to see the Bentleigh club site not sold until we have a concrete new facilities project to fund.

Edited August 22, 2020 by Lucifer's Hero

[layzie 29,129]

Does this mean we have to give Pert some credit now?

[Lucifers Hero 37,207]

4 minutes ago, Demons1858 said:

they way the article is written and other prior messages from Bartlett and Pert seems to imply they have reduced debt themselves - not sure that is accurate - l can sell my car and reduce debt but have l really moved the needle on our financial position and should l take credit for that? lm not an accountant but feels like we are being mislead a little

The info is in the Annual Accounts but it isn't easy to find.  If it is at all reassuring, I don't think we have been misled.

Also see the two posts above your latest for a bit more context.

[Demons1858 1,662]

30 minutes ago, Lucifer's Hero said:

I agree the $2.5m of the Leighoak sale was used to pay down debt.   My read of the article is we still have debt so to be debt free we need to use more of the remaining $7.5 Leigoak/investment portfolio 

The article also says we will make a loss of $3.5m this year so I am assuming that another chunk of the remaining $7.5 Leighoak/investment portfolio will be used to fund that shortfall.

Very good question about the loss of Bentleigh and Leighoak lost revenue.  My recollection of the sale announcements was that we would get commercial income from our new facilities (rental, signage etc etc) and growth in memberships.  My concern is if we use proceeds from their sale to pay down debt and fund operating losses we won't have the money for the new facilities to get that commercial income that was hoped for.

I don't mind paying down debt but don't see a lot of value if interest rates are near zero.  I'm more worried about asset sales being used to fund operating losses.  So from that view I would like to see the Bentleigh club site not be sold until we have a concrete new facilities project to fund.

agree we should wait for market value to pick up and for our finances to be back to pre covid or close plus have the plans for the new training facility back on track - then look at selling off any other assets

Edited August 22, 2020 by Demons1858

[george_on_the_outer 7,015]

There are a couple of other positives outside of the "debt free" thrust of the article.

Firstly, the sale of the Leighoak and the Bentleigh club pokie licences has been probably at the most fortuitous time, given the Covid situation.  Both closed, with no income.  We really picked the right time to sell. 

Secondly, the generosity of the MFC supporters & sponsors.  With only 100 or so wanting their money back , it means the Club has the cash-flow to continue operations during the footy season.  And with the sponsors committing to next year, that provides surety to continuing operations. 

Without that support, we would be on AFL largesse, both this year and next and maybe beyond.  The Club has been very forthright about not being under AFL financial control, and so it puts us on equal footing with the larger clubs.

For those who think that on-field success and performance is their motivator to join as a member, then they need to listen to "The Merger" :

https://www.iheart.com/podcast/256-i-was-never-given-a-name-a-43053728/

and see how not taking out memberships nearly bankrupted Hawthorn, after 4 premierships in the previous 10 years!

Thirdly, as Redleg has pointed out...we can thank our lucky stars for what the Gutnick/Mann board did in purchasing the Bentleigh Club.  It has provided continuous profit to plow back into football operations for 20 years, and now its sale will probably provide the basis for a permanent training facility.

15 hours ago, Redleg said:

The Joseph Gutnick Board and CEO Hassa Mann started the MFC/Bentleigh Club alignment, which today sees us with a $20 million asset. 
Saving us from a merger and helping our long term financial future.
Added to a personal $2.7 million donation, Gutnick , who really knew nothing about footy, has left a  lasting contribution to the MFC. 
Now we are a debt free club. Wow!

 

 

 

Edited August 22, 2020 by george_on_the_outer

[one_demon 826]

I'm a bit shocked by this.  Surely it's a misprint.

[Moonshadow 16,317]

17 minutes ago, george_on_the_outer said:

There are a couple of other positives outside of the "debt free" thrust of the article.

Firstly, the sale of the Leighoak and the Bentleigh club pokie licences has been probably at the most fortuitous time, given the Covid situation.  Both closed, with no income.  We really picked the right time to sell. 

Secondly, the generosity of the MFC supporters & sponsors.  With only 100 or so wanting their money back , it means the Club has the cash-flow to continue operations during the footy season.  And with the sponsors committing to next year, that provides surety to continuing operations. 

Without that support, we would be on AFL largesse, both this year and next and maybe beyond.  The Club has been very forthright about not being under AFL financial control, and so it puts us on equal footing with the larger clubs.

For those who think that on-field success and performance is their motivator to join as a member, then they need to listen to "The Merger" :

https://www.iheart.com/podcast/256-i-was-never-given-a-name-a-43053728/

and see how not taking out memberships nearly bankrupted Hawthorn, after 4 premierships in the previous 10 years!

Thirdly, as Redleg has pointed out...we can thank our lucky stars for what the Gutnick/Mann board did in purchasing the Bentleigh Club.  It has provided continuous profit to plow back into football operations for 20 years, and now its sale will probably provide the basis for a permanent training facility.

That's true. But correct me if I'm wrong, didn't the state govt offer MFC the Olympic Park facility and the Gutnik board knocked it back? Or was it another board? I'm not sure of the detail, and of course there was probably much more to it than that. However Olympic Park would've been a pretty handy training base over the last 10 years and into the future.

[whatwhat say what 19,227]

4 minutes ago, Moonshadow said:

That's true. But correct me if I'm wrong, didn't the state govt offer MFC the Olympic Park facility and the Gutnik board knocked it back? Or was it another board? I'm not sure of the detail, and of course there was probably much more to it than that. However Olympic Park would've been a pretty handy training base over the last 10 years and into the future.

i thought that was a szondy special?

[daisycutter 28,630]

12 minutes ago, Moonshadow said:

That's true. But correct me if I'm wrong, didn't the state govt offer MFC the Olympic Park facility and the Gutnik board knocked it back? Or was it another board? I'm not sure of the detail, and of course there was probably much more to it than that. However Olympic Park would've been a pretty handy training base over the last 10 years and into the future.

pies didn't go to olympic park initially. they went to goschs paddock + the olympic pool. it was afterwards that eddie engineered the takeover of olympic park from athletics victoria (after jumping on their board)  

so i don't think olympic park was ever just up for grabs

[darkhorse72 1,737]

paying. down debt is good even at low interest rates.  Simply if we have no debt all revenue becomes ours.  We can then redirect some of our revenue to build assets for the long term in whatever form is best for the club.

But its good to see we are in a positive position.

[Diamond_Jim 11,921]

2019 was a loss of $2m which we met from cash at bank from the sale of fixed assets.

2020 is anyone's guess as we don't know what expenses were being met by the AFL and what the AFL distribution will be  ($16M last year). The impact of reduced membership is unknown as we have been told what class of membership we lost. (I suspect thay were low game memberships that were last year purchased by the NT Govt as contra for our game in Darwin. If so the impact may not be that great.)

In simple terms we have around $20M in assets thanks to our past and present bricks and mortar investment. In a perfect world we need to get that figure to around $50M and drive a year on year 6-9% return. (That's about what most balanced super funds deliver). This gives us around $2.5M per year to invest in discretionary improvements while adjusting the $50M base for inflation.

Operating losses like 2019 will set us back badly.(the 2019 loss was due to one factor...low attendances ie on field performance).

It's a good position but investing in a non realisable asset such as a training facility may not be sound. This is effectively what North has done.Contrast them with the Hawks who have substantially relied on external funding from Government and Foundation support.

[Dr. Gonzo 22,525]

On 8/21/2020 at 7:09 PM, Lucifer's Hero said:

Very impressed with this:

Pert said fewer than 100 members had sought refunds and remarkably it had seen more than $100,000 flow into the club in membership and donations since they demolished Collingwood last Saturday. The Demons are believed to have had the fewest membership refunds of any club.

Nothing like beating Collingwood to fire up demon supporters!

 

This is true but playing devils advocate we still have about 13k members from last year who didn't join in 2020.

[george_on_the_outer 7,015]

22 hours ago, daisycutter said:

pies didn't go to olympic park initially. they went to goschs paddock + the olympic pool. it was afterwards that eddie engineered the takeover of olympic park from athletics victoria (after jumping on their board)  

so i don't think olympic park was ever just up for grabs

Correct.  The old swimming stadium ( now Lexus/Holden etc) centre was offered to the Gutnick Board, but not Olympic park.  Probably the cost of re-engineering a place with a Heritage overlay would have been too much. 

Eddie then engineered Althletics Victoria to move to create the training oval for them. It still has a training running track around the perimeter, but the athletes have been fenced out of there during Covid.....will they get a chance to return?