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2023 MFC Financials

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LeighOak sale we’ve basically spent - BTW we bought a flag!

Bentleigh proceeds are for buying future flags.

what is not to like here?

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    Great article here on who gets the money from GF Merchandising. A couple of things surprised me:

    AFL take 12.5%

    Costs are over 50% (given mass produced on Bangladesh templates there must be a few middlemen)

    The club only gets 15%

    Surprisingly, Melbourne’s 2021 premiership surpassed Richmond’s 2017 drought-breaker for merchandise sales, despite the Tigers’ significantly larger fan base. The likely explanation, as Davies suggested, was that Melbourne’s flag was during the COVID-19 shutdown and many fans splurged online on items when they couldn’t attend the game.

    https://www.theage.com.au/sport/afl/merch-bonanza-where-the-money-goes-from-magpies-record-flag-windfall-20231121-p5elp7.html

    As an aside on costs... In India you can buy the official cricket top for $20. Knock offs abound at around $5. How do we get to $100 plus for an official top

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    11 hours ago, Hawk the Demon said:

    The other quote from those 2022 Financials is this one further on in the Dircetors' Report:

    "Bentleigh Club Sale, Future Fund & Investment Committee

    As outlined previously, the sale of Bentleigh Club settled just after the financial year end. The sale of Bentleigh Club is the culmination of a long-term strategy to exit the gaming industry, which commenced with the sale of Leighoak in 2018 for $10.7m. The Club exits gaming with combined sale proceeds of $34.4m, and the expectation of an annual income stream from the Future Fund that will exceed income otherwise expected had the Club retained its two gaming venues.

    The Board have established a Future Fund with the proceeds of the sale, with the purpose of the Future Fund to underpin the long-term financial sustainability of the Club."

    One could read that the Future Fund was to be $34.4 m. Maybe the wording was unclear (sale proceeds/proceeds of the sale?) and it was only ever to be $23.7m?

    Assuming your quotation is correct then the heading in bold, Bentleigh Club Sale, is a direct indicator of what is being referred to in the phrase 'proceeds of the sale' ie the bentleigh club.

    Remember also the the sale of leighoak and bentleigh were not simultaneous events but 4? years apart but I will see if i can track the leighoak proceeds. (we are not in debt now but we were then)

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    From reading the fin reports of previous years the proceeds of the sale of leighoak went to cover an immediate cash deficit, to reduce existing debt, and with the remainder going into an Clubs Investment Fund.  This investment fund had to be liquidated to get us through Covid.

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    23 minutes ago, Jontee said:

    From reading the fin reports of previous years the proceeds of the sale of leighoak went to cover an immediate cash deficit, to reduce existing debt, and with the remainder going into an Clubs Investment Fund.  This investment fund had to be liquidated to get us through Covid.

    That's a fair reading of it. It has been unclear to me how much would be put into this Future Fund. As you know, money is fungible. Seems the final decision is not to top up the Future Fund (bentleigh Club proceeds) with surplus cash, but to "allocate" $7.7 million to the new Home Base. So $23.7 million it is for the FF.

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    On 24/11/2023 at 16:39, Gawndy the Great said:

    The state and the nation are broke. Getting any type of funding is going to be extremely challenging. I would be surprised if we made any progress this decade. 

    Point of order Chair - neither the state or the Commonwealth are "broke".

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    2 hours ago, Queanbeyan Demon said:

    Point of order Chair - neither the state or the Commonwealth are "broke".

    No, they are just up to their eyeballs in debt.

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    On 25/11/2023 at 10:06, Diamond_Jim said:

    Great article here on who gets the money from GF Merchandising. A couple of things surprised me:

    AFL take 12.5%

    Costs are over 50% (given mass produced on Bangladesh templates there must be a few middlemen)

    The club only gets 15%

    Surprisingly, Melbourne’s 2021 premiership surpassed Richmond’s 2017 drought-breaker for merchandise sales, despite the Tigers’ significantly larger fan base. The likely explanation, as Davies suggested, was that Melbourne’s flag was during the COVID-19 shutdown and many fans splurged online on items when they couldn’t attend the game.

    https://www.theage.com.au/sport/afl/merch-bonanza-where-the-money-goes-from-magpies-record-flag-windfall-20231121-p5elp7.html

    As an aside on costs... In India you can buy the official cricket top for $20. Knock offs abound at around $5. How do we get to $100 plus for an official top

    FYI 50% margin is pretty decent for apparel that is not mass produced. You might think Melbourne merchandise is mass produced, but on production scales of apparel it is not. And undoubtedly there are several middleman involved. The club doesn’t have a full time product developer who is dealing direct with factories to make the stuff. There is probably a couple of junior graphic designers at AFL HQ making some designs and sending them to an agent overseas who then sends them out to different factories to produce. 
    I won’t bore you with more information about apparel manufacturing, but I will say that some items will have a higher margin than 50% and some a lower margin. 
     

    The percentage the AFL takes is basically for the licensing of using the AFL logo. Essentially like Disney for example take a licensing fee if you use one of their characters on your merchandise. 

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    20 hours ago, drysdale demon said:

    I notice those figures were in 2021.

    First point; no, they are reporting to end of financial year 2022.

    Second point; what is your point? I mean, are you arguing that the Stage 3 tax cuts are the reason it might be difficult for AFL-level football clubs to lobby for venue funding?

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    On 24/11/2023 at 16:39, Gawndy the Great said:

    The state and the nation are broke. Getting any type of funding is going to be extremely challenging. I would be surprised if we made any progress this decade. 

     

    On 26/11/2023 at 14:53, Queanbeyan Demon said:

    Point of order Chair - neither the state or the Commonwealth are "broke".

     

    On 26/11/2023 at 17:09, drysdale demon said:

    No, they are just up to their eyeballs in debt.

     

    On 26/11/2023 at 17:42, Little Goffy said:

    https://www.imf.org/external/datamapper/CG_DEBT_GDP@GDD/CHN/FRA/DEU/ITA/JPN/GBR/USA/AUS

    In Australia's case it is not so much eyeballs as just balls-balls.

    Rounded up, Australia's government debt to GDP ratio is 38 percent. Remarkable low by both peak historical standards and compared to our major trading partners and other developed countries.

    https://www.abs.gov.au/statistics/economy/government/government-finance-statistics-annual/2021-22

    Despite the rantings and ravings of those in public life, Australia is in remarkably good shape financially. And anti-intuitively maybe, the debt to GPD ratio is dropping quickly due to inflation being higher compared to its average of the last 20 years.

    So, in short, there's more than enough liquidity to build a home stadium in Melbourne, and Alice Springs.

     

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    12 hours ago, Queanbeyan Demon said:

     

     

     

    Rounded up, Australia's government debt to GDP ratio is 38 percent. Remarkable low by both peak historical standards and compared to our major trading partners and other developed countries.

    https://www.abs.gov.au/statistics/economy/government/government-finance-statistics-annual/2021-22

    Despite the rantings and ravings of those in public life, Australia is in remarkably good shape financially. And anti-intuitively maybe, the debt to GPD ratio is dropping quickly due to inflation being higher compared to its average of the last 20 years.

    So, in short, there's more than enough liquidity to build a home stadium in Melbourne, and Alice Springs.

     

    That maybe the case but my opinion is we won't get any funding on a state or federal level for quite some time unless it it would help either retain power.

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    51 minutes ago, drysdale demon said:

    That maybe the case but my opinion is we won't get any funding on a state or federal level for quite some time unless it it would help either retain power.

    True.  And regardless of which government is in power, there is no funding unless you have a proposal which will justify the injection of funds.  Our Boards have been asleep at the wheel for the past 40 years, and the current crop have done nothing to further that position.  Other clubs have gone to the government with all sorts of slim community benefits which justify the government putting in as well.  If we want something to happen we have to do it ourselves, then go with a proposition to the powers that be.

    Jim Stynes was able to muster supporter enthusiasm to clear debts.  What has been asked of supporters in that past 40 years toward getting a home base?  Nothing. 

    Imagine what we would have available if we had been asked to make just a small contribution each year over that period of time.  All that has been sought has been handouts.  All we have heard in the past 4 years has been " we can't say anything because negotiations with government are in confidence" . I wonder what sort of hollow promises will be sprouted at this years AGM?

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    14 hours ago, Queanbeyan Demon said:

    And anti-intuitively maybe, the debt to GPD ratio is dropping quickly due to inflation being higher compared to its average of the last 20 years.

     

    That's my favourite part.

    In balance sheet terms, our debt is currently earning us a profit because the 'real' value of the dollars we will eventually have to repay is going down by more than the interest we are paying on the amount!

    It's like "2020 Dollars" are a foreign currency that is tanking compared to the value of 2023... 2024... 2030 dollars.

    Unfortunately, one think I think everyone in the thread is agreed on is that right now no government wants to be seen throwing new money around loosely without a very clear result to ribbon-cut.

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    23 minutes ago, george_on_the_outer said:

    True.  And regardless of which government is in power, there is no funding unless you have a proposal which will justify the injection of funds.  Our Boards have been asleep at the wheel for the past 40 years, and the current crop have done nothing to further that position.  Other clubs have gone to the government with all sorts of slim community benefits which justify the government putting in as well.  If we want something to happen we have to do it ourselves, then go with a proposition to the powers that be.

    Jim Stynes was able to muster supporter enthusiasm to clear debts.  What has been asked of supporters in that past 40 years toward getting a home base?  Nothing. 

    Imagine what we would have available if we had been asked to make just a small contribution each year over that period of time.  All that has been sought has been handouts.  All we have heard in the past 4 years has been " we can't say anything because negotiations with government are in confidence" . I wonder what sort of hollow promises will be sprouted at this years AGM?

    Simple really we just use the same financial modelers that wrote the cases for the Grand Prix and Commonwealth games

    It will get the nod

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    5 hours ago, Kent said:

    Simple really we just use the same financial modelers that wrote the cases for the Grand Prix and Commonwealth games

    It will get the nod

    Not that silly for the big Melbourne clubs. Market the game as bringing 20k from interstate and you have mini event marketing. It works for College and NFL games in USA. It's a cheap version of gather round

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    6 hours ago, george_on_the_outer said:

    True.  And regardless of which government is in power, there is no funding unless you have a proposal which will justify the injection of funds.  Our Boards have been asleep at the wheel for the past 40 years, and the current crop have done nothing to further that position.  Other clubs have gone to the government with all sorts of slim community benefits which justify the government putting in as well.  If we want something to happen we have to do it ourselves, then go with a proposition to the powers that be.

    Jim Stynes was able to muster supporter enthusiasm to clear debts.  What has been asked of supporters in that past 40 years toward getting a home base?  Nothing. 

    Imagine what we would have available if we had been asked to make just a small contribution each year over that period of time.  All that has been sought has been handouts.  All we have heard in the past 4 years has been " we can't say anything because negotiations with government are in confidence" . I wonder what sort of hollow promises will be sprouted at this years AGM?

    Spot on George. We have never had a comprehensive financial strategy, with sustainable fund-raising embedded - we just rattle the tins occasionally when the need arises - e.g. to get Gosch's Paddock upgraded and further work done at Casey. Foundation Heroes are now being "re-booted" - why now, why not in October 2021 when euphoria reigned? Oh the cheques that may have been written back then.

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    10 hours ago, Little Goffy said:

    That's my favourite part.

    In balance sheet terms, our debt is currently earning us a profit because the 'real' value of the dollars we will eventually have to repay is going down by more than the interest we are paying on the amount!

    It's like "2020 Dollars" are a foreign currency that is tanking compared to the value of 2023... 2024... 2030 dollars.

    Unfortunately, one think I think everyone in the thread is agreed on is that right now no government wants to be seen throwing new money around loosely without a very clear result to ribbon-cut.

    Yes, indeed @Little Goffy. During the pandemic the Commonwealth sold government bonds, valued at billions of dollars, at a negative interest rate. Or put in simple terms, people and institutions actually paid the government to take their money. So some of the government debt is actually making money. And even bonds that were sold at one or two percent interest rate are still making money because: a) inflation has eaten away at the value of the debt, and b) the strength of the economy after the pandemic has meant government receipts (i.e. tax collection in it's various forms) are much higher than budgeted (between 3-6% higher). This means the government can buy back the bonds - making a tidy little profit on the side. Quite amazing really.

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    13 hours ago, Queanbeyan Demon said:

    Yes, indeed @Little Goffy. During the pandemic the Commonwealth sold government bonds, valued at billions of dollars, at a negative interest rate. Or put in simple terms, people and institutions actually paid the government to take their money. So some of the government debt is actually making money. And even bonds that were sold at one or two percent interest rate are still making money because: a) inflation has eaten away at the value of the debt, and b) the strength of the economy after the pandemic has meant government receipts (i.e. tax collection in it's various forms) are much higher than budgeted (between 3-6% higher). This means the government can buy back the bonds - making a tidy little profit on the side. Quite amazing really.

    The old 'everybody put your money in the bank and pay for the privilege, because mattresses are spontaneously combusting' routine.

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    On 26/11/2023 at 17:09, drysdale demon said:

    No, they are just up to their eyeballs in debt.

    You do realise all those red brick primary schools built in the 19th and 20th centuries we all attended were built with (gulp) debt? 

    The point being all the generations that benefit from such assets bear a share of the cost. There's probably, somewhere deep in the government's books, a smidgeon of the cost of the school I attended back in the 1960s. That's how public debt works. No need to freak out.

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    2 hours ago, pitmaster said:

    You do realise all those red brick primary schools built in the 19th and 20th centuries we all attended were built with (gulp) debt? 

    The point being all the generations that benefit from such assets bear a share of the cost. There's probably, somewhere deep in the government's books, a smidgeon of the cost of the school I attended back in the 1960s. That's how public debt works. No need to freak out.

    Great point @pitmaster. It's one of the great myths that "we are leaving debt to our children to pay."

    Firstly, in a crisis such as a war or a pandemic, government creates money that is used to stimulate the economy. In practical terms, this usually means creating additional resources (in the case of a war) or limiting the amount of people at risk of unemployment in the case of a pandemic. The facts are these: Australia’s debt was 120 percent of GDP at the end of the Second World War, yet the economy grew by an average of 4.2 percent in the 1950s and 5.3 percent in the 1960s[1]. Tax receipts rose as a result, which had the effect of reducing the debt.

    Secondly, even allowing for the government paying interest on its debt, these payments create additional wealth by flowing back through to the economy. So as the government pays interest, on the other side of the ledger, citizens collect income. This income flows back through the economy as financial activity and indeed, results in higher tax revenues via transaction taxes such as the GST and stamp duties for instance. Indeed, the holders of government debt tend to be more wealthy individuals who are going to be subject to higher levels of taxation on the income received from the dividends on the government bonds. This tax is then reinvested by the government in public infrastructure that is passed on to future generations. Classic examples of this inter-generational wealth building is the Sydney Harbour Bridge, Snowy Mountain Hyro-electric scheme and the NBN. These are physical assets that leave future generations better off than the ones that proceeded them.

    Thirdly, depending on how the inputs are used in the calculation, between 30 and 40 percent of all money created by the Government is returned to it in taxes[2]. So the debt is not the same number as the money created or borrowed. Put simply, for every dollar the government creates, it only has to fund (create and borrow) 60 to 70 percent of the money in reality. Keeping people employed is the best way to ensure that future generations are not burdened with unsustainable welfare payments to a generation of unemployed, or unemployable, citizens.

    [1] “Fact Check: Did the Government Inherit the 'Worst Set of Accounts' in History?” ABC News. Australian Broadcasting Corporation, March 3, 2016. https://www.abc.net.au/news/2015-03-18/fact-check--australia27s-economic-inheritance/6162670?nw=0.

    [2] “Taxation Revenue, Australia, 2019-20 Financial Year.” Taxation Revenue, Australia. Australian Bureau of Statistics, April 27, 2021. https://www.abs.gov.au/statistics/economy/government/taxation-revenue-australia/latest-release#:~:text=Total taxation revenue collected in.

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    I've found over the years that in some ways economics is eerily similar to certain earth sciences and their management - the issue is not so much about 'more vs less' as about 'best place and time'.

    If the cold is in the fridge and the heat is in the oven, all is well.

    Actually, probably the main thing the two areas have in common is the sheer prevalence of analogies.

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