Eastdog
03-04-2014, 11:32 AM
http://sportsbusinessinsider.com.au/news/category/financial-and-governance/afl-guarantees-42-million-in-bank-loans-for-clubs/
The AFL is guaranteeing club bank loans to the value of $42 million.
The league is grappling with revenue-sharing measures to ensure greater competitive balance, made more urgent with 10 of the 18 clubs coming off financial losses in 2013.
Six of those losses were greater than $1m and eight clubs face debts ranging from $2.4m to $10.4m.
The AFL — which chose not to comment on its role as financial backer to clubs — has guaranteed loans for several years, but some sides significantly increased the level of their borrowings at the end of last year and there has been an overall rise of $8.4m in borrowings now backed by the league.
The AFL and club bosses agreed to 10 key equalisation principles in Adelaide earlier this month — but nothing will be finalised before the competitive balance sub-committee next meets, likely in May.
Among the measures that will be introduced from next season are a soft cap on football spending, coupled with a luxury tax, and a revenue tax for the competition’s highest earners.
The revenue imbalance created by the poor financial returns some clubs receive for playing home games at Etihad Stadium has prompted suggestions the league buy the $250-million-plus venue now, rather than wait to buy it for $1 in 2025, as per the terms of the league’s tenancy agreement.
But the Herald Sun understands there are no serious discussions underway between the AFL and Etihad’s management in this regard.
Five of the seven Victorian clubs to have their loans guaranteed by the AFL are based at Etihad, although Essendon’s loan relates mostly to its new high performance centre and Carlton plays five of 11 home games at the MCG.
Quizzed about the state of the clubs’ finances earlier this month, league boss Andrew Demetriou said the game was financially healthy overall, but acknowledged concern over the position of some clubs.
“When I started at the AFL, we had about $50 million of debt,” he said.
“We (now) have about $60 million in the bank. We’ve restored the balance sheet.”
The Brisbane Lions are battling debts of about $10m and have AFL-backed loans totalling $8m.
Club great Jonathan Brown said the Lions needed help.
“I think we’re one of the clubs that needs equalisation because we’re a small market team,” Brown said on Channel 9.
“The basic fact of the matter is we’re a small club so we’re always going to have off-field issues.”
But Demetriou backed the club to dig itself out of the hole.
“I’ve got a lot of confidence the Brisbane Lions can turn it around … but it’s going to take time,” Demetriou said.
“They’re going to find it hard in the first 12 months of this turnaround, because every other club’s got their foot on the pedal as well.”
AFL — CLUB LOAN GUARANTEES
Brisbane Lions — $8m (up from $5m)
St Kilda — $6.75m (up from $4.75m)
Melbourne — $5.5m (up from $4.6m)
Essendon — $5m (not previously guaranteed)
Carlton — $4.9m (down from $5.5m)
Western Bulldogs — $4.55m (same)
North Melb. – $4.2m (down from $4.6m)
Richmond — $1.5m (down from $3m)
Gold Coast — $0.98m (same)
GWS — $0.66m (same)
————–
TOTAL $42.04 (up from $33.64m)
This article originally published in the Herald Sun.
The AFL is guaranteeing club bank loans to the value of $42 million.
The league is grappling with revenue-sharing measures to ensure greater competitive balance, made more urgent with 10 of the 18 clubs coming off financial losses in 2013.
Six of those losses were greater than $1m and eight clubs face debts ranging from $2.4m to $10.4m.
The AFL — which chose not to comment on its role as financial backer to clubs — has guaranteed loans for several years, but some sides significantly increased the level of their borrowings at the end of last year and there has been an overall rise of $8.4m in borrowings now backed by the league.
The AFL and club bosses agreed to 10 key equalisation principles in Adelaide earlier this month — but nothing will be finalised before the competitive balance sub-committee next meets, likely in May.
Among the measures that will be introduced from next season are a soft cap on football spending, coupled with a luxury tax, and a revenue tax for the competition’s highest earners.
The revenue imbalance created by the poor financial returns some clubs receive for playing home games at Etihad Stadium has prompted suggestions the league buy the $250-million-plus venue now, rather than wait to buy it for $1 in 2025, as per the terms of the league’s tenancy agreement.
But the Herald Sun understands there are no serious discussions underway between the AFL and Etihad’s management in this regard.
Five of the seven Victorian clubs to have their loans guaranteed by the AFL are based at Etihad, although Essendon’s loan relates mostly to its new high performance centre and Carlton plays five of 11 home games at the MCG.
Quizzed about the state of the clubs’ finances earlier this month, league boss Andrew Demetriou said the game was financially healthy overall, but acknowledged concern over the position of some clubs.
“When I started at the AFL, we had about $50 million of debt,” he said.
“We (now) have about $60 million in the bank. We’ve restored the balance sheet.”
The Brisbane Lions are battling debts of about $10m and have AFL-backed loans totalling $8m.
Club great Jonathan Brown said the Lions needed help.
“I think we’re one of the clubs that needs equalisation because we’re a small market team,” Brown said on Channel 9.
“The basic fact of the matter is we’re a small club so we’re always going to have off-field issues.”
But Demetriou backed the club to dig itself out of the hole.
“I’ve got a lot of confidence the Brisbane Lions can turn it around … but it’s going to take time,” Demetriou said.
“They’re going to find it hard in the first 12 months of this turnaround, because every other club’s got their foot on the pedal as well.”
AFL — CLUB LOAN GUARANTEES
Brisbane Lions — $8m (up from $5m)
St Kilda — $6.75m (up from $4.75m)
Melbourne — $5.5m (up from $4.6m)
Essendon — $5m (not previously guaranteed)
Carlton — $4.9m (down from $5.5m)
Western Bulldogs — $4.55m (same)
North Melb. – $4.2m (down from $4.6m)
Richmond — $1.5m (down from $3m)
Gold Coast — $0.98m (same)
GWS — $0.66m (same)
————–
TOTAL $42.04 (up from $33.64m)
This article originally published in the Herald Sun.