Stadium Deal

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Post by Admin on Sat Nov 15, 2014 11:37 am

In the blue corner, Michelangelo Rucci, the AFL, Adelaide FC and Port Adelaide FC.

In the red corner, Graham Cornes, the SANFL, the SMA.

The blue corner argues the AFL clubs are getting a bad deal.

The red corner argues the AFL clubs signed a contract and are whingers.

Who's right?
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Post by bayman on Sat Nov 15, 2014 12:27 pm

probably both................


you make your bed & therefore you have to lay on it


Port have a 'money man' in charge, surely he would have had a look & if the figures PORTrayed weren't viable why would they sign in the first place ?
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Post by Booney on Mon Nov 17, 2014 9:13 am

I would think the stadium deal is fair to all parties......if the projected average crowds were correct, however, we know the remarkable success the Oval experienced meant both Port and Adelaides average "projected" home crowd was up by some 10-12,000 people. ( ie - Port budgeted for 28,000 and got 40,000 )

As such, as any business, if you "exceed budget" you would expect a better return.

With Port set to lose around $1.9m and Adelaide to make about $300k, with the crowds both clubs pulled, would you not think something is wrong with the deal?

Now, to play devils advocate, the deal was brokered over a long time frame, over 12 months in fact, so how could any party who reviewed such an agreement over such a long period of time have got it so wrong?

( Or, do the SMA have the best contractual writing team in the history of the world and some of the caveats were so well hidden nobody picked them up? )

Ultimately, the stadium was full ( all but ) every week for 6 months and the two entities who gets the bums on seats saw scant reward for the efforts and marketing that filled the place. Therefore something is wrong...
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Post by Booney on Mon Nov 17, 2014 9:28 am

*Footnote*

It also seems that the SMA is a very mysterious entity. I understand they are a "not for profit" body, who merely need to break even?

It was also noted that the SANFL made $200k over their projected budget, what was the projected budget?
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Post by Lee on Mon Nov 17, 2014 9:37 am

Perhaps what is wrong is that almost all of the publicity is all about the poor AFL clubs.

These are clubs who happily (not under any duress) signed contracts agreeing to a specific return. They are now screaming 'unfair', 'unfair'. At the very least, their due diligence is sadly wanting.

Now they scream that they've put more bums on seats - correct, but they're very quiet about the $15 million or so the SANFL put into them to keep Port afloat when the tarps were out. What happens when the crowds drop off again and they get a guarantee which means the SAM and the SANFL take all the risk and no money?

Even with the extra money Por get this year, they're still going to declare a $2 or $3 million dollar loss. No details provided? What are they doing? Where is the money going?

Meanwhile the AFL is no doubt leaning on the SANFL to bend over, with no regard for the SANFL competition at all. The SMA takes all the risk and the AFL clubs just whinge until they get what they want.

As for marketing, Port haven't been able to sell all their corporate benefits and have a President who hates the SANFL.

The SMA has to put aside a certain amount into a statutory reserve fund. If the negotiations have gone on this long, I suspect there's not enough to keep everyone happy.

Not that I'm biased, of course Very Happy
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Post by Lee on Mon Nov 17, 2014 9:40 am

Just saw your footnote, Booney.

The SMA is so mysterious it has a website all about themselves.

http://www.adelaideoval.com.au/125/about-the-sma.aspx

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Post by Booney on Mon Nov 17, 2014 9:45 am

Thanks for that link Lee, it's very interesting, but tells you nothing about the structure of the SMA, a mission statement, financial report etc.

I'll leave this debate for now, no point, as they say, "preaching to the converted".
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Post by Gingernuts on Mon Nov 17, 2014 9:46 am

I'd just like to know where the money is actually going. Are the operating costs far more than anticipated? No doubt they'll identify efficiencies for next season.

Also - I'm still questioning a little bit how Port can make such a significant loss. Yes they should have got more from the stadium deal in the end, but those inflated profits wouldn't have been forecast at the start of the season or when the budget for 2014 was being prepared.

To me that means Port spent beyond their means this year. The bonus profit from the inflated crowds should have been exactly that, a profit, not required to just cover the budget.
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Post by Lee on Mon Nov 17, 2014 10:05 am

Booney wrote:Thanks for that link Lee, it's very interesting, but tells you nothing about the structure of the SMA, a mission statement, financial report etc.

I'll leave this debate for now, no point, as they say, "preaching to the converted".

Please continue, Booney, we're probably both 'converted'.

I do agree about the lack of public detail from all sides, which means we're all in the dark about the important details.

Do you think the fact that mooted increased membership prices might indicate there actually isn't enough to go around.

It does seem strange that capacity crowds isn't a bit of a goldmine.
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Post by Booney on Mon Nov 17, 2014 10:35 am

Some light reading :

http://www.legislation.sa.gov.au/LZ/C/A/ADELAIDE%20OVAL%20REDEVELOPMENT%20AND%20MANAGEMENT%20ACT%202011/CURRENT/2011.29.UN.PDF

An Act to facilitate the redevelopment of Adelaide Oval; to provide for the future care,
control and management of Adelaide Oval and its precincts; and for other purposes.
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Post by Gingernuts on Mon Nov 17, 2014 10:39 am

Thanks Booney, I was looking for my next piece of legislation to read!
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Post by Booney on Mon Nov 17, 2014 10:44 am

So the SMA hold a sub lease and pay the "State" for that right.

So, one may assume they are indeed a profitable body. How profitable? How can we find out?

18—Special annual sublease fee
(1) SMA is liable to pay the following amounts to the State on account of a sublease
granted to SMA under section 5:
(a) in relation to 2015/2016 financial year—$200 000;
(b) in relation to 2016/2017 financial year—$400 000;
(c) in relation to 2017/2018 financial year—$600 000;
(d) in relation to 2018/2019 financial year—$800 000;
(e) in relation to 2019/2020 financial year—$1 000 000;
(f) in relation to each succeeding financial year while SMA holds a sublease over
any part of the Adelaide Oval Core Area under this Act—$1 000 000
(indexed).
(2) An amount payable under this section in relation to a particular financial year must be
paid by SMA to the Treasurer by 31 July immediately following the end of that
financial year
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Post by Gingernuts on Mon Nov 17, 2014 10:51 am

So in other words the State Government is charging substantial rent - and that's only from next financial year.

Interesting.
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Post by Booney on Mon Nov 17, 2014 10:59 am

http://www.adelaidenow.com.au/sport/afl/how-the-money-flows-with-the-stadium-management-authority-at-adelaide-oval/story-fnia3v71-1226929173053

The SMA’s match-day revenue stream is from food and beverage sales.

“And the costs to the SMA of running this stadium are significant,” Daniels said.

Olsen also highlighted the SMA is needing to find almost $4 million a year before any event is hosted at the Oval.

This is to cover a government demand for $2.8m to be invested each year in a “sinking fund” for future development and between $200,000 and $1 million as a “community sports” tax.


_______________________________________________________________________

( From the same article )

PORT Adelaide will pay $111,000 to the Stadium Management Authority for opening the gates at Adelaide Oval to its AFL top-of-the-table clash with Hawthorn on Saturday night.

And both the SMA and the SANFL say this is the best stadium deal in Australia - and will get better to ensure the Crows and Power are in the AFL’s top five for stadium returns.

The SMA is currently taking $2.22 from every AFL ticket sold at the Oval to cover match-day costs.

This is 31 per cent more than the $1.69 average fee at Football Park last season.

But with cost cutting underway at the Oval, the SMA is confident it will meet the target of keeping it match-day claims on the AFL clubs to no more than 30 per cent when compared to Football Park.

“Opening a stadium does not cost nothing,” SMA chairman and SANFL president John Olsen told The Advertiser on Friday.

“And we will ultimately out-perform the rest of Australia in delivering the best-practice for a venue - and with the least cost to the clubs on match day.”
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Post by Lee on Mon Nov 17, 2014 11:28 am

Thanks for all that, Booney.

I'll have a read as soon as I can get time.
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Post by UncleHuey on Mon Nov 17, 2014 1:27 pm

Gingernuts wrote:I'd just like to know where the money is actually going. Are the operating costs far more than anticipated? No doubt they'll identify efficiencies for next season.

Also - I'm still questioning a little bit how Port can make such a significant loss. Yes they should have got more from the stadium deal in the end, but those inflated profits wouldn't have been forecast at the start of the season or when the budget for 2014 was being prepared.

To me that means Port spent beyond their means this year. The bonus profit from the inflated crowds should have been exactly that, a profit, not required to just cover the budget.

I agree. What did Port forecast would be the crowds for the year and the income derived?

If they budgeted for a lower crowd then any increase should have tipped them into profit, pareticularly as the crowd increase was large. Realistically the only reasons for a loss I can imagine are
- the original budget was rubbish and their projections of income and expenditure are widely inaccurate (for a professional multi million dollar organisation this wouldbe a real concern if true)
- the increased crowds resulted in increased organisational costs that out stripped the additional revenue. Hard to believe that this is a case but it is possible.
- they saw the good early crowds and spent more then originally budgeted in anticipation of increased revenue and got it wrong
- they always wanted to generate a loss to try to get a better deal out of the stadium profit allocation.

Be interesting to know what they budgeted for originally and which numbers varied so much they got a large loss. Or are they just spending too much knowing they will probably get bailed out anyway as they have in the past?
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Post by Booney on Mon Nov 17, 2014 2:21 pm

There is no denying monies have been badly mismanaged at Alberton for some time now, no denying it.

From a supporters point of view the best thing that I figure could have happened was a very sharp rise in on field performance, that has occurred over the last 2 years. From that I would expect, and as we have seen, membership numbers increase ( from around 29,000 to nearly 57,000 in 4 years ) and game day attendances increase. From the 18-22,000 we got 4 years ago to 45,000 on a regular basis this year, so that has.

We've also got Renault on board as opposed to the now defunct "My ATM". We've got a great CEO in charge and a very smart President.

All this though does not mean any of these parties have a magic wand to wave over the place and turn us into a money making machine over night. Clearly there had to be investment in our core "business", football. So coaching, fitness, development all had to be invested in to get the return. While still in the bottom 4 for football club spending in the competition, we seem to be leading with way with fitness and conditioning. ( For now, anyway, this stuff has swings and roundabouts )

On the flip side, Adelaide have had on field stability, huge membership, the second largest average home match attendances in the AFL and a loyal long standing major partner with international brand Toyota on board for 25 years.

So why did Adelaide return a meagre profit?

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Post by Booney on Mon Nov 17, 2014 2:23 pm

There can be no denying the two parties who create the biggest revenue streams into Adelaide Oval, Port and Adelaide, are getting short changed. They must be.

Do I think they should get a bigger dividend at the expense of the SANFL/SMA, no, I don't. But let's get the balance a little more even.
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Post by Lee on Mon Nov 17, 2014 2:28 pm

Without knowing the figures, how can any of us say that?

I wonder what other costs the AFL clubs have in their budget. I see some Victorian clubs are cancelling their summer 'training camps' in the USA now, so I wonder what other flexible spending is made?

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Post by Booney on Mon Nov 17, 2014 2:43 pm

I'm basing this on Adelaide's reported return this year, not Ports.

Big member numbers, big crowds, big corporates buying into packages, big sponsors - yet hardly make any money?
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Post by Gingernuts on Mon Nov 17, 2014 7:22 pm

Their purpose is not to make money though, it's to win flags.

I expect them to break even, it means they have prepared a solid budget, and balanced membership and corporate fees and charges well to maximise on field performance and support their general operations.
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Post by Booney on Tue Nov 18, 2014 8:41 am

This is true, and I know you've made the point previously that you felt Adelaide were focused on the wrong thing, money and fame not football.
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Post by Ben W on Fri Nov 21, 2014 10:24 am

I suspect the discussion on stadium deals may be more linked to the discussion that is about to happen on capping football club spending for yet another equalization policy of the AFL. I recall when Essendon were the first AFL club to have a full time coach, now the list of employees at each AFL club seems to grow each year, clearly the funds have to come from somewhere and at the same time why wouldent they if its coming in the door, there is little point banking it for a rainy day as the AFL system just does not work that way.

Personally I do not favour a strong focus on equalization policies because it rewards mediocraty. I feel that the AFL need to add a further two sides into the competition and then split into a Premier League of the best ten sides and a Championship League of the rest of the also rans of the competition. The current system has to many teams and to many rounds for a single season. Its time this was looked into, not the actual stadium deals IMO.
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