Covid 19 and footy - season (suspended) now resumed

[Swansongster]

Not quite sure what you mean by the game will recover.

Lets play forward the idea that the AFL disolves due to bankruptcy. This will no doubt take a few clubs with it, with all us northern clubs very vunerable financially. And probably a few other clubs who are just at the wrong economic cycle to ride this out.
What will the new Aussie rules league look like. What teams will compete in it ?

Swans arent in a great position financially, even in a normal year:
2019: The Sydney Swans have reported a net operating loss of $509,625 for the year ending October 31, 2019. Net assets were $2,201,819.

There was something very dark about Gil's mood in that announcement. This is a really serious situation for the AFL as an organisation.

I don't profess to be an expert on corporate law but to my eye, the AFL is stuffed:
* They have invested heavily in the game (GWS, Gold Coast, AFLW etc.) and probably don't have a huge cash reserve.
* They would be contractually bound to a lot of expenditure and all their sources of revenue have disappeared (gate takings, selling product to broadcasters, sponsors, gambling companies etc.).
* The AFL is insolvent and there are laws against organisations trading under such balance sheet inequity.
* Maybe they are technically a Not For Profit? I don't know if that changes anything.

They own Docklands Stadium and I think some other strategic real estate around the venue but that is not going to cover the bills. They also own one of the most recognised brands in the Australia and that has to be worth something?

Maybe the organisation will be put under protection from creditors by statute somehow?

The game will survive, no doubt. The people love it too much. But who will be the puppeteer when the rebound happens (which may be a long way away)?

[stevoswan]

This is a great read. An excellent and relevant perspective on the game in these changing times.

From the Outer: It's a new season

[liz]

* The AFL is insolvent and there are laws against organisations trading under such balance sheet inequity.
* Maybe they are technically a Not For Profit? I don't know if that changes anything.

The clubs are Not for Profit. Not sure about the AFL itself but I suspect it is. However, I doubt that absolves them from insolvency provisions.

The clubs aren't necessarily insolvent yet. You can have negative net assets and still not be insolvent. Indeed, you can have positive net assets yet still be insolvent. The test is whether you believe you can pay your bills as and when they fall due. Clearly the organisation has taken major steps to reduce its payments in the immediate term, most obviously by standing down staff across the clubs and HQ. I imagine they are also trying to renegotiate payments due to other providers - eg the SCG Trust (and other stadium owners/operators for the competition more broadly). They will be trying to secure lines of credit, with payment dates way out into the future, at a time they can reasonably expect to have some income flows coming in again.

The clubs aren't trading as normal. It's not like they are taking on new creditors who are unaware of the financial situation. They have taken, or are taking, steps to reduce their outgoings as far as they reasonably can.

This is a very unusual set of circumstances (doh!) At this stage, it is somewhat reasonable to expect there is an end date (however far away that is), and that after that point, normal economic activity will be able to resume. Its not about deterioration in trading conditions of individual organisations for reasons specific to them. So, with lines of credit in place, and a defensible position that they will have some revenue coming in at a point in the not too distant future, boards may quite reasonably reach assessments that they will be able to pay creditors as and when they fall due.

I read an article in the Australian a couple of days ago (sent to me by a close friend who is an insurance underwriter, currently grappling with D&O renewals in the current climate). Part of the government's support and rescue package provides some temporary relief for insolvency trading obligations, making it more difficult for creditors to start actions to wind up a company if it hasn't been paid what it is. This issue goes way beyond the sporting leagues. It is critical right across the corporate world, particularly amongst small and medium businesses. Any economic recovery will be very difficult if businesses have gone into liquidation in the meantime.

[Swansongster]

Thanks for the insight Liz.

[stevoswan]

The lads are doing there bit.....

Swans players share an important message

[neilfws]

I see Carlton are no longer able to support the Northern Blues VFL club. If they sound familiar - it's where Alex Johnson ended up.

Heartbreak as Carlton call sees VFL club with 138-year history go under

[bloodspirit]

I see Carlton are no longer able to support the Northern Blues VFL club. If they sound familiar - it's where Alex Johnson ended up.

Heartbreak as Carlton call sees VFL club with 138-year history go under

I see Cody Hirst got a gig with the Northern Blues after he left us. That's over now but he has some prospect of being picked up again to play for Carlton's VFL team if footy resumes this year.

[707]

AFL has secured a $500-600 million line of credit from NAB & ANZ banks using Docklands Stadium as collateral.

Interesting that ANZ had to get involved, obviously NAB didn't want to expose itself alone to a line of credit of this magnitude.

[KTigers]

AFL has secured a $500-600 million line of credit from NAB & ANZ banks using Docklands Stadium as collateral.

Interesting that ANZ had to get involved, obviously NAB didn't want to expose itself alone to a line of credit of this magnitude.

I flagged this last week as the only thing they can do. Good to see they moved fast. I know we bag them a lot but buying that pile in
West Melbourne was a smart play by the AFL.

[Aprilbr]

Yes the purchase of Marvel Stadium has proven to be a master strike for the AFL. The loan places the AFL in a much stronger position to recover over time than the NRL who appear to face much less palatable options to survive. Rugby league will survive but some clubs may face extinction. While some commentators are foreshadowing the merger of some Victorian clubs in the AFL, the huge loan means the AFL can potential continue to cross-subsidise the less wealthy clubs. I'm not sure the NRL has this luxury?

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[barry]

Yes the purchase of Marvel Stadium has proven to be a master strike for the AFL. The loan places the AFL in a much stronger position to recover over time than the NRL who appear to face much less palatable options to survive. Rugby league will survive but some clubs may face extinction. While some commentators are foreshadowing the merger of some Victorian clubs in the AFL, the huge loan means the AFL can potential continue to cross-subsidise the less wealthy clubs. I'm not sure the NRL has this luxury?

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If the AFL comes out of this exactly as it is today, it will be a missed opportunity.
This come badly needs a restructure away from being so Vic centric.

[stevoswan]

If the AFL comes out of this exactly as it is today, it will be a missed opportunity.
This come badly needs a restructure away from being so Vic centric.

It would be the perfect time to cull (or merge) some Vic clubs.....but you know what you're up against with that task. The 'Heartland'. The AFL is naturally Vic-centric so I wouldn't hold my breath. They'll be hell bent on retaining the league in it's current form, I reckon.....which is a pity.

[Nico]

It would be the perfect time to cull (or merge) some Vic clubs.....but you know what you're up against with that task. The 'Heartland'. The AFL is naturally Vic-centric so I wouldn't hold my breath. They'll be hell bent on retaining the league in it's current form, I reckon.....which is a pity.

I disagree. The last the AFL will want is upheaval from supporters where 10's of thousands of people are disenfranchised. They need all supporters to keep paying memberships and not throw their membership cards in the bin or ask for refunds or stop direct debits. Carolyn Wilson said she had it on good authority that North will be sent packing to Tassie. Ben Buckley came out today and said there was not shred of truth to it, and North have not spoken to the AFL or any other club about relocating. Smacks of a bored journo who has bugger all to talk about.

[Nico]

Easton Wood, that flog who took out the legs of Hanners in 2016 GF said the AFL will not be the same again. Yes it will, but players will have to accept lower and realistic salaries. Fair dinkum talking through his kick.

[Aprilbr]

On Melbourne radio today the AFL CEO virtually ruled out teams dropping from 18 in the foreseeable future. The $500 million war chest loan will keep things pretty stable for 2020 but Clubs will certainly operate on much tighter budgets for the next few years.

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