Million Dollar Profits question

[Cirra]

Excuse me for my ignorance but I'm not sure how big buisnesses work so I have a quetion about St. Kilda's profits over the last couple of years....

In my laymans understanding any profits of a buisness goes to it's shareholders, however that doesn't happen with Football clubs as I would say the members are the shareholders.

So, where does the profit go??

I'm asking because SFF is saying that even though the current board have successfuly put the Saints back in the Black they have not put enough of the profits back into the Footy Dept, Training Services or Recruitment.

So, where has it gone??

This then leads me to ask, if SFF puts more money into the Footy Dept, Training Services and Recruitment, are they taking money from somewhere else that needs it??

Hopefully someone can shed some light on this for me.
Thanks

[Mr Magic]

Cirra, as I understand it,

The million dollare profits were used by the Club to pay off an exisiting debt. So whilst they were making a profit for the last few years they were in fact reducing that debt to the point where the Club now has no more debt(zero debt).

SFF is arguing that the Board could have reduced debt, but that it would have been better to keep some of that profit and use it in the football dept. If we used their 'model' then we would have decreased what we owed the banks (but not to zero debt) and spent more on football areas.

What they are proposing is to increase the money we 'earn' so that we can spend more on football areas without going into debt (now that we are at zero debt).

I hope that explains it to you clearly?

[Cirra]

Thanks Mr. Magic.

So, basically what you are saying is:
SFF want to increase our revenue (through sponsors etc) to then increase spending money on the impotant areas without having to borrow to get there.

That makes sense.

My next question is:

Now that the profits have been used to pay the debts, where is the profit going to go now??

You would think straight back into the Footy Dept, Training Services, Recruitment and Staffing, right?

So why is SFF so special in saying this is what they will do?
Isn't that what RB and the current board will be doing anyway now that we are out of debt??

PS. I'm not sure which way I'm voting yet.

[evertonfc]

That was what I was going to post MM but I was wondering this; shouldn't there be two figures the board really push to their members? Total profit before debts and Total debt profits after debt servicing?

That way everyone would know exactly what % of the profit is going to debt servicing, what profit is going to the bank, and what % of it is going to enhancing the football club (without having to trawl through ARs).

I guess that's the crux of SFF at a financial level, Cirra - they want to alter the balances so that we spend more on football and less on debt reduction, saying both can be ably managed.

[Mr Magic]

Thanks Mr. Magic.

So, basically what you are saying is:
SFF want to increase our revenue (through sponsors etc) to then increase spending money on the impotant areas without having to borrow to get there.

That makes sense.

My next question is:

Now that the profits have been used to pay the debts, where is the profit going to go now??

You would think straight back into the Footy Dept, Training Services, Recruitment and Staffing, right?

So why is SFF so special in saying this is what they will do?
Isn't that what RB and the current board will be doing anyway now that we are out of debt??

PS. I'm not sure which way I'm voting yet.

Cirra, WHat you are saying sounds logical except that the incumbent Board have not announced any plans as yet re where they are going to spend money.

Part of SFF's platform is that membership is dropping and we are losing sponsors so therefore we may not make a profit in the future and therefore won't have any extra money to spend.

The current position is :-
SFF have said they will increase revenue and how much they spend on football areas

Current Board have not said anything about this area.

[evertonfc]

So, basically what you are saying is:
SFF want to increase our revenue (through sponsors etc) to then increase spending money on the impotant areas without having to borrow to get there.

That definitely seems to be one of their core aims - increasing turnover and getting more cash flowing through the club, both into the coffers for rainy days and for club development.

That makes sense.

My next question is:

Now that the profits have been used to pay the debts, where is the profit going to go now??

You would think straight back into the Footy Dept, Training Services, Recruitment and Staffing, right?

Well, this hasn't been made clear. There seems to be a school of thought that RB likes to have the club running on a shoestring anyway, and that it's prudent financially to do so. It is, to a degree - it just depends on how far back you believe things can be scaled, I suppose. SFF, you might say, believes they've gone too far, too quickly.

Isn't that what RB and the current board will be doing anyway now that we are out of debt??

Well, you'd hope so. I say hope, because we actually haven't heard what they plan to do yet.

I think one of the benefits of this board challenge has been to throw light on exactly how bare-bones we are as the football club, and how far behind we are to the other clubs in budgetry areas.

[4theluvoftheclub]

Where will the money go? I will bet that because SFF have come out with a " spend on footy " policy, Butterss and his cronies will copy SFF and soon make a big announcement of - surprise surprise- a big spend on footy, and say:

"there, see - we always planned to do it, (even though we didn't for years and only announced it afterf SFF said its needed)...so now you won't need to vote us out. Ignore the years of mistakes we have made that are discussed all over the SS website on other threads. Please keep us in power. PLEASE PLEASE LET US STAY. WE NEED TO STAY IN POWER. ONLY WE CAN SAVE THE CLUB. "

[Otiman]

Profits will go into the Footy Dept. and also further investments outside of the football club.

[Mr Magic]

That was what I was going to post MM but I was wondering this; shouldn't there be two figures the board really push to their members? Total profit before debts and Total debt profits after debt servicing?

That way everyone would know exactly what % of the profit is going to debt servicing, what profit is going to the bank, and what % of it is going to enhancing the football club (without having to trawl through ARs).

I guess that's the crux of SFF at a financial level, Cirra - they want to alter the balances so that we spend more on football and less on debt reduction, saying both can be ably managed.

Everton, I don't have a copy of any of the last few A/R's but I think it shows how much is paid in interest (which would be the amount paid to service any debt).
It would also show how much money was applied to reducing the debt.
My recollection is that they ahve been using all net profits to reduce debt.

The real argument from SFF is that they(the current Board) should have spent an extra $250,000 (an arbitrary figure) on football dept matters and declared a profit of $750,000 rather than not spending it and reducing debt by that extra $250,000.

The one thing you can say is that we have reduced our debt to zero which is a good thing. But by doing that, have we harmed our performance? We all have an opinion on it, but who really knows?

[Cirra]

Thanks Mr. Magic and evertonfc for the explanation.

So it seems then that whoever , SFF or RB, can tell the members where the profits are going to go will probably get the support they need to be the board in 2008 and beyond.

Can you tell me when the debt was paid??

Was it a couple of years ago, or just in 2006?

I think this is a relevent question because, if the debt was paid years ago and RB still hasn't put any substantial $$ into the Footy Dept etc. then what make us think things are going to change now??

However, if the debt was only just reduced, maybe he should get the opportunity to put the profits where they belong before getting the sack.

[aussierules0k]

[Mr Magic]

Can you tell me when the debt was paid??

Was it a couple of years ago, or just in 2006?

I think this is a relevent question because, if the debt was paid years ago and RB still hasn't put any substantial $$ into the Footy Dept etc. then what make us think things are going to change now??

However, if the debt was only just reduced, maybe he should get the opportunity to put the profits where they belong before getting the sack.

Cirra, you have posed the question and made the observation that teh current Board seems to be basing their re-election on.

IIRC they have finally paid off the debt at the end of last season? They claim that they have spent more this season on the football areas.

Is that claim true? I don't know and none of us will until the 'accounts' for this season are published.

Given that SFF claim to already have 7500 proxies it would seem that it doesn't really matter anyway because SFF have convinced enough members that the current board should go.

[evertonfc]

...and what happened to the Waverley and Media money? How much did we get and where did it go?

Good question. I don't know for sure but I'd guess at this:

a) I'd say the Waverley money would have been swallowed up by debt servicing and ongoing costs. I think we suffered some bad financial results for the first few years at the Dome which wouldn't have helped either.

b) I don't think the clubs get all that much from the media; after the AFL takes their raw cut, a portion would be set aside to go into distribution pool, which is tightly policed.

[saintsRrising]

Where will the money go? I will bet that because SFF have come out with a " spend on footy " policy, Butterss and his cronies will copy SFF and soon make a big announcement of - surprise surprise- a big spend on footy, and say:

"there, see - we always planned to do it, (even though we didn't for years and only announced it afterf SFF said its needed)...so now you won't need to vote us out. Ignore the years of mistakes we have made that are discussed all over the SS website on other threads. Please keep us in power. PLEASE PLEASE LET US STAY. WE NEED TO STAY IN POWER. ONLY WE CAN SAVE THE CLUB. "

To be fair to the current Board they had in 2007 already started spending more on Football.

*we have more coaches....we havea development coach
*a football manager (even if some do like that it is Ken)
*the AIS Committee of 3 (or is it 4) focussing on player conditioning and fitness
*increased spending on recruiting (Full time ex-cats guy recruited and for example in the 2006 draft we did ou own player testing in WA for the first time)

The Board had already flagged that they will spend even more on the football department in 2008.



So FF have to up the spend even more as increased spend was already occuring and was already planned.


FF to deliver on their promises have to be not just an average Board, but an exceptional one.

This has been their promise...based on trsst us we will deliver (with little in the way of detail or fixed targets)....and so I expect them to now deliver on this.


FF to deliver have to not just spend more....they have to spend dramatically more. An increase in spend was already staerting to occur with the debt having paid off.



now to be fair to FF I do not expect to see all of this delivered in 2008...but I do expect see strong signs of it in 2008.....with in 2009 there beinga dramatic increase in spend.

This is effectively their platform and so this is what they must deliver.......otherwise they will have just cherry picked a great time to have come in....at least on the finacial front.


There are of course other shall we call them "issues" (ir continued GT/RB brawling) while mean wanta a "fresh" start.

And for this reason apart from "financial" aspects including more football spend what I also will be looking for from the Board is a more "professional" corporate and PR profile. So now more "drugs and drinks" gaffes please.

[skeptic]

Just to add to MM's op...

I believe that SFF are also saying that while were making money and paying off the debt, the majority of the net was not made by increased revenue and by cost cutting... furthermore, we infact could have been making a lot more out of our push over the last 2-3 years (media, exposure, up and coming team etc) and are squandering significant amounts of money by not using it properly