Eddie's pie in the sky loses wings

[saynta]

http://www.heraldsun.com.au/sport/afl/m ... c7fde507cf

'EDDIE McGuire's grand plan has hit a grand hurdle.

The AFL plans to spend $100-plus million on Etihad Stadium and not knock it down.

In fact, popular opinion has it the AFL will purchase Etihad by the end of the 2017 season — eight years ahead of schedule — and that the asking price and the selling price at the moment is as little as $20m apart.

It means plenty on the back of a $2.5 billion media rights injection.

It means the AFL can get hold of Etihad, spend the required money to improve the facility with help, they hope, from the State Government and, most important of all, fix the tenancy deals of Carlton, the Western Bulldogs, North Melbourne, St Kilda and to a lesser extent Essendon, which signed the first and most advantageous deal.'


So, f*** off Eddie.

[bigred]

Does this mean we might actually be financially viable at some point?

[the dome]

Great news Saynta. Now we can hopefully look forward with confidence that our home @ 'the Dome' will start feeling like a real home after the recent bizarro years which has hurt our St. Kilda Football Club big time. The suggestion of bulldozing The Dome always seemed drastic and not exactly helpful to the current tenants that regularly play out of there. Let's face it our mighty Sainters need and deserve a decent financial foundation that actually contributes to a stable future. The afl can show their real support for St. Kilda, the Bulldogs, Roos & even the Blues by bedding down a strong financial foundation that supports these genuine 'heritage' clubs that in recent times have been left out in the cold while plenty of talk about 'equalisation' has as yet remained just talk unfortunately.
No more bizarro world ideas that 30,000 fans need turn up at the Dome before the home team make a dollar etc. etc.

A better Dome can still happen.

[desertsaint]

Didn't Carlton get a very large bonus 'signing on' fee for it's 6 home games a year deal?
Hence only the dogs, saints, and norths got shafted.

[mr six o'clock]

The solution to the stadium problem is simple !
The Afl buys it so that any club playing there , even if the crowd is 10 thousand makes money .
Next put a new roof on the stadium
One that eliminates the four pillars that restrict viewing on the top deck .
One that allows a few more rows of seating lifting the capacity to 60+k .
One that allows in more natural light (obviously without cooking the people in the back row on a hot day ).
Surely this would be cheaper than building a brand new stadium .

[BigMart]

Stupid idea by Eddie... Victoria Park... Haha

[Bluthy]

Stupid idea by Eddie... Victoria Park... Haha

His alternative title was Eddie'sPad

I'm open to all suggestions and blue sky thinking, but Etihad upgrade is the safest option for us. Sounds like AFL are serious about buying it early which is great news for us - hopefully. Brayshaw has been fantastic about publicising what an insane deal the tenants at Etihad were forced into. We will be working behind the scences now to make sure when AFL take it over we get a really good deal. When I know we have a good deal I'll embrace the stadium a lot more. Right now I resent it because of how it sucks dollars out of us.

[sunsaint]

I didnt mind Eddies idea ~
i have read here the many complaints from SS posters their gripes about docklands so a new stadium seems logical, not to mention that it would've sloted in nicely with a junction oval expansion
but
Could someone clear something up for me?
Why is that i am of the belief that the AFL was going to buy docklands for a nominal amount? $1?

[St Chris]

Could someone clear something up for me?
Why is that i am of the belief that the AFL was going to buy docklands for a nominal amount? $1?

Your belief is correct, it's just a matter of time.

The deal to hand over the keys for $1 "concludes" at the end of 2025, it's essentially a "rent-to-buy" deal where the AFL pays exorbitant amounts of money to rent the venue every week for the first 25 years, at which time they finish the lease and become outright owners. It was to ensure the AFL didn't go and build their own stadium and leave Etihad with a couple of concerts and half a dozen big bash games to host each year.

So if the AFL wants to buy out the venue early, it needs to reimburse the current owners for the lost rent of the next however many years the 25 year agreement was meant to run. The closer the deadline is, the less the "balloon payment" will be.

Where we get stuck is that it's not the AFL, but the clubs who have to fork out the "rent" cash to Etihad. We signed a deal with poor financial conditions (I assume because of a lack of any other possible home grounds) and continue to suffer because of this deal. Most teams who play there face similar touch economics, except maybe Essendon because they are a rat infested corruption juggernaut with slimy fingers in every pie, and managed to get a sweet deal early on.

The idea is that if the AFL take over, they will help negotiate the deals to be far more favourable for the clubs (a-la Geelong who apparently make $1m every home game at Kardinia Park.) I'm not convinced it will be so easy, but it couldn't be any worse than the current situation.

[sunsaint]

I'm not convinced it will be so easy, but it couldn't be any worse than the current situation.

yes - thanks stchris
2025 is where the dilemma lies
the AFL is cashed up now -
but if they go for an early payout that would easily be northwards of 30mil
throw in the "improvements" that people here want - new roof & removing structural pillars double that purchase cost
-or-
wait till 2025 to get the zero payout but then any "improvements" will then be more expensive and who know what the financial situation will be like then
Eddies' idea wasnt stupid

[the dome]

St Chris that is one staggering stat if that's accurate.
Gee Wizz you have to hand it to the team from Kardinia Park with their various stages of stadium development and the $1 million smackeroos for each home game played there. I hope Gill & the afl see fit to do their best to help our Sainters achieve a much better cash injection for our Saintly Home games @ the Dome.

[Sainternist]

Yes, upgrading it would probably make more sense. Eddie should put his money where his mouth is and build his own stadium.

[IanRush]

Did Ed use this as distraction technique before the drugs issue came out? If he wasted Govt time as a stunt, make him pay up!

[prwilkinson]

Frankly, I saw the whole thing as Eddie trying to get the AFL to show their hand rather than his idea of building the 60,000 seat stadium itself.

[Locals322]

I can't believe anyone actually likes Etihad Stadium though let alone thinks it's a good idea to stay there. The whole football precinct being based round Richmond would be amazing, and secure this great game which grew up in the paddocks of Richmond for the next 50 years.

F etihad stadium, F it's location, F the cold wind, F the foot traffic...F the lot.

Don't care if it's an Eddie idea or not it's good for 'Football'

[ausfatcat]

I can't believe anyone actually likes Etihad Stadium though let alone thinks it's a good idea to stay there. The whole football precinct being based round Richmond would be amazing, and secure this great game which grew up in the paddocks of Richmond for the next 50 years.

F etihad stadium, F it's location, F the cold wind, F the foot traffic...F the lot.

Don't care if it's an Eddie idea or not it's good for 'Football'

Iy's a great venue easy to get to, good atmosphere with lower crowds, good viewing. I would prefer to goto Etihad than the mcg with less than 40k crowds any day.

[BigMart]

I much prefer go to Etihad than the MCG

[prwilkinson]

Once ownership passes to the AFL, as well as the $100 million they plan on putting into the place, I'd love the whole place to become far more supporter/fan orientated... not the feeling you get at Etihad sometimes that goons are picking you up by your ankles and shaking the coins out of your pockets. $100 million is a hell of a lot of clams to sink into a stadium that's only 16 years old... I hope it includes a comfy cushioned seat for everyone.

[To the top]

The reason for Docklands now being on a "hire/purchase" agreement with the transfer of ownership for a nominal amount at some future date is that it has been a monumental financial disaster from the moment construction was envisaged - and various registered proprietors of the venue have lost money.

Whether the current "hire/purchase" agreement makes money (inclusive of depreciation) for the registered proprietor is not known but if the registered proprietor is making money you could assume that it is only a "washing your own face" holding exercise.

The original construction cost, which escalated, was financed by Westpac which also funded the "equity" in the project by funding the "Stapled Debt" investors as individuals, those "Stapled Debt" investors and attracted by the Prospectus.

Simply, the complex cost way, way too much to construct against revenue generating abilities.

Westpac and the "Stapled Debt" lenders/investors provided the in course of erection costs as and when claimed by the constructor - so there was debt accruing during the construction period minus any income from the project (in accordance with the Prospectus).

The attraction to the "Stapled Debt" investors was the cost of funds being applied against taxable income from other sources - so a complex tax minimisation scheme supported by ATO rulings which included a need to transfer the security property on offer to the bank by the "Stapled Debt" investors to a party other than the high income earner (a spouse) and that other party "lending" money to the high income earner for the purchase of the "Stapled Debt" instrument.

There was also the "Capital Gain" attraction once the project was "mature" and was listed on the ASX.

But it was never, ever going to fly as a business model.

Westpac wrote off bad debt (ironic given the pressure on bank shares last Thursday with bad debt provisions being increased) and the "Stapled Debt" investors lost their money.

From there there has been a chain of registered proprietors, all floundering (aka Collins' time as CEO).

And the sale consideration reduced with each transfer in registered proprietor, looking for a break even outcome (and profit).

No doubt the AFL was involved somewhere in all of these transactions, as the (almost) exclusive tenant, leading to what we see today in regards this distressed asset and the "hire/purchase" agreement.

You would need to look at the Balance Sheet of the current Registered Proprietor to see where the debt now sits - and what arrangements the "hire/purchase" agreement satisfy (even if the debt is equity - because owned by a superannuation fund for example - there is still the history of the debt so monies - or residuals of the original debt impacted by capital losses - still exists. It owes someone something).

From contributions here, the AFL has passed at least some of the cost of the "hire/purchase" agreement back to the Clubs it enticed to the venue as game day tenants - and it appears that some Clubs may have had advantage over and above some other Clubs at the hands of the AFL and AFL "subsidies", because of the "mates at the table" regime of the AFL, which continues unabated and is so damaging to the code, nationally.


In regards Geelong FC, courtesy of expenditure on its venue, it re-financed from Westpac to Bendigo Bank back in the late 1990's with Bendigo Bank financing $3 Million and Westpac writing off $2 Million.

How Geelong's business model "stacks up" today, and why (being at the AFL "mates" table) given it again investing in a Stadium which can only attract 30,000 crowds maybe 10 times a year would be of interest.

To quote receiving $1 Million a game in Net revenue from a crowd of 30,000 invites a "contribution" of $35- from every attendee which is reasonable - but then there are the liabilities (debt) to be serviced and that is the question.

So you need to look at the Balance Sheet to identify the debt courtesy of the expenditure on the Stadium - and then see what falls out in net terms from the business model (including any principal reduction arrangements with lenders).

The lessons of Docklands and the write off of $2 Million 20 years ago by Westpac to save the existence of Geelong FC have not been learnt - with the exclusive focus being "a stadium", not the business model - because the Stadium is a business.

And Maguire's proposal, similarly, does not learn.

Who picks up the "tab"?

And the AFL and individual Clubs pressuring a State Government to contribute tax payer funds is, in my view anyway, not appropriate because health, education, water, utility services, security and transport are the priority of government, recognizing that public investment is not all about work and no play so there will be a contribution to the social aspects of society including sport. But more stadiums?

Learn the lessons!

And this in a society where some, because of their circumstances, have to pay in advance for their electricity, gas and water at the risk of the services being not available - privatization, and, no doubt, Corporate boxes at Stadiums along with being subscribers to the Institute of Public Affairs which runs the current federal government!!!

[prwilkinson]

The reason for Docklands now being on a "hire/purchase" agreement with the transfer of ownership for a nominal amount at some future date is that it has been a monumental financial disaster from the moment construction was envisaged - and various registered proprietors of the venue have lost money.

Whether the current "hire/purchase" agreement makes money (inclusive of depreciation) for the registered proprietor is not known but if the registered proprietor is making money you could assume that it is only a "washing your own face" holding exercise.

The original construction cost, which escalated, was financed by Westpac which also funded the "equity" in the project by funding the "Stapled Debt" investors as individuals, those "Stapled Debt" investors and attracted by the Prospectus.

Simply, the complex cost way, way too much to construct against revenue generating abilities.

Westpac and the "Stapled Debt" lenders/investors provided the in course of erection costs as and when claimed by the constructor - so there was debt accruing during the construction period minus any income from the project (in accordance with the Prospectus).

The attraction to the "Stapled Debt" investors was the cost of funds being applied against taxable income from other sources - so a complex tax minimisation scheme supported by ATO rulings which included a need to transfer the security property on offer to the bank by the "Stapled Debt" investors to a party other than the high income earner (a spouse) and that other party "lending" money to the high income earner for the purchase of the "Stapled Debt" instrument.

There was also the "Capital Gain" attraction once the project was "mature" and was listed on the ASX.

But it was never, ever going to fly as a business model.

Westpac wrote off bad debt (ironic given the pressure on bank shares last Thursday with bad debt provisions being increased) and the "Stapled Debt" investors lost their money.

From there there has been a chain of registered proprietors, all floundering (aka Collins' time as CEO).

And the sale consideration reduced with each transfer in registered proprietor, looking for a break even outcome (and profit).

No doubt the AFL was involved somewhere in all of these transactions, as the (almost) exclusive tenant, leading to what we see today in regards this distressed asset and the "hire/purchase" agreement.

You would need to look at the Balance Sheet of the current Registered Proprietor to see where the debt now sits - and what arrangements the "hire/purchase" agreement satisfy (even if the debt is equity - because owned by a superannuation fund for example - there is still the history of the debt so monies - or residuals of the original debt impacted by capital losses - still exists. It owes someone something).

From contributions here, the AFL has passed at least some of the cost of the "hire/purchase" agreement back to the Clubs it enticed to the venue as game day tenants - and it appears that some Clubs may have had advantage over and above some other Clubs at the hands of the AFL and AFL "subsidies", because of the "mates at the table" regime of the AFL, which continues unabated and is so damaging to the code, nationally.


In regards Geelong FC, courtesy of expenditure on its venue, it re-financed from Westpac to Bendigo Bank back in the late 1990's with Bendigo Bank financing $3 Million and Westpac writing off $2 Million.

How Geelong's business model "stacks up" today, and why (being at the AFL "mates" table) given it again investing in a Stadium which can only attract 30,000 crowds maybe 10 times a year would be of interest.

To quote receiving $1 Million a game in Net revenue from a crowd of 30,000 invites a "contribution" of $35- from every attendee which is reasonable - but then there are the liabilities (debt) to be serviced and that is the question.

So you need to look at the Balance Sheet to identify the debt courtesy of the expenditure on the Stadium - and then see what falls out in net terms from the business model (including any principal reduction arrangements with lenders).

The lessons of Docklands and the write off of $2 Million 20 years ago by Westpac to save the existence of Geelong FC have not been learnt - with the exclusive focus being "a stadium", not the business model - because the Stadium is a business.

And Maguire's proposal, similarly, does not learn.

Who picks up the "tab"?

And the AFL and individual Clubs pressuring a State Government to contribute tax payer funds is, in my view anyway, not appropriate because health, education, water, utility services, security and transport are the priority of government, recognizing that public investment is not all about work and no play so there will be a contribution to the social aspects of society including sport. But more stadiums?

Learn the lessons!

And this in a society where some, because of their circumstances, have to pay in advance for their electricity, gas and water at the risk of the services being not available - privatization, and, no doubt, Corporate boxes at Stadiums along with being subscribers to the Institute of Public Affairs which runs the current federal government!!!

Thanks for that, interesting read. I realise I should just search myself but, can we access the latest financial reports coming from Etihad Stadium?

[saynta]

I can't believe anyone actually likes Etihad Stadium though let alone thinks it's a good idea to stay there. The whole football precinct being based round Richmond would be amazing, and secure this great game which grew up in the paddocks of Richmond for the next 50 years.

F etihad stadium, F it's location, F the cold wind, F the foot traffic...F the lot.

Don't care if it's an Eddie idea or not it's good for 'Football'

Iy's a great venue easy to get to, good atmosphere with lower crowds, good viewing. I would prefer to goto Etihad than the mcg with less than 40k crowds any day.

Same here mate, and it;s got a f****** roof.

I hate the MCG on those cold freezing and wet winter's days

[SinCitySainter]

You cannot have another stadium in the MCG precinct.
At the moment Melbourne can accommodate two games on the same day, one at the MCG and one at Etihad.
If you had two games in the Richmond precinct on the same day it would be impossible to get to.
You would need to upgrade Richmond station, build a couple of multistory car parks and probably add extra tram lines to get people in and out.
Etihad is easy to get in and out of, is close to the city and if financially viable for the clubs playing there would be a great stadium.
I still think a 25K seat stadium would be a fairly good idea but it is not critical.
You could make Etihad 25K for smaller drawing games by simply closing the top deck.
The atmosphere would be fantastic then.