Sturt in Financial Trouble?

[SDK]

When it is clearly Garry Window.

[UK Fan]

Not convinced it does, every club should have a sustainable business model based on the team missing the finals, then if success comes its cream on the top.

Look at South. (and North & Glenelg)

I agree

100% agree.

[am Bays]

Rumours are of a $450 K loss, not good if true.

Depends how you want to read the financial report...

... I don't like to count the "Debt Demolition" donations, as they are to pay off debt and therefore the club shouldn't be relying on those payments to offset how the business actually faired.

If you take out those donations, loss was around $650K.

Normally I'd do a detailed report of the AGM, but alas I've been marked as someone who has a vendetta against the club. Therefore I'll keep my thoughts to myself, but for the benefit of everyone else, there must be others on here, who as members who attended the AGM, can relay their views, how they saw it, with what was presented, questions asked, answers provided, board misconduct revelations, contract issues with sponsors, constitutional changes, desire to become Crows reserves, decisions the accountant said we should have taken last year but didn't and what the reasons were for that, confidence in the future etc etc, how Castle Plaza and Barzaar faired and so on... I for one, would be interested to see how other members saw it, see if they thought things were as positive as I saw it.

Do you ahve a copy of the Annual report CSB?

From a genuine football perspective I am interested in the 2012 Income = $X XXX XXX and then 2012 Expenditure = $X XXX XXX for Sturt.

My concern is for Sturt as an ongoing concern is as Barto said - not more fat to trim off the budget.

[jumbo20]

What I really want to know as a Sturt person is the true position.Perhaps it has been articulated and I have just missed it but a few simple questions:

1.Accurate list of debtors and creditors
2.Average age of debts
3.forecast of 2013 income
4.Any ATO liability
5.State of lease payments
6.2013 season expenses broken down
7.True level of Debt
6.Statement of Assets and Liabilities

Probably more but knowing a bit of this would help people know that throwing money in will fix the problem i.e if 500k was chucked in does this actually do anything?

[csbowes]

I do have the report. I've gone to 19 of the last 20 agm's...

If no other member on here wants to do a full review then I will later tonight, people just better not whine if I do...

I gave others an opportunity to present their views first...

[The Apostle]

I'm interested in if there's any sponsors who haven't paid up.

[csbowes]

I'm interested in if there's any sponsors who haven't paid up.

Yes... that rumour was confirmed as true.

I'll comment on that later as well...

[UK Fan]

Sturt need to re-connect with its community maybe run some self help seminars like below.

http://www.motherearthnews.com/do-it-yo ... dzsto.aspx

[csbowes]

Here's my report on the Sturt AGM and the reported financial situation. These are my views and my views alone, I don't speak for anyone else and anyone is free to give an alternate view on how they saw things transpire on the night.

I've been accused a number of times over the last couple of years of having a vendetta against the club. From my perspective, that accusation has been made simply because I choose to criticise the club and some of its decisions as opposed to simply agree with anything and everything they do. If any other Sturt members on here disagree with me, then I encourage them to challenge my views and present their case based on what they heard...

Let's start with the basics and that's the $$$ in the report...

The Sturt Football Club turned over $8,505K last season, which was down from $8,990K in 2011. The reason seems to come down to venue income, which dropped by $520K. Other income from membership, sponsorship and fundraising was about the same, while there was a $152K drop in football operation income, but then a $101K increase in football development and matchday income, so a few overs and unders, but essentially its the venue income which was down.

However, cost of sales to get that revenue was $3,580K, which was down from $3,904K in 2011. That reduction in costs to produce the revenue results in gross profit being $4,924K, which was down from $5,085K in 2011.

Considering the team finished last for the second year in a row, I think one would probably think that a $161K drop in gross profit, so around 3% isn't a particularly bad result when one takes into account how fickle some supporters can be.

When we look at expenses we see that employment and occupancy expenses were down $145K. Likewise depreciation and advertising and promotional expenses were also down around $73K. That indicates that the club was cutting back in these areas. Sponsorship and membership expenses were about the same, while fundraising expenses were down $43K. Matchday expenses were up $51K, which I think was to do with providing our own catering at the ground, I'm not sure.

When you look at that, you see around $210K cut from the expenses. You'd have to think that was good from a financial perspective, only the club knows whether that any adverse effect somewhere else.

On the football operations side, they broke even essentially, some costs up, some costs down, it was pretty much even. In the end, with $161K less gross profit, the loss was $32K better at $534K compared to $566K in 2011.

When you add the Unley Community Sports Club (UCSC) into it, we can see that revenue did increase from $2,405K to $2,543K. That increase of $138K in revenue helped reduce the consolidated groups gross profit drop to $84K. Note above that I said the football club gross profit dropped by $161K, so when UCSC is added, the drop is now half that. When expenses are taken into account, there's ups and downs, the bottom line is the $534K football club loss is reduced to a $447K consolidated group loss.

I would say that those numbers show restraint in spending, which is good. The board should be congratulated for ensuring that cost of sales and football club expenses were kept in check. On the down side, it meant that no real in-roads were made into ensuring that the massive loss from 2011 ($413K) was reduced, in fact it went up to $447K. As a Director who runs a budget considerably larger myself, I would be disappointed with that turnaround considering the situation the club is in.

What is probably MOST concerning is that the club had $219K in debt demolition donations included in the revenue. To me that is a separate line item and really it means the group lost $666K this year in comparison to 2011's $413K.

That is terrible and really highlights that while costs and expenses were kept to 2011 levels, no effort was made to drastically reduce those costs and expenses in line with what turned out to be a 9.5% drop in revenue.

So overall I can't say that was a good result.

The only other statement I'll go into detail about is the assets v liabilities section. Current assets took a massive dive from $846K in 2011 to $529K in 2012 for the group. That's a $319K drop and most of that ($253K) came from the football club. Most of that drop itself seemed to be in trade receivables ($168K). Non-current assets didn't change much, depreciaton was higher on plant and equipment, but pokies machines were valued upwards and so nothing really changed there.

That meant total assets were $3,923K down from $4,240K in 2011.

On the liabilities side, current liabilities were reduced from $4,353K to $4,261K. This was mainly due to bank loans being reduced by $248K, but being offset somewhat by a $120K bank overdraft increase. A couple of other minor current and non-current liabilities were reduced, meaning that overall total liabilities were down from $4,512K to $4,411K. That's a $101K improvement, but obviously that's offset by assets beind down $317K, so net assets were worse at minus $488K compared to minus $272K in 2011.

So that's it for a review by the numbers, take from that what you will... but my summation of that is that while in-roads were made here and there, overall the group traded much worse, almost 50% worse in 2012 than 2011.

[UK Fan]

Good job CS Bowes!!

[85 WAS A GOOD YEAR]

I'm interested in if there's any sponsors who haven't paid up.

Yes... that rumour was confirmed as true.

I'll comment on that later as well...

Very well written report cs

Do you wish to comment about the rumour re sponsors not paying up?

[csbowes]

The next part of the review is purely qualitative and about the AGM itself...

(a) Presentation

This was poor in my view. In my professional career, I'm required to present to extremely high ranking military officers, scientists and business people. When you have bad news to relay, you need to play it straight, but also you can't just be a problem provider, you need to be a problem solver. In addition you need to know the facts, the important facts and be able to answer questions with accuracy, show the audience that you know what's going on and can resolve any problems.

Alas, I didn't get that feel whatsoever. From my perspective Jason Kilic (President) and Rick Goode (Accountant) didn't present in a manner that I would have liked. Jason seems like such a nice fellow, but his speech was more about hope than providing any real confidence to members that things would improve. Likewise, Rick is no doubt a competent accountant and I think has only been in place a year, but not knowing some facts about the poker machine sale just isn't good enough.

(b) Questions

I asked Jason what he could tell us, as members and supporters, that would give us confidence that things would turn around, because over the last 20 AGMs, the club had only posted a profit 2-3 times. Jason acknowledged that was true, however, he did not make any statements in my view, that gave me as a member any confidence things would improve. It was all about hope, fingers crossed, members bailing them out and that it, no real plan.

Jason was then asked to move on by the GM and not continue the conversation.

Another member said that employment costs were too high. I'm not sure I agreed with him, however the board did not respond to that allegation during the AGM. The same member stated that strong desire reaps strong rewards, weak desire reaps weak rewards, he said the club had not made the hard, tough decisions to get itself back on track. Again the board did not respond to that allegation during the AGM. The same member said we should all bring $100 to our first home game and give it to the club.

I'm not sure I agree with that. Giving $100 to someone who might waste it is not smart, its commendable from a dedication, passionate supporter sort of view, but you don't give money without knowing what's going to be done with it.

That said, no information was given as to how donations would be used. They said it would pay off debt, but no plans were divulged, no business model or anything like that, to show that something had been worked out. Maybe it has, but for whatever reason, the board chose not to disclose that information at the AGM. This is one of the problems I have with the club, they have ideas, keep them to themselves, execute them, win or fail, we don't know what happened.

I asked questions about the business model, about systemic failures in the club to turn things around, that we must have something fundamentally wrong to lose money every year. Alas, no real response to that question.

It was reported that the club had done many, many internal investigations etc, but again, no results have ever been disclosed. I just don't get it, how do we move forward if we never learn from pr publicise what has been done before?

(c) Board Misconduct Revelations

Jason acknowledged that a past board or boards had borrowed beyond the clubs means to repay. I jumped on that admission and asked why this was not disclosed to the members, he shrugged his shoulders.

(d) Consitutional Changes

Jason commented that in response to boards borrowing more than the club could repay, he was seeking to change the consitution to ensure such things could not be done again.

I did not comment or question this, however another member, who I believe runs a business of his own, said that this was not the right thing to do, as you may just exacerbate cash flow issues. I am presuming the argument is that if you have a rule in the consitution that stops you from borrowing too much, you may find yourself in a situation where the constitution stops you from doing something completely legitimate also, halting cash flow short term, crippling the club.

That's just my take on it...

(e) Contract Issues with Sponsors

I asked whether it was true that some sponsors in recent seasons had not paid their sponsorship dollars. It was confirmed by Rick Goode that this was true. When I asked how that happen, he confirmed it was because the contractual obligation on the sponsor was not sound, how that occured I do not know, but that just amazes me. Either the club chose not to pursue it legally or the club knew it has no legal grounds on which to pursue the $$$. This has never been reported to the members.

(f) Desire to become Crows Reserves

John Halbert made a speech (which was applauded by the members) stating that the club will not survive trading as it does and should begin talks with the Crows to investigate the framework within which we'd work / surviver if it were to happen.

I agree with this and think it should be investigated. The membership should be polled to determine if it is in support of investigating it, if so, the board has a duty to do so and report back to the members with its findings.

The president / GM did not give any undertaking to look into this...

(g) Reduce Salary Cap

John Halbert (in the same speech) also called for Sturt to begin negotiating with other clubs a reduction in the salary cap from $360K to something like $200K, similar to the WAFL / VFL.

The president / GM did not give any undertaking to look into this...

(h) Cost Cutting

Rick Goode stated that the club would cut $600K from its expenses in 2013. However, he also said the club should have done this in 2012, but could not state why they didn't considering the position they were in after 2011.

(i) Caslte Plaza

From memory and a quick check of the books, it lost $24K for the year. 2013 is our final year on the lease, my impression from the members who spoke out was that we should ditch it.

My opinion is that something turning over large $$$, but making no profit or a loss, means even a small down turn could give us a big loss, so I tend to agree, this experiment has not worked.

I'd be interested to know from the club whether this has cost us more than made us over time....

(j) Barzaar

I think it made about $85K, which is not as good as it was, but at least its a profit. My impression is that the club has tried extremely hard to make this and Castle Plaza work, so I don't blame them for any mis-management.

(k) Pokie Sales

Of the 31 poker machines we own entitlements to, we sold 4 to reap $180K and leased 3 back at $6K a year each. I asked Rick Goode what the expected profit would be from each machine, so what are we getting for our $6K. He did not know.

I have to say... WTF? That's a major decision and he should know that fact.

Obviously selling 4 machines wipes some debt, I believe that $180K hasn't come in as yet, but will go to wipe off a Westpac loan, but we need to know what the cost benefit analysis was of this decision.

Again, these are the sorts of things the club should publish to members. I asked about this sorta thing, transparency, but the president couldn't think of anything more the club could do besides publishing the board meeting minutes. I don't get that, there's a million things that could be done to keep members informed. Personally, I feel the board is worried about making mistakes, so when they do, they're not keen to report on them. That's just my view.

Jason said the GM going to the papers and reporting the debt was transparency. No it isn't, that's just a soundbite. Transparency is showing members what you're doing, processes and due diligence you're following, reporting on this and that...

(l) Unley Council

A council member was present. His view was Sturt are doing well diplomatically with the council, having moved the view from one of complete detest for the club to one where we have slightly the upper hand.

Miscellaneous

I walked around after the AGM and spoke with John Halbert, various members of the Vice Presidents Club (which is a members group of people who pay large amounts towards membership) and our first female board member.

Forgive me, but I don't recall the ladies name.

My impression from those discussions was that there were members who felt the board did not like being asked questions. I was told by one Vice President that you only have to look at the faces of the board members present to realise they don't like being put under any scrutiny. I can't say if that's 100% true, but its what was told to me. The problem here is just being passionate about the club, doesn't automatically mean you are a good board member.

Lots of people at Unley games love the club, but lots of them don't have two brain cells to rub together. We need strong minded business people on the board, whether they love the club or not, I don't care.

Just on the female board member, she seems to be running with the club facebook site and is doing some analysis of membership v facebook likes v twitter followers and comparing us to AFL teams. Interesting.

For me she seems like a smart lady, so I hope she does well. Maybe having a pragmatic female on the board will make some of the blokes on there, who lets face it, haven't done the job, either move on or lift their game.

That's it... feel free to ask anything you like... again, these are just my thoughts.

More than happy for others to give their views on how the night went...

[Brodlach]

Great write up CS

[csbowes]

Great write up CS

Yeah well wait for the Sturt fans to get on here and call me Judas...

[The Sleeping Giant]

So some at Sturt think the only solution is to throw in the towel and become the crows reserve side, but also drag the rest of the competition down to sturts standard by nearly halving the salary cap.

[UK Fan]

Good to see John Halbert laying the boot when the club is down !!!

I wonder what his agenda was pushing for a smaller salary cap and sturt to become crows reserves.

Im sure they were just topics that we're just mulling around in his head that he was seeking clarification on.

[godoubleblues]

Great write up CS

Yeah well wait for the Sturt fans to get on here and call me Judas...

mate, I appreciate the write up and your honesty, I generally dont get to these meetings due to various reasons so cheers

[csbowes]

Good to see John Halbert laying the boot when the club is down !!!

I wonder what his agenda was pushing for a smaller salary cap and sturt to become crows reserves.

Im sure they were just topics that we're just mulling around in his head that he was seeking clarification on.

I think that's unfair...

My impression from talking to John is that he is frustrated with the clubs lack of progress financially. That is something he didn't seem to think was the boards fault or at least didn't overtly blame them. That said, I think he is also very worried that we'll trade ourselves into oblivion and in opposition to that, he'd much rather see us strike up a deal with the Adelaide Football Club and continue to compete as Sturt Football Club, but officially be the Crows reserves side.

I've already stated that I agree this should be investigated. Whether the membership agrees to it going ahead or not is a separate step, but I think it comes from people feeling our situation is once again desparate.

[csbowes]

So some at Sturt think the only solution is to throw in the towel and become the crows reserve side, but also drag the rest of the competition down to sturts standard by nearly halving the salary cap.

I disagree with the sentiment you're implying, that people want to throw in the towel...

... however, your supposition that it would drag the competition down etc remains true. I don't think having reserves side would necessarily be good for the competition, but I also think it might happen regardless.

Many fans (of not just Sturt) would side with the idea of keeping the clubs identity as a reserves side to an AFL team as opposed to just disolving completely and never competing again.

Of course, many would prefer to die with dignity (as they would see it).

I'm really torn on it. But as I've said above, I support investigating it. I'd like some facts from which to base my decision on...

[The Sleeping Giant]

Becoming an afl reserve side would be like no longer existing. I wouldn't support my club if it decided to go down that path. Merge would be the same. I don't understand how old woodville and Torrens supporters can follow the eagles. Best option is survive or die.