The Melbourne Football Club today announced a loss of $0.549m for the year ended 31 October 2008.
The 2008 result includes $1m in asset write-offs. The majority of the write-offs relate to the Leighoak gaming venue ($0.8m) with a general asset review, including merchandise, making up the balance.
The loss also includes revenue from the Club’s Debt Demolition campaign. This campaign generated over $3m in pledges with $2.5m (net of expenses) included in the 2008 result. The balance relates to pledges that are linked to the 2009 financial year.
Proceeds from the Debt Demolition were used to repay bank debt which has been reduced across the year from just under $5m to its current level of $2m.
Melbourne Football Club President Jim Stynes empahsised the significance of Debt Demolition.
“Had it not been for Debt Demolition, the club would have recorded a loss of over $3m in 2008 which would have put the Club at its limits in terms of debt funding. In the end it fell to Melbourne people to save the Club,” said Mr Stynes.
Through 2008, the Club’s core operations traded poorly. Revenue generation fell well short of management’s expectations at the start of the year, particularly in corporate partnerships, sponsorships, game day hospitality and retail. The Club’s match day attendances were down as a result of poor team performance.
The injury toll (119 injury games) throughout the season also had a negative impact on the trading result. Aside from the difficulties in replacing leaders and key players on the field, the financial impact of replacement players and injured player payments was significant.
Melbourne CEO Cameron Schwab confirmed that new President Jim Stynes and his Board had set about stabilising the business as the first step of the rebuilding process.
“Whilst no one is underestimating to size of this challenge, the most important component is the need to build a sustainable business model that will enable Melbourne to consistently compete at the top end of this competition. To this end, some very important steps have been taken,” Mr Schwab said.
“Debt Demolition has been an overwhelming success and plans are now being formulated for it to continue into 2009. Last week the Club received confirmation of $2m of AFL and MCC funding for next year and membership is also building great momentum with almost 16,500 members already committed - 4,500 ahead of this time last year.”
“Clearly, 2009 will be an important year and we look forward with confidence. The Club has rebuilt its management team, significantly reduced its cost base, and established a clear focus on youth from a football perspective. Importantly, Melbourne has commenced the process of re-engaging with its own people. We are also hopeful of making some important announcements in the near future in relation to funding and facilities,” Mr Schwab commented.
The club has titled the first step in the rebuilding of the Melbourne Football Club as ‘Facing our Demons’, the process of bottoming out, honest assessment and communication of the true position of the Club, as well as implementing measures to stabilise the business.
The next step is formulating the strategy that will underpin the club’s future business model, titled the ‘Red and Blueprint’. This document will be released during next year.
