Collingwood may build own stadium

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yob
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Collingwood may build own stadium

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Could the home grounds return to the AFL?

http://www.theage.com.au/afl/afl-magpie ... 1ssco.html
Chief executive Gary Pert said the club had adopted a similar philosophy to La Liga giants Barcelona FC on how to handle their financial strength and ongoing profits once all football and administration costs were covered.

"We are strategically committed that we will use the profits to keep the costs of membership and membership services down. We had a cost freeze on membership last year and a small increase this year, but nowhere near the increase in cost to us," he said.

"It is a Barcelona model. Basically, what Barcelona does is say, 'We are going to make big money out of sponsorships and generate great revenues from all our commercial deals and that is done to keep your membership costs down'."

However, Pert said consideration had already been given to options for investing in the club once the community centre was paid off and that owning their own stadium was one option.
Elsewhere, cashed up Hawthorn is investigating whether to pursue a 35 million dollar expansion of facilities at Wayverley, or build a new $50 million training base elsewhere.

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dibo
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Re: Collingwood may build own stadium

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It's a pretty logical conclusion - if you're capped, and you're making money, build a ground.

gyfox
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Re: Collingwood may build own stadium

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What sort of stadium are they going to be able to fund out of their $5m to $15m pa profit?

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yob
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Re: Collingwood may build own stadium

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^^ A Bizarre comment IMO. How many houses can people afford with their $50,000. Plenty, over 30 years.

The club has a net asset position somewhere around 40 million which is a good starting point. Land for this purpose can generally be secured on a (very) long term lease. A stadium opens further revenue streams, particularly naming rights which is pure cash profit (ask Arsenal).

A lot can be achieved by moving slow.

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Re: Collingwood may build own stadium

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You didn't answer my question? A quality 50k stadium to cater for their average attendance is going to cost roughly $350-$400m. Only 3 years ago they averaged 12k more than that. There is another $110m. What do they build? A 75k stadium to cater for most of their larger crowds. Thats another $150m.

How far will the things you mentioned take them?

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yob
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Re: Collingwood may build own stadium

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You've narrowed the field down considerably. 75k stadium, premiership matches, tomorrow. Well duh, not going to happen. Well let's narrow the field the other way. Training ground, training, within 5 years. Duh, would happen. Now let's fill in the grey bits which form 99% of our lives.

The core issue is you're generating money as a football business, but are limited in what football purpose it can be invested in. The player spend is fixed. The football department spend model is coming to an end, because the league will curb it. The pokie/hotel spend model is limited because of risk.

I'd consider a long term viable option is a peri-urban greenfield, with clubroom facilities, a bit of earth moving around the ground, TV standard lights, and a club commitment to 3 pre season matches a really good start. Then maybe aim to pinch a couple of your silly premiership games as well. Add to you portfolio in increments, invest in the ground in increments.

This is the rationale for all of use buying our first shitty house, and planting our first shitty garden. I'd have thought a stadium nerd would be all over the idea.

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Re: Collingwood may build own stadium

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They may think about it, but I can't see it happening. It would require far too much of their income to go into paying it off. Yob's point about paying it off over a long period is fine in theory, but it's the sheer size of the debt that would make it very difficult I think.

Collingwood would need something around a 60-70k capacity. They would also want something of fairly reasonable quality in order to attract both fans and corporate support. If they plan to kick this project off in the next few years that sort of stadium would cost $750m I would have thought. Not even the Pies could cope with that. And using Eddie's own logic, they should have any income from the AFL immediately cut - if they can afford to build their own stadium they shouldn't be getting handouts from the AFL. Can't have it both ways Eddie...

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yob
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Re: Collingwood may build own stadium

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Not Collingwood specific, but the AFL does have a pretty big blind spot - outer east suburbia. This was one basis for the opposition from Hawthorn and St Kilda to closing Waverley - and opposing the "city-fication" of a suburban game. Melbourne is peculiarly positioned well inside the western half of its metropolitan area. Rail does well to alleviate travel times, but can't cure all.

IMO the capacity requirements for Collingwood are being way overblown here. Collingwood's 2014 crowds against non Victorian opponents, in a year where they challenged for finals: 37, 53, 41, 33, 33k .

Geelong actually make more profit from a packed house at Kardinia than they do 60k+ at the MCG (hence why Geelong has lobbied for more games at KP). Once you've let in all your members, opposition members, AFL members, MCC members, there's f**k all for the kitty.

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dibo
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Re: Collingwood may build own stadium

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If you can commit cashflow of $5 million for 25 years you can borrow approximately $55 million at 7.5%.

That doesn't buy an awful lot.

This cost $27 million - you *might* get a second grandstand and terracing at the ends for the additional $28 million...

That said, Yob's right - big grounds aren't necessarily the be all and end all.

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yob
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Re: Collingwood may build own stadium

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5 million is conservative when you consider consolidated revenue north of 75 million per annum. Not to mention more revenue streams (contracting pourage, catering, signage), uplift of existing streams - your club sponsorship combined with ground naming rights is platinum in the industry.

Not to mention your rental outgoings are now reatined (albeit serving interest).

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Re: Collingwood may build own stadium

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If Collingwood built a 50k stadium and got a naming rights sponsorship of 25% of the cost to build it like Arsenal did the $15m profit they mentioned would cover the interest only on the borrowings.

Yob, you also have to include the O & M costs in the equation and they are in the millions pa.

As a general statement, in Australia stadium ownership is not profitable because we don't play enough home games and our construction costs are the second highest in the world behind only Switzerland.

Having said that Millennium Stadium in Cardiff used to boast that the venue was profitable and at the time it hosted 8 sporting events per year.

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yob
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Re: Collingwood may build own stadium

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The standard deviation in Collingwood's crowds is high. The Vic/non Vic fixturing is an obvious factor, and it's consistent. I see no case whatsoever for an additional 50k seat stadium. More along the lines of a 35k stadium. They will always play Fremantle, Port, Gold Coast, GWS. The smallest crowds will always be the smallest crowds.

Geelong seems to get a 35k stadium for 5 cents in the dollar from the tax payer, with half the members and in a town of 200,000 people. Yet you travel to the other side of town and it's all impossible again? Sucks to be the 4 million in Melbourne shouldering the load of the obvious gap n the market - a small capacity venue. If only we all lived in Geelong they must be saying*.


*hah

gyfox
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Re: Collingwood may build own stadium

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The difference with tax payer funded stadiums is the hirer isn't required to cover the capital cost of the venue. Stadiums Qld are the only one that I know that try full cost recovery but even then there are substantial capital grants to assist the construction and an annual grant to subsidise the operation of Stadiums Qld so that hire charges are kept down.

35k seems low and using a $250m - $300m venue a handful of times a year doesn't seem value for money to me.

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yob
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Re: Collingwood may build own stadium

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As a board for a sporting club, faced with the dual problem - hot money coming in, your core business expense fixed, your traditional investment vehicle (social club and gaming) exposing you to regulatory and business cycle risk, where do you invest?

As a non profit sporting club your duty is to invest in the sport, not to accumulate tax free profits for nothing. A bank balance earning interest does not develop the sport. Having assets on your books that aren't working towards your interests are weakening your business.

It's a systemic issue, and it's a long term one. Where do you invest the cash, every single year for a generation? They're up to 40 million in members' equity and counting.

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dibo
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Re: Collingwood may build own stadium

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If they own it, they can also rent it to other clubs. If nothing else, it'll drop the costs at Docklands quick smart.

It'd be a very interesting shift in the power base away from the AFL too.

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