There are several key areas of the article the club wishes to highlight and comment on:
The Age’s Mark Hawthorne: “NORTH Melbourne stands on the brink of financial disaster, with the club's bank account holding just $2749 of cash when it filed its annual report on October 31.”
NMFC: Our cash flow situation fluctuates and has done so for a long time but this is a very misleading way to report it. 15 days after this balance was recorded, we had $1.1 million in the same account.
It is important to note that we pay our players and creditors on the second last day of the month and if you look at this account then, it will always be low.
It can fluctuate by $1 million during the course of a month.
MH: “At the same time, the Kangaroos have run up a $201,268 overdraft and have drawn down $4.75 million of a $5 million bank loan facility to help fund the club's new training facilities at Arden Street.”
NMFC: This is correct. We are at our facility limit and we do not hide from this fact. That’s why it is crucial that we find other markets and continue to grow this football club like never before.
MH: “Concern has been growing in recent months among senior figures at AFL House about the parlous state of the club's finances, and the perceived bungling of the club's plan to relocate home games to Tasmania.
“The handling of negotiations with the Tasmanian government has been a particular source of ire, with league chief executive Andrew Demetriou reportedly criticising North Melbourne executives over their inability to close the deal.”
NMFC: This is blatantly incorrect and disappointing.
We were aligned with the AFL on the Tasmania strategy and worked very closely with its key executives.
During discussions with the Tasmanian Government, it became clear it held a desire to relocate our club. When it learned that we were not interested in relocating, the deal fell over and Hawthorn was re-signed.
However, we are still exploring the possibility of playing a reduced amount of games in Hobart. How many exactly and what the deal looks like; at this stage we don’t know. But we are still in talks with the relevant parties to hopefully get something resolved this year.
MH: “Auditors have since highlighted the dire financial state of the club for a second successive year, warning there is a significant risk the club will not be able to pay its debts.
“Auditor Brad Taylor, of Grant Thornton, warned the club would need further assistance from the AFL, and noted "the existence of material uncertainty which may cast significant doubt [over] the company's ability to continue as a going concern.
“He added that North Melbourne "may be unable to realise its assets and discharge its liabilities in the normal course of business".
NMFC: Correct, and this has been in the accounts from at least 2005. In fact, any business at its debt limit would have a similar statement in its financials. Again, we have never hidden from this.
MH: “Further examination of North's financial accounts reveals the parlous financial state of the club. While North booked a $233,752 profit last financial year, that figure included a $1.4 million special distribution payment from the AFL.”
NMFC: Let’s firstly address the AFL’s ASD. It’s important to note that a number of clubs receive this funding and some in fact are given a higher amount than us. The ASD is direct compensation for various anomalies which occur throughout any given season with regard to fixturing, broadcasting and stadium deals. It is designed to level the playing field and is constantly reviewed by the AFL on a monthly basis with our executive team.
MH: “In 2009, the club's net current liabilities totalled $4 million. That blew out to $6.85 million last year.”
NMFC: This figure is very misleading. We had $3.9 million in payables (current liabilities) in 2009 and only $2 million in 2010. So in essence, we actually reduced our payables.
The blow-out of “net current liabilities” is particularly misleading as Hawthorne is conveniently ignoring the fact that our non-current assets increased by a similar amount.
Basically, it’s like moving money from a bank account, and putting into a physical asset - in our case, the Aegis Park building. So the money is still there, but in a different form.
MH: “North Melbourne's assets have fallen from $4.2 million in 2009 to $564,600 in 2010.”
NMFC: This is factually wrong. Hawthorne’s wording is incorrect here. Our total assets increased from $16.1 million to $16.2 million and the club’s total net assets actually increased by just over $700,000 in 2010. Hawthorne is referring only to one class of assets - current assets.
MH: “According to the auditors, North will have to "generate sufficient revenue from operating activities", receive "continued financial support from the AFL" and have "success with other strategic initiatives under consideration" in order to survive.”
NMFC: Yes, this all true and we agree with this statement. Our business plan is designed to address these challenges and again, we don’t shy away from this.
However, we have full confidence in our ability to secure a secondary market, grow our supporter and membership base, increase all our commercial revenue and encourage more people to turn up to our games and watch us on television.
MH: “The auditors also point out that North will need a league guarantee of its loans and further access to credit in order to meet its liabilities.”
NMFC: True, but this is unchanged for close to ten years and a number of other AFL clubs are in exactly the same position.
Again, this is one of our key strategic objectives. However, one important point is that we are in a better position than we ever have been with relation to our Aegis Park facility, stable Board, high-class management, adequately funded Football Department, talented playing list and outstanding coaches.
We encourage our supporters to rally behind us and continue to support this great club as we strive to win our fifth premiership in the coming years.
Finally, it has come to our attention that Mark Hawthorne sent a late text message to James Brayshaw on the night of the AGM while he was on radio. However he made no attempt to contact the club media manager and follow the appropriate channels in order to clarify this article or gain comment on the 2010 financials.
The club’s 2010 financial report has been publically available since early December 2010.
