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Pokies fail to boost struggling AFL clubs

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Sliding returns from pokies operations are having a big impact on the business performance of some Victoria-based AFL clubs, with two of the league’s largest gaming venue operators – Carlton and Geelong – falling into the red in 2014.

Since 2008 most Victorian AFL clubs have invested heavily in the gaming machine industry and are now financially exposed to the sector’s declining share of the gambling market.

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According to the Victorian Commission for Gambling and Liquor Regulation, the rise of online sports betting has eroded per capita spending in Victoria on poker machines.

This may present a threat to the balance sheets of many clubs as they scramble to find other sources of revenue to make up for falling attendances at AFL matches.

Aggregate spending on poker machines at licensed hotels and clubs across Victoria has flat-lined at about $2.5 billion a year since 2011.

There are still many pennies from hell to be made by pokies operators, but that should not blind AFL clubs to the fact they have leapt into an industry that is no longer growing.

The 2014 financial accounts of some clubs appear to bear this out.

Carlton FC’s pokies mire

Anglicare wants access to pokies restricted after 10pm.

Carlton operates 290 poker machines across four venues.

No other Victorian club is more exposed to the pokies market than the AFL’s most successful on-field franchise, the Carlton Football Club.

The Blues operate 290 machines across four venues in the state, including the Manningham Club in the northeastern suburb of Bulleen.

Spending on pokies at all four venues declined in 2014, according to data published by the state gambling authority.

The Manningham Club was collecting more than $6 million a year from patrons when Carlton took over the business in 2012.

That fell to $4.4 million in 2014.

At one of the club’s other venues in the western suburb of Laverton, official data collated by the regulator shows that revenue from gaming machines has slipped from $7.6 million to $ 5.8 million in the same period.

Instead of helping the club to stabilise its revenue base, the gaming business has become its most volatile business activity.

No other revenue source exerted such a negative impact on Carlton’s revenue base in 2014.

The club reported a net operating loss of $1.6 million for the 12 months to the end of October – a material deterioration from the 2013 net profit of $520,000.

Despite a massive plunge on pokies licences, Carlton continues to rely on handouts and financial guarantees from the AFL to stay in business.

Geelong Cats fall into the red

While Geelong fans have enjoyed a golden era of on-field success in the past decade, the club’s finances took a turn for the worse last year.

The Cats posted a net loss of $251,000 compared to a profit of $1.2 million in 2013.

Geelong

Geelong made a $251,000 loss in 2014. Photo: Getty

Although costs associated with the redevelopment of the club’s home stadium were the major reason for the slide, Geelong’s gaming venues also contributed to its deteriorating financial position.

Geelong operates 180 poker machines at two venues in Victoria.

Revenue generated by those machines has contracted by 30 per cent or $3 million since 2012 to $7 million.

The club will have to find other sources to grow revenue if it is to reverse its worsening balance sheet, which showed a $4.3 million net deficiency of current assets at the end of October.

Geelong’s directors reassured members in a note to the financial accounts that they had developed marketing and other strategies to address the debt blowout.

“The directors are confident that these strategies will be successful in allowing the club to continue to participate in the Australian Football League,” they stated.

Pokies pay out for Hawthorn and Collingwood

Reigning AFL premier Hawthorn is continuing to harvest a bonanza from its bank of 155 poker machines.

Hawthorn operates 75 machines at the “Vegas Club” in Waverley Gardens and another 80 at a joint-owned gambling centre in the outer western suburb of Caroline Springs.

Getty

Hawthorn’s investment in poker machines is paying off. Photo: Getty

The combined expenditure on pokies at these venues is reported by the gambling regulator to exceed $20 million.

While the returns from “Vegas” have fallen slightly since 2012, Hawthorn can legitimately lay a claim to the problematic title of “Pokies Champion of the AFL”.

More than a quarter of the club’s total revenue of $68 million in 2014 came from the pokie operations.

With a bottom line surplus of $5.2 million last year, Hawthorn is the most profitable of the eight AFL clubs to have released their 2014 financial accounts.

Collingwood Football Club is still reaping big returns from its gaming centres, with its flagship venue known as “The Club” at Caroline Springs, reeling in more than $5 million from gambling victims.

Collingwood posted a net profit of $2.01 million.

Brisbane Lions – a financial basketcase despite boost from pokies

In accounting parlance, the financial position of the Brisbane Lions can be described as “balance-sheet insolvent” after the club turned a loss of $3.5 million last year.

At the end of October, the club’s liabilities exceeded assets by $8.2 million.

Ordinarily, a company in this position would cease trading, but guarantees on loans and extra cash from the AFL are helping to keep Brisbane afloat.

So too is revenue from poker machines, according to statements by the club’s directors in the accounts.

The viability of the club, according to the board, is now contingent not only on the AFL, but also its Queensland gambling licences.

“A significant portion of the income of the company is derived from the holding of licences issued by the Australian Football League and the Queensland Office of Liquor and Gaming Regulation,” directors stated.

In contrast with most Melbourne-based clubs, Brisbane’s annual cash haul from poker machines seems to be increasing.

Not by enough, though.

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