Melbourne Victory raising $7m as Covid hits finances

Melbourne Victory needs the money after a bad year on the field and the pandemic making it tough off it

Melbourne Victory needs money from its shareholders after a tough season on the field. (AAP Image/George Salpigtidis)

A-League club Melbourne Victory is trying to raise almost $7m from shareholders to shore up a balance sheet wrecked up two Covid-hit seasons and poor on-field performances.

Victory this week lodged a prospectus with the corporate regulator that both reveals the rights offer raising and the havoc the pandemic has wreaked on what has long been considered the A-League’s strongest club in financial terms.

After years of being one of the few sports clubs in Australia to post regular profits, Victory has made net losses of about $5.6m in the last three years, the document reveals.

In that time, Victory’s revenue has slumped nearly $9m from about $23.4m in the 2019 financial year, which covered the 2018/19 season in which Victory finished third, to $14.2m for the just completed competition that featured cross-town rivals Melbourne City winning the grand final while Victory finished last.

Victory has since hired star coach Tony Popovic and football director John Didulica, while completely overhauling its coaching staff, administration and playing squad.

But the pandemic combined with last season’s poor performance had fans staying away in droves for most home matches, put pressure on Victory’s finances. It also, along with all the other A-League clubs, had to deal with a halving of the value of the last season of the competition’s broadcast deal with Fox Sports.

The Victory fundraising is being undertaken at $1.25 per share for the privately-held club, which gives Victory a valuation of about $17.6m. But an independent experts report by RSM Corporate Australia inserted in the prospectus pegs the likely value of Victory now at about $15m given its financial struggles of recent years.

“The emergence of the Covid-19 pandemic has materially and adversely affected the club’s financial position,” Victory chairman Anthony Di Pietro writes in the prospectus, which outlines that most of the money will be used for working capital requirements.

“A key purpose of the rights offer is to try to overcome the financial detriment resulting from the … pandemic, among other things, by providing the club with working capital to better support the club’s strategic ambitions and initiatives.”

The offer is being undertaken via a 4-for-11 pro rata non-renounceable rights offer to existing Victory shareholders, opening on Thursday and runs to August 12.

Victory’s major shareholder Mario Biasin, the owner of home builder Metricon, has indicated he will take up his rights offer in a move that combined with others on the board will mean Victory raises at least $3m.

But it remains to be seen if former director and chief executive Richard Wilson takes up his rights in the raising. Wilson is trying to sell his stake of about nine per cent in the club and has offered the shares to the general public at $2.20 per share, which gives an implied value of about $30.9m to the club.

The club also issues shares at a value of $32m in 2019, but RSM Corporate Australia has estimated Victory’s value at half that figure now given its poor financial results since.

But Victory’s board says the A-League’s overall financial situation is improving given it has signed a new five-year $200m broadcast deal with Network 10 and the prospect of an investment of up to $100m by private equity.