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ASX-listed Broncos eye premiership

The National Rugby League’s season wraps up this Sunday, with the Brisbane Broncos (ASX:BBL) having a good chance to become premiers for the first time in 17 years when they play Penrith in Sydney.

They are well ahead of their 2022 performance, and this year’s success has seen the team’s owners, Brisbane Broncos Ltd, emerge as major winners judging by the company’s half-year financials.

The Broncs finished second in the minor premiership behind Penrith, the defending premiers, and they meet again in Sunday evening’s season finale.

But don’t tell investors who have kept the listed company (69% owned by News Corp) down at levels of a year ago when the team was pushed into 9th place and missed the finals at the last minute.

Brisbane were last in a grand final in 2015 when they lost to North Queensland in extra time. Before that, they last won in 2006.

Thanks to the better performance from the team this year, crowds are up by more than 25% from 2022, merchandising sales are rising, and fees from TV broadcasters are up, with the team’s matches broadcast regularly each week.

And while the on-field performance has lifted the side and the financial performance of the listed company, the share price (ASX code BBL) has not reflected that improvement.

The shares trade around 99 cents this week, which values the company and presumably the players and fixed assets such as the ground, clubhouse, and associated facilities at more than $97 million.

But at 99 cents, the shares are more than 13% lower than a year ago when they traded around $1.14, which seems odd given the dramatic improvement in the team’s effort this year and the very positive impact that has had on the listed company’s finances, thanks to those higher crowds, merchandise sales, and TV fees.

The company told the ASX in half-year report that it saw a big improvement in its June 30 interim profit, which came in around $5.41 million compared to $3.64 million in the first half of 2022. Earnings before Interest, Tax, and Depreciation were around $5.64 million compared to $4.24 million in 2022.

Even if the second half sees no extra profit (there will be fewer games as the season winds down, though getting to play home ground finals at Suncorp Stadium in Brisbane in September should have provided a further boost and the prospect of becoming Premiers), the company has already topped 2022’s net result of $3.23 million.

The company said the first half of 2023 saw eight home games played at Suncorp Stadium in Brisbane, compared to seven games in 2022.

“Consumer and commercial revenue increased due to the additional game, together with higher average crowds and growth across the membership and corporate programs. Crowds averaged 35,100, 25% more than the 27,751 in the corresponding period.

Based on current projections and all things remaining constant, the company thinks its earnings for the full year “will exceed the prior corresponding period” when the company earned a net of $3.23 million on revenue of nearly $44 million.

“During the second half of the financial year, revenue for the remaining home games will be recognised and significant expenses accounted for, including player salaries. Accordingly, the first half cannot be taken as an indication of a full-year trend,” the company warned.

The old adage in sport is ‘Winners are Grinners,’ and so far that’s very true and very profitable for the Brisbane Broncos in 2023 – on and off the field.

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