. O.f . . I'll. 4 3. .-TABLE OF CONTENTS Report from the Chair Report from the President and CEO Football Operations Community Relations Treasurer’s Report Business Plan Summary Financial Statements 1 3 4 6 8 10 11 CHAIRMAN’S REPORT As the Winnipeg Football Club looks forward to the 2014 season, it is important to reflect on 2013, our first year at Investors Group Field. Although our 2013 season was not successful on the field, there were many memorable moments worth sharing. The excitement associated with our Grand Opening on June 27, 2013 was truly amazing. Investors Group Field was shining on this opening night as Ken Ploen and Milt Stegall came out of the Bomber tunnel for the first time to the roar of 33,500 loud and passionate Blue Bomber fans. It was indeed a special night and the beginning of a new era in Blue Bomber football. We look forward to creating more of these special memories for all of our fans in the future. We share in our fans’ disappointment regarding our team record on the field in 2013, as we missed the playoffs for the second straight year. However, we are extremely excited about the future of the organization. The hiring of Wade Miller as President & CEO, as well as the hiring of Kyle Walters as General Manager and Mike O’Shea as Head Coach, bode well for the future of the Winnipeg Football Club. We look forward to our return to the Western Division in 2014 whereby we will renew old rivalries while still maintaining the rivalries we have developed in the East over the years. The Winnipeg Football Club continues to move forward with respect to creating greater Board transparency with the community. We have initiated the public nominating process for elections to the WFC Board of Directors which has resulted in the addition of two new Board members in 2013. We look forward to continuing this process in 2014 and future years. The future is indeed bright for the Winnipeg Football Club and its wonderful facility at Investors Group Field. Not only is it our goal to provide our fans with a competitive and entertaining football team, we are extremely excited about the many upcoming events at Investors Group Field inclusive of hosting the 2015 Grey Cup Game, and the FIFA Women’s World Cup in 2015. We also look forward to many more world class concerts similar to the Taylor Swift and Sir Paul McCartney concerts that were tremendous successes in 2013; we are thrilled to welcome hip-hop stars Beyonce and Jay Z and their On the Run tour this summer, as well as a fabulous lineup of country acts including Zac Brown Band for the Prairie Jam Music Festival. We are also very excited about the return of Ottawa to the CFL, with their new REDBLACKS name and their fantastic new stadium, as well as the new facility in Hamilton. The future of the CFL is indeed very bright with the addition of a ninth team and new stadiums in Ottawa and Hamilton and another planned for Saskatchewan. As we look forward to 2014, I would like to extend my deepest appreciation to our Board of Directors and all our staff at the Winnipeg Football Club for all their efforts regarding the transition to our new home at Investors Group Field. My deepest thanks go to the fans of the Blue Bombers. It is your loyalty and passion that fuels the Blue Bomber organization. On behalf of all of us at the Winnipeg Football Club, thank you for your unyielding support. We look forward to providing you with the on field product that you so richly deserve. Brock Bulbuck Chairman Winnipeg Football Club 2013 2013Annual AnnualReport Report Page 1 REPORT FROM THE PRESIDENT & CEO 2013 was a huge year in the history of the Winnipeg Football Club, as we played our inaugural season in our new home at Investors Group Field. Along with the Blue Bomber football season, we welcomed the talented and entertaining Taylor Swift and Paul McCartney. The excitement of the new stadium was, unfortunately, overshadowed by the team’s performance on the field in 2013. As result, the organization went through major organizational changes beginning in August. On August 9, 2013, I, along with a committed team of staff, started the journey of rebuilding the Winnipeg Football Club franchise with a purpose of regaining its storied history. I share our fans’ frustration regarding the 2013 season but can assure you we will not rest until we are a winning organization on and off the field. We are looking forward to the 2014 season with our new head coach, Mike O’Shea and our General Manager, Kyle Walters. Kyle and his scouting team of Assistant General Managers Danny McManus, Ted Goveia and National Scout Drew Morris, held eight tryout camps in the spring of 2014, culminating with the Winnipeg Blue Bombers mini-camp in Tampa, Florida this past April. Here, 70 talented prospects fought for a spot to compete at our upcoming training camp, which will be held in June at Investors Group Field. Notwithstanding the disappointment of the 2013 season, our fans continue to show their support. In fact, as a result of our Big Blue fans, we had the third highest attendance in the CFL for the 2013 season. Our goal is to ensure every game at the stadium in 2014 is just as loud as it was at last year’s Banjo Bowl. I would like to thank our stakeholders – the Province of Manitoba, City of Winnipeg, and University of Manitoba – and most importantly you, our Big Blue fans and our loyal corporate partners, for making the Winnipeg Football Club such a strong organization and for continuing to stand by us throughout these transitions. I am committed to this team and this city, and I can assure you we will bring back the Bomber pride! Wade Miller PRESIDENT & CEO Winnipeg Football Club 2013 Annual Report Page 3 FOOTBALL OPERATIONS The 2013 football season was one of major disappointment for the Winnipeg Blue Bombers and our fans. On the field, the Club struggled out of the gate, resulting in major hierarchal changes within the organization, including replacement of the General Manager, and eventually, the Head Coach. The final result – a 3-15 record – was simply unacceptable. However, with the changes made during the 2013 season, and throughout this off-season, it is with great confidence and optimism that we approach the 2014 CFL campaign. Our Football Operations department, led by General Manager Kyle Walters, has gone through a complete overhaul. Our entire scouting department has been revamped and re-tooled; it is now five times the size it has ever been before. Walters brought on CFL Hall of Fame Quarterback Danny McManus as one of two Assistant General Managers, and to oversee all U.S. Scouting. Ted Goveia came over from the Argos as the other Assistant GM, and to oversee all aspects of our Canadian scouting. Between Walters, McManus, Goveia, and National Scout Drew Morris, the Bombers management and scouting staff has never, in the history of the franchise, been so deep in both personnel and experience. A minicamp in April, operated by the coaching staff and overseen by Walters and his staff, showcased the work these scouts have done, and it appears some extremely talented, newly identified American athletes will showcase their skills in a Bomber uniform in 2014. time acquiring one of the league’s top pass catchers for Willy when he signed free agent Wide Receiver Nick Moore in February. Moore joins the Bombers after leading the BC Lions in receiving last season, finishing third in the CFL with 1,105 yards and six touchdowns. Defensively, the Club has seen some major additions over the winter, including 10-year CFL veteran, and five-time all-star, Defensive Back Korey Banks, acquired in a trade for Wide Receiver Kito Poblah. Banks brings an immediate veteran presence to the field and the locker room. Pending free agent, Defensive Back Alex Suber re-signed with the club and is expected to continue his solid play. Suber will be joined by newcomer Defensive Back Chris Randle, who was acquired via trade with Calgary and was the Stamps top rookie in 2012. Randle finished 2013 with 34 tackles and four interceptions. Up front, big Defensive End Jason Vega chose to return to Winnipeg after a one-year stint in the NFL. Side-by-side with one of the league’s best Defensive Tackles in Bryant Turner, who also chose to re-sign in Winnipeg this past off-season, the Defensive Line looks to be very solid in 2014. In one of the busiest times in franchise history in terms of changes, the organization is as confident as ever that the right people are in place, from top to bottom, and that this will translate into a truly exciting and competitive on-field product in 2014. In December of 2013, Kyle Walters introduced Mike O’Shea, a man with 20 years of CFL experience (16 as a player, four as a coordinator) as the 30th Head Coach in franchise history. O’Shea has assembled a record number of coaches on a staff highlighted by decades of CFL and NFL experience. Long-time defensive guru Gary Etcheverry brings his innovative and unpredictable defensive mindset to a Bomber team that lacked defensive creativity in the past, as the team’s new Defensive Coordinator. Meanwhile, Offensive Coordinator Marcel Bellefeuille returns to control the offence for his first full season with the Bombers, now having the opportunity to work with his own playbook, after joining the team more than half way through 2013. Other key appointments on the coaching staff include renowned Offensive Line Coach Bob Wylie, who brings his decades of NFL and CFL coaching experience to the Bombers offensive line, and former Bomber Quarterback Buck Pierce, who retired from playing and chose to return to Winnipeg to coach our Running Backs, after receiving job offers from other CFL clubs. Not only is Pierce adored by Bomber fans, he brings a wealth of recent playing experience to the coaching staff. From an on-field perspective, the 2014 roster will barely resemble the lineup from 2013. This off-season, the Club has been more active than any of the past five combined. Quarterback Drew Willy is set to handle the controls on offence – a player who many very well respected football minds are pegging as a future star in the CFL. His poise and confidence already shone through at the three day minicamp in April. General Manager Kyle Walters wasted no 2013 Annual Report Page 4 COMMUNITY RELATIONS Our inaugural season at Investors Group Field was very special. There was great anticipation leading up to the Grand Opening of Investors Group Field on June 27, when the Bombers hosted the Montreal Alouettes. This included the Winnipeg Blue Bombers Ball Run, which saw fans across the province handing the ball off to one-another, until it was finally carried into the new stadium. Opening night will be etched into the memories of Bomber fans forever as Hall of Fame Bombers Quarterback Ken Ploen handed the ball off to one of the best receivers the CFL has ever seen, former Blue Bomber Milt Stegall. It was a great night for everyone in attendance and for those watching on national television as we began a new era of Blue Bomber football. our fans throughout Manitoba and the rest of Canada. This was highlighted by two sellouts, the first on opening night and the Banjo Bowl in September, against the Saskatchewan Roughriders. More than 300,000 fans attended Blue Bomber home games in 2013 which once again speaks to the amazing support shown by The amenities at Investors Group Field are spectacular and were very well received by both our fans and corporate sponsors, including our two giant HD video boards and the more than 250 HD screens located around the concourse. The Bomber Store was a very popular place for Bomber fans to congregate in 2013, with record sales on game days. We look forward to providing our fans with new merchandise selections in the future as we continue to be the number one destination for official Blue Bomber gear in the city. In addition to Blue Bomber football games, Investors Group Field hosted a significant number of other events in 2013. Among the highlights were the Taylor Swift and Sir Paul McCartney concerts, Manitoba Bisons and Winnipeg Rifles football games, amateur football games as well as the Red River Cup held during the week of July 7 -13, 2013. The Winnipeg Football Club eagerly looks forward to hosting more events in the future at our wonderful new home at Investors Group Field. Community outreach continued to be a strength in 2013. Our players, coaches, mascots and cheer team attended many functions in support of many worthy causes in Winnipeg and across the province. The Winnipeg Football Club eagerly looks forward to staying involved with communities and organizations throughout Manitoba, and in particular, in rural areas. Once again, the Winnipeg Football Club acknowledges the tremendous efforts provided by all of our volunteers on the Blue Bombers Flight Crew. Our Club is so fortunate to have the support and passion of the people who continue to help us on game days and with many other events throughout the year. Their team work, dedication and enthusiasm for the Winnipeg Football Club is very much appreciated by all of us. The 50/50 draws were once again a big hit on game days and the execution of them was greatly improved with the implementation of new 50/50 technology at Investors Group Field in 2013. Participation in this program allows our organization to continue supporting amateur football across the province. The Winnipeg Football Club looks forward with great excitement and anticipation to the 2014 season, our second year at Investors Group Field. The 2014 season sees our Club return to the Western Conference where we will renew acquaintances with our western rivals. We look forward to seeing the loudest fans in the country once again at Investors Group Field in 2014. 2013 Annual Report Page 6 TREASURER’S REPORT $3,500,000 From a financial perspective, 2013 proved to be a much more successful year for the Winnipeg Football Club than 2012. The Club had excess revenue over expenses from operations of $2.9 million compared to just $727,000 in 2012 which was an increase of $2.2 million. Excess revenue over expenses from operations, before depreciation, came in at $3.7 million in 2013 compared to $1.2 million in the prior year. These results were in large part due to the move to Investors Group Field and the fantastic support shown to both the team and new facility by the fans and the corporate community. While the Club was pleased and encouraged by the financial results for 2013, it is fully confident this can be improved upon going into 2014 and beyond, given the increased revenues and removal of one-time costs as noted below. EXCESS OF REVENUES OVER EXPENSES FROM OPERATIONS 3,014,597 $3,000,000 2,911,932 $2,500,000 $2,000,000 $1,500,000 $1,000,000 726,930 697,679 $500,000 $0 $-500,000 (109,284) 2009 2010 2011 2012 2013 Revenues Increases in total game revenue, Winnipeg Football Club revenue and stadium management revenue were the primary reasons for the increase in operating revenues of $7.5 million for the year, going from a balance of $16.7 million in 2012 to $24.2 million for 2013. CFL revenue distributions remained relatively consistent from 2012 to 2013, but will be increasing substantially in 2014 and subsequent years. Expenses The move to the new facility not only resulted in increased revenues, but also increased costs, as evidenced by the increase in operating expenses of $21.3 million in 2013 compared to $16 million in 2012. This was exacerbated by certain costs that were one-time in nature and will not occur again in future years, led by significant executive and football operations severance costs that have all been expensed in 2013, as well as transportation plan costs that will be at a more acceptable level going forward. Shown in Other Items in the Statement of Operations are other non-recurring costs such as grand opening costs, concession start-up costs, and stadium development costs that further contributed to decreasing the excess of revenues over expenses, but these also will not be incurred going forward. Even with the increased stadium operation costs, football operations remains the biggest area of expenditure and main focus of the Club, accounting for almost 50% of total operating expenses. 2013 Annual Report TOTAL GAME REVENUE $12,000,000 10,277,118 $10,000,000 8,366,978 $8,000,000 $6,000,000 5,109,491 7,783,372 5,295,867 $4,000,000 $2,000,000 $0 2009 2010 2011 2012 2013 Page 8 TOTAL CORPORATE AND OTHER REVENUE $16,000,000 $13,908,612 $14,000,000 $12,000,000 $10,000,000 $9,650,923 $10,052,412 $9,295,022 $8,945,440 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 2009 2010 2011 2012 2013 Financial Position and Cash Flow The excess of revenues over expenses for the year increased the Club’s net assets to $7.9 million as at December 31, 2013. Included in net assets is the newly established operating reserve, which is internally restricted and not to be used without the approval of the Board of Directors. The balance of the reserve as of December 31, 2013 was $1.095 million, and commencing in 2014 the Management Agreement allows annual allocations to the reserve of $500,000 until the reserve reaches a maximum of $5 million. The Club experienced a net decrease in cash during the year of $4.75 million, the result of the Club having to spend $13.2 million in capital additions mostly relating to stadium infrastructure and equipment. These additions were financed through a combination of available cash on hand and long term debt financing. Despite these capital requirements, the Club was still able to maintain a cash balance of $5.4 million at December 31, 2013. 2013 Annual Report In looking to the future, we are very pleased with our new management team and new football operations team and are very excited about their enthusiasm and new initiatives. We are optimistic this will translate into improved performance both on and off the football field in 2014 and beyond. New marketing ideas for additional special events at Investors Group Field will continue to grow over the next few years, which are expected to continue to contribute to our bottom line. We are confident in our business plan for the future and the ability to meet all our financial obligations. We believe all of these exciting opportunities will help us to ensure our goal of the long term financial viability of professional football in Winnipeg. Deborah Metcalfe Treasurer Winnipeg Football Club Page 9 BUSINESS PLAN SUMMARY OPERATING REVENUE SUMMARY Premium Sales [Suites, Loges, Premium Seating] Based on the above, net earnings from operations are expected to improve significantly from 2013 results, and be fairly consistent going forward beyond 2014. All Suites and Loges at Investors Group field are sold out and are under remaining contracts ranging from 4 to 6 years. 75% of Premium Seating expires in 2015 while the remainder are under contract for additional years. Renewal rates experienced to date are very strong and based on inquiries we believe that demand is and will remain strong for these properties. Season Ticket Sales 2013 was an abnormal year due to the opening of Investors Group Field. Going forward we project season ticket sales in the range of 21,500 to 23,000 as the on-field and off-field team improves and fans become accustomed to using and enjoying Investors Group Field. In addition, 2015 will see a one time increase in net earnings due to the Winnipeg Football Club hosting the Grey Cup in that year. The combined effect of all these factors gives the Club confidence that we will be able to both adequately fund our business and football operations as well as meet all of our other financial obligations. The intent of the move to a new facility and the financing arrangements necessary to make it happen has always been to secure the long-term stability of your Winnipeg Blue Bombers and the Club strongly believes that our business plan will accomplish that objective. Corporate Partnership – Winnipeg Football Club Revenue Investors Group Field was designed to maximize corporate sponsor inventory and value, and we moved into the new facility with strong support. Going forward this number will be fairly consistent from the Club’s 2013 benchmark, with targeted incremental growth. CFL Revenues Beginning in 2014 we will be benefitting from the new CFL broadcast agreement. Concessions Managing customer flow, adjusting food choices and improving overall service is essential. We anticipate that Investors Group Field concessions provide the Winnipeg Football Club the opportunity to grow from the level set in 2013 by 5% annually. OPERATING EXPENSES The percentage breakdown of operating expenses outlined in the 2013 Annual Report are expected to be consistent going forward. The 2014 budget for operating expenses is consistent with 2013 results due to specific budgeted expense increases being offset by one-time costs incurred in 2013 that will not occur in 2014. Going forward after 2014, marginal increases of 2 to 3% year over year are expected in all major expense categories. 2013 Annual Report Page 10 ?3 A A FINANCIAL STATEMENTS WINNIPEG FOOTBALL CLUB DECEMBER 37, 2073 7 GrantThornton Independent Auditors? Report . 204 9440100 To the Directors of pl2ui,lg51.5442 Winnipeg Football Club We have audited the accompanying financial statements of the Winnipeg Football Club, which comprise the statement of ?nancial position as at December 31, 2013 and the statements of operations, changes in net assets and cash flows for the year then ended and a summary of signi?cant accounting policies and other explanatory information. Management?s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these ?nancial statements in accordance with Canadian accounting standards for not-for-profit organizations, and for such internal control as management determines is necessary to enable the preparation of ?nancial statements that are free from material misstatement, whether due to fraud or error. Auditor?s Responsibility Our responsibility is to express an opinion on these ?nancial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the ?nancial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor?s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company?s preparation and fair presentation of the ?nancial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the organizations internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the ?nancial statements. We believe that the audit evidence we have obtained in our audit is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the ?nancial statements present fairly, in all material respects, the ?nancial position of the Winnipeg Football Club as at December 31, 2013 and the results of its operations and its cash ?ows for the year then ended in accordance with Canadian accounting standards for not-for-profit organizations. rm Winnipeg, Manitoba May 7, 2014 Chartered Accountants 2073 Annual Report Winnipeg Football Club Statement of Operations and Changes in Net Assets Year Ended December 31 2013 2012 {Note 14) Operating revenue Total game revenue 10,277,118 8 7,783,372 Corporate and other revenue CFL revenue (Note 9) 2,054,270 2,107,341 Winnipeg Football Club revenue (Note 11) 7,840,159 5,290,204 Stadium management revenue (Note 7 8. 11) 3,861,838 1,180,731 Community support and special events (Note 11) 152 345 367 164 Total corporate and other revenue 13,908,612 8 945 440 Total operating revenue 24,185,730 16 728 812 Operating expenses Football operations 10,489,343 9,333,426 Marketing and administration 6,078,714 4,667,177 Stadium occupancy 3,351,723 1,672,156 Game day transportation 1,325,227 20,000 Other charges 28 791 309,123 21 273 798 16,001,882 Excess of revenues over expenses from operations 2,911,932 726,930 Other items Grand opening costs (163,874) - Concession start-up costs (594,224) - Stadium development (Note 12) (195,217) (1,050,950) Gain (loss) on disposal of stadium assets 115 605 (434,287) Excess (de?ciency) of revenues over expenses 2,074,222 (758,307) Net assets, beginning of year 5,871,346 6,629,653 Excess (de?ciency) of revenues over expenses 2 074 222 (758,307) Net assets, end of year 7,945,568 5,871,346 1? ?is? -at . 2073AnnualReport P579973 Winnipeg Football Club Statement of Financial Position As at December 31 2013 2012 (Note 14} Assets Current Cash and cash equivalents 5,419,443 10,171 ,078 Receivables 674,477 963,353 Due from Stadium inc. (Note 13) 1,394,766 189,769 Inventories 757,871 367,908 Prepaids 364,268 385 039 8,630,845 12,077,147 Capital assets [Note 3} 14 733 418 2.494 767 23,364,263 14,571,914 Liabilities Current Payabies and accruals (Note 4) 1,629,254 1,275,785 Deferred revenue 5,521,468 6,617,796 Current portion of long-term debt (Note 5} 768 739 - 7,919,461 7,893,581 Long?term debt (Note 5) 7,369,053 742,263 Deferred contributions (Note 6) 130 181 B4 724 15,418,595 8,700,568 Net Assets Operating reserve (Note 7} 1,095,000 - Surplus 871 346 23,364,253 $14,571,914 Commitments {Note 10) Contingencies (Note 9) On behalf of the Board Director I Director 2073 Annual Report Winnipeg Football Club Statement of Cash Flows Year Ended December 31 2013 2012 (Decrease) increase in cash and cash equivalents Operating Excess (de?ciency) of revenues over expenses 2,074,222 (758,307) Depreciation 793,016 505,085 Amortization of deferred contributions (97,270) (127,859) (Gain) loss on disposal of stadium assets (115,605) 434,287 2,654,363 53,188 Change in non-cash working capital Receivables 288,876 (574,880) Due from Stadium Inc. (1,204,997) (189,789) lnve ntories (389,963) (1 19,122) Prepaids 751 (89,883) Pavables and accruals 353,489 78,122 Deferred revenue (1,098,328) 5,033,690 606,171 4,211,344 Financing Deferred contributions 162,727 - Increase in long-term debt 7,755,401 742,283 Repayment of long-term debt (359,872) (59,141) 7,558,256 883,122 Investing Proceeds on disposal of stadium assets, net 235,015 30,824 Purchase of capital assets (1,810,887) (12,916,062) (1,579,843) Net (decrease) increase in cash and cash equivalents (4,751,835) 3,314,823 Cash and cash equivalents Beginning of year 10 171 078 8,858,455 End of year 5,419,443 1? -at . 2073AnnualReport P579975 Winnipeg Football Club Notes to the Financial Statements December 31, 2013 1. Nature of operations The Winnipeg Football Club (the ?Club?) was incorporated as a Manitoba Corporation on March 5, 1951. The object of the Club is the promotion and fostering of football in the City of Winnipeg. The Club is exempt from income taxes under Section 149(1) of the Income Tax Act. 2. Summary of signi?cant accounting policies Basis of Presentation The Club has prepared these ?nancial statements in accordance with Canadian Accounting Standards for Not-for-Profit Organizations (ASNPO). Financial Instruments lnitfaf measurement The Club's ?nancial instruments are measured at fair value when issued or acquired. For ?nancial instruments subsequently measured at cost or amortized cost, fair value is adjusted by the amount of the related ?nancing fees and transaction costs. Transaction costs and ?nancing fees relating to ?nancial instruments that are measured subsequently at fair value are recognized in operations in the year in which they are incurred. Subsequent measurement At each reporting data, the Club measures its ?nancial assets and liabilities at cost or amortized cost (less impairment in the case of ?nancial assets), except for equities quoted in an active market, which must be measured at fair value. The financial instruments measured at amortized cost are cash and cash equivalents, receivables, due from Stadium payables and accruals and long-term debt. For ?nancial assets measured at cost or amortized cost, the Club regularly assesses whether there are any indications of impainnent. If there is an indication of impairment, and the Club determines that there is a signi?cant adverse change in the expected timing or amount of future cash ?ows from the ?nancial asset, it recognizes an impairment loss in the statement of operations. Any reversals of previously recognized impainnent losses are recognized in operations in the year the reversal occurs. Cash and cash equivalents Cash and cash equivalents include cash on hand, balances with banks {net of bank overdrafts) and cashable guaranteed investment certi?cates. Capital assets Purchased capital assets are recorded at cost. Contributed capital assets are recorded at fair value at the date of contribution. Capital assets are amortized on a straight-line basis over their estimated useful lives as follows: Bomber Store 20% Computer hardware and software 20% Concession equipment 10-20% Cover-all building 5% Game day equipment 20% Football equipment 10-20% Of?ce furniture and equipment 20% Stadium equipment 10?20% Stadium 5-10% 1? if -at . 2073AnnualReport 1009975 Winnipeg Football Club Notes to the Financial Statements December 31, 2013 2. Summary of signi?cant accounting policies {continued} Inventories Inventories are carried at the lower of cost and market. Cost is determined on an average cost basis. Market is de?ned as net realizable value. Non-monetary transactions The Club enters into non-monetary transactions in the normal course of operations where sponsorship packages are exchanged for goods and services. These transactions are recorded at the fair market value of the sponsorship packages given up and no gain or loss is realized on the transaction. Revenue recognition Game revenue from the sale of tickets is recognized as revenue on a game by game basis. CFL revenue is recognized as received or when receipt is reasonably assured. Revenue from the sale of sponsorships, stadium naming rights and radio rights is recognized over the tenn of the related contract. Revenue from the sale of products or services is recognized when the products are shipped, and services are rendered. Revenue from community support and special events is recognized as revenue in the period when the community support is received or when the special event is held. Deferred revenue consists of corporate sponsorships, premium seating and season ticket sales which relate to the subsequent year. The Club follows the deferral method of accounting for its contributions. Deferred contributions are recognized as revenue in the year in which the related expenses are incurred or as amortization is recorded. Use of estimates In preparing the Club's ?nancial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and reported amounts of revenue and expenses during the period. Actual results could differ from these estimates. 3. Capital assets Accumulated Net Net Depreciation Book Value Book Value Bomber Store 275, 847 50,000 225,847 53,829 Computer hardware and software 447,758 150,288 297,470 191 ,529 Concession equipment 3,005,744 109,707 2,896,037 53,364 Cover-all building - - - 118,434 Game day equipment 655,749 224,232 431,517 36,629 Football equipment 957,258 369,974 587,284 388,874 Office furniture and equipment 313,959 72,067 241,892 40,610 Stadium equipment 3,209,108 1,116,162 2,092,926 1,436,512 Stadium infrastructure 8,144,250 183 .805 7.960.445 174.986 $17,009,673 2,276,255 $14,733,418 2,494.76? 1? ?Ar? -at . 2073AnnualReport 1009977 Winnipeg Football Club Notes to the Financial Statements December 31, 2013 3. Capital assets (continued) Concession equipment, stadium equipment and stadium infrastructure include assets under capital lease with an original cost of (2012: $nil) and accumulated amortization of $120,?41 (2012: During the year, the Club received insurance proceeds in the amount of $235,015 for the disposal of the cover-all building and event deck with a net book value of $1 19,410 that were damaged in a ?re. 4. Payables and accruals 2013 2012 Tradeand other 1,510,063 1,264,394 Government remittances 119,191 11,391 1,629,254 1,275,785 5. Long-tenn debt City ofwinnipeg Note payable balance to be repaid in full by December 31, 2017. Interest to be accmed at 5.00% and due with ?nal payment, 1 ,074,032 ?42,263 Royal Bank of Canada Non-revolving term loan to be repaid in full by May 31, 2016. Interest to be accrued at prime p us1.00% and paid 2,000,000 - Ovations Ontario Food Services LP Loan payable with principal and interest payments of $5,734, including interest at prime plus 3.00%. Balance to be repaid in full January 1, 2028. 641,703 - Ovations Ontario Food Services LP Pre-opening fees payable with principal payments, interest free, of $4,167. Balance to be repaid in full April 30, 2016. 116,667 - Ovations Ontario Food Services LP Pre-opening expenses payable with principal payments in the months of June to November, interest free, of $18,509. Balance to be repaid in full November 30, 2016. 333,16? 1? ?Ar? ?i -at . 2073AnnualReport P099753 Winnipeg Football Club Notes to the Financial Statements December 31, 2013 5. Long-terrn debt (continued) Obligations under capital leases 3,972,223 ?'42,263 Less: Current portion of long-term debt 1768339] - 7,369,053 ?42,263 As security, Royal Bank of Canada has ?rst ranking security interest over property of the Club by way of a general security agreement. As security, Ovations Ontario Food Services LP has ?rst position lien on, and security interest in, the speci?c equipment and other related tangible personal property purchased from the loan proceeds. During the year two new capital leases were entered into for various concession equipment, stadium equipment and stadium infrastructure costs. These capital leases bear interest at ?xed rates ranging from 5.36% to 6.02% and have maturity dates up to September 2020. The obligations are secured by the related equipment. Interest expense related to capital lease obligations of $58,267 (2012: $750) was paid during the year. The minimum annual principal payments over the next ?ve years are as follows: 2014 2015 803,355 2016 2,806,611 201? 1,722,214 2018 584,677? The Club has a revolving demand facility of up to $50,000 (2012: $50,000) of which $50,000 (2012: $50,000) was unused at December 31, 2013. This revolving demand loan is due upon demand, bears interest at prime plus 1.00%, and is secured by a general security agreement. 6. Deferred contributions Deferred contributions related to capital assets represent restricted contributions with which the Club purchased certain game day, stadium and audio-video equipment. The change in the deferred contributions balance for the year is as follows: 7% Balance, beginning of year 64,724 192,533 Add: Contributions 162,727 - Less: Amounts amortized to revenue (97,270) [12?,859) Balance, end of year 130,181 64,724 Fir 2: i 20i3AnnualReport P579979 Winnipeg Football Club Notes to the Financial Statements December 31,2013 7. Stadium Management Agreement On December 15, 2010, the Club entered into a Management Agreement with Stadium Inc. a non-share corporation of which the Club is a member, together with The City of Winnipeg and The University of Manitoba, and is able to appoint one of four directors. is incorporated under the Canada Corporations Act and is exempt from taxes under Subsection 149(1) of the Income Tax Act. Upon dissolution of the Club has no entitlement or access to any of remaining net assets, including the stadium. The Club does not control but rather exercises significant in?uence over and has therefore not recorded any value for its membership in on the Statement of Financial Position. purpose is to develop, construct and own a stadium on leased land at the University of Manitoba, for use by the Winnipeg Blue Bomber football team and the University of Manitoba Bisons footbatl team and for the use of amateur athletics and other public purposes. Under the terms of the Management Agreement, the Club will manage and operate the stadium in exchange for primary access to the facilities. The Management Agreement requires the Club to establish its own Operating Reserve by way of annual allocations of up to $500,000, commencing in 2014, until the reserve reaches a maximum of $5,000,000. The Club maintained an Operating Reserve balance of $1 ,095,000 (2012: as at December 31, 2013. Under the terms of the Management Agreement the Club is also required to use its best efforts to generate sufficient Excess Cash and collect entertainment tax and facility fees to meet all of the following payments. Subject to the existing note payable (Note 5) to the City of Winnipeg, commencing in 2014 all entertainment tax and facility fees collected on regular season and exhibition Blue Bomber football games by the Club will be paid to In any year that entertainment tax and facility fee payments in total exceed $2,000,000, the first $2,000,000 will be applied against the scheduled payments noted below and the excess will be applied to a capital fund to be held by to a maximum of $500,000 per year. Any further excess entertainment tax and facility fee payments (over $2,500,000 in a year) will be applied by to the scheduled payments below. In addition, the Club is to use any Excess Cash generated in a ?scal year, after consideration of the Club's required working capital levels and allocations to the Operating Reserve, to make a further annual payment to B88 in accordance with the maximum total scheduled payment, inclusive of the amounts collected and remitted by WFC for entertainment tax and facility fees (except for amounts applied to the capital fund), as follows: 2014 4,000,000 2015 4,000,000 2016 4,000,000 201? 3,000,000 Thereafter, the maximum annual scheduled payment of Excess Cash will be $3,885,834, until 2058. Any shortfall on the above Excess Cash amounts in any year will be added to the amount to be paid by the Club in the following year in which it was originally due. Under the terms of the Management Agreement the Club is also required to remain a community owned non-share, not-for-profit corporation. The scheduled payments from the Club to detailed above are to be utilized by against loans that exist between and its lenders. 2073 Annual Report Winnipeg Football Club Notes to the Financial Statements December 31, 2013 8. Financial instruments The Clubs activities are exposed to a variety of ?nancial risks of varying degrees of signi?noe which could affect its ability to achieve its strategic objectives. The Clubs overall risk management program focuses on the unpredictability of financial and economic markets and seeks to minimize potential adverse effects on the Club?s ?nancial performance. Risk management is carried out by ?nancial management in conjunction with overall Club governance. The principal financial risks to which the Club is exposed are described below. Liguidity risk The primary source of liquidity is net operating income which is primarily used to ?nance working capital and capital expenditure requirements and is adequate to meet the Club?s ?nancial obligations associated with ?nancial liabilities. The Club maintained an Operating Reserve balance of $1 ,095,000 (2012: $nil) as at December 31, 2013. The following table shows the timing of cash out?ows relating to payables and accruals, and long-term debt: 2013 2012 Within one year 2,397,993 1 to 5 years 5,916,857 742,263 5 8,314,850 2,018,048 Credit risk The Club is exposed to credit risk through its cash and cash equivalents, amounts due from Stadium Inc., and receivables. The maximum credit risk to which the Club is exposed at the balance sheet date is equal to the fair value of cash and cash equivalents and receivables. Cash may be redeemed upon demand and consists of balances with banks and therefore bears minimal credit risk. Receivables credit risk arises from the possibility that entities that owe funds to the Club may experience financial dif?culty and not be able to ful?ll their commitment. The Club evaluates receivable balances based on the age of receivable, credit history of the customers, and past collection experience. There are no amounts allowed for as doubtful accounts related to signi?cant past due accounts as indicated in the following table: Receivables: 2013 2012 Current and not impaired 23,280 - Past due in the following periods 31 to 60 days 45,813 255,533 61 to 90 days 26,346 6,300 Over 90 days 419,884 200 479 Trade receivables 515,323 462,312 Other receivables 159,154 501,041 Allowance for doubtful accounts - - Total receivables 674,477 963,353 Due from Stadium Inc. 1,394,766 189369 1? ?l -at . 2073AnnualReport P579927 Winnipeg Football Club Notes to the Financial Statements December 31, 2013 8. Financial instruments (continued) Interest rate risk The Club is exposed to interest rate risk on its fixed and floating interest rate ?nancial instruments. Given the current composition of long-term debt, ?xed-rate instruments subject the Club to a fair value risk while the ?oating-rate instruments subject it to a cash ?ow risk. The Club had a signi?cant change in interest rate risk during the year as a result of taking on additional debt with ?xed and variable rates. Total long-term debt of (2012: $742,263) is made up of ?xed rate loans amounting to $5,496,089 (2012: $142,263) and variable rate loans amounting to $2,641,703 (2012: $nil). Currency risk The Club does not have signi?cant ?nancial instruments denominated in a foreign currency and is therefore not exposed to signi?cant currency risk. Other price risk The cash ?ows associated with the ?nancial instruments of the Club are exposed to minimal other price risk. 9. Contingencies la) Transactions with the Canadian Football League As at May 2014, the date on which these audited ?nancial statements have been reported, the CFL has not made a ?nal determination of its operating results for the year ended December 31, 2013. Consequently, the Club may be entitled to additional revenues or obligated to pay additional expenses once the accounts of the CFL have been ?nally determined. Any adjustments arising from the ?nal determination of the results of operations of the CFL will be recorded in the accounts of the Club during the year ended December 31, 2014. During the year, the Club received distributions from the CFL of $2,054,2?0 (2012: Other The Club is involved in various legal claims arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Club's ?nancial position, results of operations or cash ?ows. Any amounts awarded as a result of these actions will be re?ected in the year of settlement. 10. Commitments Stadiumlnc. The Clubs contractual obligation with is referred to in Stadium Management Agreement Note 7. lb) ovations Agreement On January 17, 2012, the Club entered into a Food and Beverage Agreement with Ovations Ontario Food Services LP (Ovations) which expires June 2028. Concession revenue recorded by the Club is net of fees paid to Ovations as per the terms of the Agreement2073AnnualReport Winnipeg Football Club Notes to the Financial Statements December 31, 2013 10. Commitments (continued) Other The Club, in its normal course of business, enters into various supply and service contracts the terms of which would normally not exceed three years. The costs related to these contracts are treated as expenses in the period to which they contractually relate. The Club has entered into a lease for certain of?ce equipment. The Club's total future minimum lease payments under operating lease commitments over the next three years are as follows: 2014 23,588 2015 23,588 2016 1? 691 64,867 11. Supplementary information Certain revenues and expenses presented on the Statement of Operations are disclosed net of related expenditures and revenues. Details of the gross revenue and expense amounts are as follows: go13 2012 Revenue Exgense Revenue Exgense Winnipeg Football Club revenue 9,700,291 1,860,132 6,312,438 1,522,234 Stadium management revenue 4,119,375 257.537 1,180,731 - Community support and special events 427,502 g75,157 691,54? 324,383 Winnipeg Football Club revenue is net of cost of sales, which include $1,111,630 (2012: $1,046,316) of Bomber Store merchandise recognized as an expense. 12. Stadium development The Club incurred costs of $195,217? (2012: $1,050,950) which directly relate to the process associated with the stadium development and transition. Since 2007, the Club has invested $2,215,364 in stadium development costs that have been expensed in the years incurred, and a further in stadium capital costs. I . A 2073 Annual Report Page 23 Winnipeg Football Club Notes to the Financial Statements December 31. 2013 13. Related party transactions Due from Stadium Inc. of which the Club is a member, is unsecured, non?interest bearing and has no ?xed terms of repayment. The $1 ,394,?66 (21312: $139369) balance due from arose as a result of the Ciub paying for certain services and equipment purchased on behalf of These transactions were conducted in the normal course of business and were accounted for at the exchange amount which is the amount of consideration established and agreed to by the related parties. 14. Comparative ?gures Comparative ?gures have been adjusted to conform to changes in the current year presentation. I 2073 Annual Report WINNIPEG FOOTBALL CLUb 315 C H A N C E L LO R M AT H E S O N R O A D W I N N I P E G , M B R 3 T 1 Z 2 PHONE: 204-784-2583 E - M A I L : B B O M B E R S @ B LU E B O M B E R S . CO M