AFL Real Economy - Today's Crikey

[St George]

AFL real economy: Port & Brisbane post losses, what next?

Adam Schwab writes:
The stunningly poor financial performance of AFL side Port Adelaide has cast further doubt over the AFL’s poorly planned Queensland and New South Wales expansion.

Yesterday, The Australian revealed that Port Adelaide, Australia’s most successful football club, announced a $1.4 million loss for 2008 -- spurred by poor attendances, lower membership and rising costs.

Yesterday seemed to be the day to release bad economic news if you're in the AFL because the Brisbane Lions also announced a loss of more than $2 million, which was blamed on the global financial crisis.

While many are quick to point the finger at struggling Victorian clubs, it is Port Adelaide, Brisbane and Sydney that have proved constant financial disappointments for the AFL. Port Adelaide has been an on-field success since joining the competition in 1997, narrowly missing the finals in its first year, but achieving an enviable record of success, culminating in the 2004 premiership.

However, last year, Port Adelaide were only able to draw on average a measly 23,842 fans to its 11 home games. Of the eight highest attended clubs in 2008, seven were Victorian sides. Port Adelaide had the lowest attendance, followed by Brisbane, which recorded an average attendance of only 28,374 (North Melbourne had a slightly lower average than Brisbane, but its figures were distorted by playing matches on the Gold Coast). Brisbane also recorded the lowest number of members as at April 2008.

The poor financial performance and levels of support for non-Victorian clubs cast further doubt over the viability of the AFL’s expansion plans in the Gold Coast and Western Sydney. Even the AFL, which ploughed ahead with its Gold Coast plans without conducting adequate financial feasibility studies (instead, relying on the views of a focus group consisting of Gold Coast identities), has apparently realised that a Gold Coast side may not be the panacea some have hoped. In a shock move, on 18 November, AFL Chairman, Mike Fitzpatrick, stated that the AFL may actually take the time to consider the financial ramifications of spending hundreds of millions of dollars on a money-losing expansion:

This is a generational decision for Australian football and the AFL Commission is committed to making prudent financial decisions based on a complete and proper process and a clear understanding of the current economic situation.

The Commission did not make a final decision today about the licence but has instead asked the AFL executive to clarify several matters from today’s discussion and provide a further analysis and financial modelling of the impact of the new club on the existing competition.

A "normal" business, answerable to shareholders would not dream of considering an expansion into the Gold Coast as the economy enters a recession. It should also be remembered that the Gold Coast is the venue of the failed Brisbane Bears (which was virtually bankrupt before moving to Brisbane), and will cannibalise Brisbane’s supporter base, already the lowest among all AFL clubs. Of course, the AFL is anything but a normal business. AFL directors like Fitzpatrick and Andrew Demetriou are not accountable to shareholders, and certainly not to club members.

While the AFL is happy to spend upwards of $100 million on a Gold Coast expansion, it is easily forgotten that those monies actually belong to the clubs, and by implication, club members. It is not without irony that while the league is enjoying record broadcast and corporate revenues, the costs faced by ordinary supporters continues to rise. It has recently been revealed that the cost of a Full AFL Membership and Premium Reserved Seat (for 10 home games) for a Melbourne-based club has increased to more than $900 annually -- having more than doubled in a decade.

If the AFL executive had a true understanding of their role, the $100 million being spent on a money-losing Gold Coast side would instead be used to reduce membership costs for ordinary members. But what kind of legacy would that leave for Fitzpatrick and Demetriou?
________________________________________

[saintspremiers]

Great article from a respected source using an intellegent argument.

But the question always is and remains: will Demetriou and his floggers actually ever listen?

Gold Coast is not worth bothering about for at least 5 years now you'd think.....they may as well scrap West Sydney and look again at the Tassie option...I'd hate to see a bye in the comp....better to bring in two teams in the one season, so they are on equal footing.

How does this effect St Kilda?

Well, we need to do everything possible to hold onto Jeld Wen/a major sponsor, try and make a small profit in 2009, and keep pushing the AFL for a better stadium deal, be it at the Dome or MCG - whatever gives us the best return.

[rodgerfox]

How about we just worry about what we've got, instead of trying to take over the world?

How about the AFL gets back to what it's meant to be - a competition for Aussie Rules footy clubs to compete in. Not a financially successful business.

How about we stop associating money with the success of the 'competition'?

[Ice Wolf]

Great article from a respected source using an intellegent argument.

But the question always is and remains: will Demetriou and his floggers actually ever listen?

Gold Coast is not worth bothering about for at least 5 years now you'd think.....they may as well scrap West Sydney and look again at the Tassie option...I'd hate to see a bye in the comp....better to bring in two teams in the one season, so they are on equal footing.

How does this effect St Kilda?

Well, we need to do everything possible to hold onto Jeld Wen/a major sponsor, try and make a small profit in 2009, and keep pushing the AFL for a better stadium deal, be it at the Dome or MCG - whatever gives us the best return.

And fudging facts and figures to make his point.

Brisbane still made an operating profit, there loss was just an accounting write down and has nothing to do with the health of the club as a whole.

Port Adelaide have only made 2-3 losses since they joined the league and they had a s*** season this year.

"normal" businesses do incredibly stupid things all the time mostly due to short term thinking and to appease fickle stock markets.

The AFL isn't a "normal" business, it doesn't and should act like one. The financial crisis is actually a golden opportunity for the AFL to expand and one it can't afford not to take.

[bob__71]

Go Tassie

[rodgerfox]

The AFL isn't a "normal" business, it doesn't and should act like one. The financial crisis is actually a golden opportunity for the AFL to expand and one it can't afford not to take.

In the interest of whom?

[Ice Wolf]

The AFL isn't a "normal" business, it doesn't and should act like one. The financial crisis is actually a golden opportunity for the AFL to expand and one it can't afford not to take.

In the interest of whom?

In the interest of Australian Football and the Clubs that make up the AFL competition, NSW and Queensland are very important for the long-term viabilty of the game and the league. It is time to add some redundancy into the system in NSW and Queensland, the new teams will increase the exposure of the sport and make it so that the Australian Football north of the Barrassi line isn't tied to the fortunes of just 2 teams that can't afford to drop too far down the ladder.

[markp]

Ego comes first for AD (money second).... I'd be surprised if there was any scaling back of plans.

[degruch]

Great article from a respected source using an intellegent argument.

But the question always is and remains: will Demetriou and his floggers actually ever listen?

Gold Coast is not worth bothering about for at least 5 years now you'd think.....they may as well scrap West Sydney and look again at the Tassie option...I'd hate to see a bye in the comp....better to bring in two teams in the one season, so they are on equal footing.

How does this effect St Kilda?

Well, we need to do everything possible to hold onto Jeld Wen/a major sponsor, try and make a small profit in 2009, and keep pushing the AFL for a better stadium deal, be it at the Dome or MCG - whatever gives us the best return.

And fudging facts and figures to make his point.

Brisbane still made an operating profit, there loss was just an accounting write down and has nothing to do with the health of the club as a whole.

Port Adelaide have only made 2-3 losses since they joined the league and they had a s*** season this year.

"normal" businesses do incredibly stupid things all the time mostly due to short term thinking and to appease fickle stock markets.

The AFL isn't a "normal" business, it doesn't and should act like one. The financial crisis is actually a golden opportunity for the AFL to expand and one it can't afford not to take.

Yes, normal businesses can make VERY stupid decisions...ABC Learning anyone? However, I think his point in regard to funding is most interesting - the AFL's 100 million bucks (which they know they are going to lose, and keep losing in the near future) comes from clubs, generated from memberships that are sure to plummet this upcoming season.

Even if membership costs remained the same (yes, I know most are not Premium, so $900 ain't what Joe Bloggs with 4 kids working on the assembly line at Altona is going to spend), most families are going to start to feel the financial pinch after Christmas, and club memberships are sure to take a hit.

So, whatever short term loss the AFL thought they'd take over the Gold Coast, is going to take a long time to pay off...they'd better start scheming to hand GC17 a few premierships in a hurry!

As for the Saints, with a major investment in new facilities on the way, how long will it take us to recoup development losses, given that memberships are unlikely to increase this year? I hope there's a very good plan in place.

[rodgerfox]

The AFL isn't a "normal" business, it doesn't and should act like one. The financial crisis is actually a golden opportunity for the AFL to expand and one it can't afford not to take.

In the interest of whom?

In the interest of Australian Football and the Clubs that make up the AFL competition, NSW and Queensland are very important for the long-term viabilty of the game and the league. It is time to add some redundancy into the system in NSW and Queensland, the new teams will increase the exposure of the sport and make it so that the Australian Football north of the Barrassi line isn't tied to the fortunes of just 2 teams that can't afford to drop too far down the ladder.

I'd far prefer it if the Saints played in a local comp at a suburban ground.

I'm far from convinced it's in anyone's interest other than those getting rich off the game.

[Ice Wolf]

The AFL isn't a "normal" business, it doesn't and should act like one. The financial crisis is actually a golden opportunity for the AFL to expand and one it can't afford not to take.

In the interest of whom?

In the interest of Australian Football and the Clubs that make up the AFL competition, NSW and Queensland are very important for the long-term viabilty of the game and the league. It is time to add some redundancy into the system in NSW and Queensland, the new teams will increase the exposure of the sport and make it so that the Australian Football north of the Barrassi line isn't tied to the fortunes of just 2 teams that can't afford to drop too far down the ladder.

I'd far prefer it if the Saints played in a local comp at a suburban ground.

I'm far from convinced it's in anyone's interest other than those getting rich off the game.

Then in your opinion we should never have jumped ship with the other 7 and formed the VFL

[duckduckduckgoose]

The AFL isn't a "normal" business, it doesn't and should act like one. The financial crisis is actually a golden opportunity for the AFL to expand and one it can't afford not to take.

In the interest of whom?

In the interest of Australian Football and the Clubs that make up the AFL competition, NSW and Queensland are very important for the long-term viabilty of the game and the league. It is time to add some redundancy into the system in NSW and Queensland, the new teams will increase the exposure of the sport and make it so that the Australian Football north of the Barrassi line isn't tied to the fortunes of just 2 teams that can't afford to drop too far down the ladder.

I'd far prefer it if the Saints played in a local comp at a suburban ground.

I'm far from convinced it's in anyone's interest other than those getting rich off the game.

How many suburban grounds do you know of that can accomodate 40,000 fans?
Without the risk of stands collapsing and people getting killed such as what happens in the subcontinent and south america?

I usually agree with your point of view rog, but i think your way off there.

Bigger stadiums= more people get to see the game.

[marksnsparks]

Football is run from TV money plain and simple. Attendances don't matter, and to a lesser degree memberships...AFL is always there to bail clubs out if needed....(unless they want you to piss off out of Melbourne!)

[BackFromUSA]

A quick point ... membership and social club memberships are retained by the club (less servicing costs) and NOT passed onto the AFL. Clubs just get a small share of tickets purchased at the date, the balance going to the stadium and AFL as the stadium hirer. Seat sales are also split revenue.

Having said that ... Tasmania should be added before Western Sydney.

There is no way Western Sydney will gain local support and will take 20+ years to even get a foothold ... basically todays kids turning into adults.

AFL Clubs take $25 million to operate and I can see Western Sydney costing $15m + to operate in the first 10 years.

One Sydney club is enough. An intercity rivalry will not work in Sydney as it is actually already 4 cities rolled into one - north, west, south and central / eastern suburbs.

If Gold Coast will cost $100 million to establish, I think Western Sydney will take double that OR more!

Gold Coast and Tasmania should be admitted simultaneously.

A Darwin and Canberra club should then be added.

It should then be split into two conferences (not divisions) to minimise travel during the year - with 18 rounds (10 games per round - 5 in each conference) which lessens the impact on players but delivers 180 games in a season (176 currently) and then the top 5 in each division play off in a 4 week conference final series and the top team from each division then play the Grand Final in a fifth week of the final series.

[Ice Wolf]

A quick point ... membership and social club memberships are retained by the club (less servicing costs) and NOT passed onto the AFL. Clubs just get a small share of tickets purchased at the date, the balance going to the stadium and AFL as the stadium hirer. Seat sales are also split revenue.

Having said that ... Tasmania should be added before Western Sydney.

There is no way Western Sydney will gain local support and will take 20+ years to even get a foothold ... basically todays kids turning into adults.

AFL Clubs take $25 million to operate and I can see Western Sydney costing $15m + to operate in the first 10 years.

One Sydney club is enough. An intercity rivalry will not work in Sydney as it is actually already 4 cities rolled into one - north, west, south and central / eastern suburbs.

If Gold Coast will cost $100 million to establish, I think Western Sydney will take double that OR more!

Gold Coast and Tasmania should be admitted simultaneously.

A Darwin and Canberra club should then be added.

It should then be split into two conferences (not divisions) to minimise travel during the year - with 18 rounds (10 games per round - 5 in each conference) which lessens the impact on players but delivers 180 games in a season (176 currently) and then the top 5 in each division play off in a 4 week conference final series and the top team from each division then play the Grand Final in a fifth week of the final series.

Those last 2 things would never work, there isn't the population or money to sustain it, Darwin has a smaller population the Tasmania. You think Western Sydney is a stupid move and then suggest something far more ridiculous.

[stevos2009]

who cares

[BackFromUSA]

Darwin has many more footy fans than West Sydney AND has a number of very large government sponsorship opportunities ... State tourism, the defense forces and it is in my mind 100% certain that the Federal Governemnt would tip in millions as a major sponsor to run aboriginal health programs via an AFL club there. Darwin has a much better chance of gaining Federal and State funding for a suitable stadium and facilities too.

It's not about population it is about FANS and FUNDING.

[jays]

really who cares should be vic only sport

[Mr X from the West]

The AFL isn't a "normal" business, it doesn't and should act like one. The financial crisis is actually a golden opportunity for the AFL to expand and one it can't afford not to take.

In the interest of whom?

In the interest of Australian Football and the Clubs that make up the AFL competition, NSW and Queensland are very important for the long-term viabilty of the game and the league. It is time to add some redundancy into the system in NSW and Queensland, the new teams will increase the exposure of the sport and make it so that the Australian Football north of the Barrassi line isn't tied to the fortunes of just 2 teams that can't afford to drop too far down the ladder.

I'd far prefer it if the Saints played in a local comp at a suburban ground.

I'm far from convinced it's in anyone's interest other than those getting rich off the game.

I'm with you on this Roger.....give me grass roots footy and I'm happy.

[saintspremiers]

The AFL isn't a "normal" business, it doesn't and should act like one. The financial crisis is actually a golden opportunity for the AFL to expand and one it can't afford not to take.

In the interest of whom?

In the interest of Australian Football and the Clubs that make up the AFL competition, NSW and Queensland are very important for the long-term viabilty of the game and the league. It is time to add some redundancy into the system in NSW and Queensland, the new teams will increase the exposure of the sport and make it so that the Australian Football north of the Barrassi line isn't tied to the fortunes of just 2 teams that can't afford to drop too far down the ladder.

I'd far prefer it if the Saints played in a local comp at a suburban ground.

I'm far from convinced it's in anyone's interest other than those getting rich off the game.

I'm with you on this Roger.....give me grass roots footy and I'm happy.

Well our Magoos for at least the next 5 years are Sandy.

That's as good as you can get, aside from a Saints VFL playing at Moorabbin!

[Mr X from the West]

The AFL isn't a "normal" business, it doesn't and should act like one. The financial crisis is actually a golden opportunity for the AFL to expand and one it can't afford not to take.

In the interest of whom?

In the interest of Australian Football and the Clubs that make up the AFL competition, NSW and Queensland are very important for the long-term viabilty of the game and the league. It is time to add some redundancy into the system in NSW and Queensland, the new teams will increase the exposure of the sport and make it so that the Australian Football north of the Barrassi line isn't tied to the fortunes of just 2 teams that can't afford to drop too far down the ladder.

I'd far prefer it if the Saints played in a local comp at a suburban ground.

I'm far from convinced it's in anyone's interest other than those getting rich off the game.

I'm with you on this Roger.....give me grass roots footy and I'm happy.

Well our Magoos for at least the next 5 years are Sandy.

That's as good as you can get, aside from a Saints VFL playing at Moorabbin!

Suits me - when you live interstate and have to put up with all of the anti-Victorian football crap that goes on you just long for some suburban footy (which is why, more often than not, I go to WAFL games).