Why is the AFL never going to be truly equal?

[Rob]

Its supply and demand. Victorian football supporters can elect to go to any of 110 or so matches throughout the year, as opposed to 22 in any of the other states. More matches = more supply = cheaper prices.

The clubs that bring in the big crowds are what brings in the money if you are a victorian club. So North, St Kilda, Melbourne and the Bulldogs need to get home games against the likes of Collingwood, Essendon, Carlton and Richmond - which currently isnt possible under the guaranteed blockbuster system. You dont make money playing Fremantle or Port Adelaide in Melbourne, which is why Hawthorn and North play those games in tasmania where they are paid to play, and Melbourne and the Dees play Port in Darwin where they get paid to play.

I don't disagree with any of that - although I doubt too many people would choose to go and see another club solely on the basis of price. People go mainly because they support one of the competing teams, the number of genuine neutrals that aren't AFL or MCC members would be insignificant to most matches.

So if you're a small Victorian club, come up with a model that could work long term. You can't seriously expect favourable fixturing every year as a solution. And even then, it's no panacea. See North Melbourne in 2009. Possibly the greatest fixture commercially possible. Home games against Hawthorn, Essendon, Richmond, Collingwood, St Kilda (when they were good) and Carlton. Their operating profit (inclusive of additional AFL funding of $1.4 million) was about $60k. So even with the massive fixture and AFL assistance, they still could only break even.

Heres the important part though, there really is no such thing as a handout from the AFL. The Clubs generate ALL the income, and theoretically are entitled to all the proceeds thereof. Quite frankly Im amazed that theres any funding for lower leagues at all.

You're half right. Clubs do indeed generate the AFL's income, but if you assume all clubs are equal, then all clubs have a right to 1/18th share of that income.
But if some clubs get more of a share of that income than others, then that's a handout. And it comes from the hands of other clubs. But the major problem is that it's not necessarily sustainable. It's fine whilst the sun is shining on the AFL, but if there comes a time that the TV rights deal doesn't come in what was anticipated and the league is going to have to cut costs. And it's that discretionary assistance that will be first in the firing line, and because AFL distributions haven't been equal, other clubs, which wouldn't ordinarily be needing assistance, require it to stay afloat and are now in trouble as well. It's no co-incidence that the number of clubs requiring more than the basic AFL distribution has been consistently going up since the AFL introduced the concept 10-15 years ago.

I don't have a problem with funding for lower leagues, as long as it goes to player development. Money that just ends up in the pockets of 2nd rate players is a waste of resources. Which is why the AFL are so keen to restructure SA footy. SANFL rips money out of AFL clubs to pay for excessive SANFL salary cap, SA AFL clubs struggle financially so go cap in hand to AFL. You can understand why the AFL are hesitant to hand over a blank cheque.

 

[Rob]

Theres no reason the Robin Hood model cant work long term.

The reason is staring you in the face. If you ignore the idea that the league may not always have the money to do so, The AFL has removed a lot of the accountability involved with running football clubs. The number of clubs requiring this financial assistance just keeps going up because clubs are prepared to spend knowing full well the AFL will just bail them out. Not just that, but the level of assistance keeps going up as well. Clubs that were getting $1 million a few years ago are now getting well north of $2 million a year.

Eventually the bubble will burst. Might be in 10, 20, 30 years but you can't just keep continually injecting more and more money in after creating a culture where clubs think there is a bottomless pit of funds available.

I think the AFL know it too, that's why they have started talking in the last couple of years about using special distributions for the purpose of building a base for the future.

The problem being that when clubs have the choice in using the money to try and win premierships now or investing for later, they are always going to pick the former because that's what members want to hear. And that's what's happening - to the extent now that some clubs actually boast about how their football department spend has gone up by $X million. There's little to no investment in the future going on at club level, outside of cheap rhetoric about how a club might be targeting a certain area.

 

[Timmy from Thomastown]

Eventually the bubble will burst. Might be in 10, 20, 30 years but you can't just keep continually injecting more and more money in after creating a culture where clubs think there is a bottomless pit of funds available.

The size of the wealth pool will go up and down over time but the rich clubs can still subsidise the poor. There will just be less to distribute and luxuries will be cut back.

 

[madmug]

Theres no reason the Robin Hood model cant work long term.

Except that it can lead to laziness & the classic 'cargo cult' mentality with the expectation of handouts. In the end the AFL need to ensure that clubs are as efficient as possible.
Again part of the argument is, do we have too many clubs in one place? Can we spread AFL Licenses to better cover the Australian market? Would that make the competition better balanced?

 

[Demonic Ascent]

Except that it can lead to laziness & the classic 'cargo cult' mentality with the expectation of handouts. In the end the AFL need to ensure that clubs are as efficient as possible.
Again part of the argument is, do we have too many clubs in one place? Can we spread AFL Licenses to better cover the Australian market? Would that make the competition better balanced?

Probably not because even the smaller Vic clubs will make just as much if not more money than one based in Tassie.

 

[madmug]

Probably not because even the smaller Vic clubs will make just as much if not more money than one based in Tassie.

Probably true. However we have two relatively inexpensive cleanskin stadiums to utilise & a very keen government who see the tourism benefits of having more than just the usual few teams come here & play. I think it would go just fine. Certainly it would be easier to run than fighting other clubs in the same market.

 

[Demonic Ascent]

Probably true. However we have two relatively inexpensive cleanskin stadiums to utilise & a very keen government who see the tourism benefits of having more than just the usual few teams come here & play. I think it would go just fine. Certainly it would be easier to run than fighting other clubs in the same market.

Don't get me wrong I'm not saying a club in Tassie couldn't work or that there shouldn't be one. I'm all for it given teright circumstances. It's just that I don't think it would add any financial value to the comp and could actually reduce the value if a Vic club had to make place for it.

 

[Rob]

The size of the wealth pool will go up and down over time but the rich clubs can still subsidise the poor. There will just be less to distribute and luxuries will be cut back.

So let's imagine the scenario. Next TV deal comes in 20% lower than the AFL (and the clubs) anticipated. Given clubs plan costs years in advance, they're going to find it incredibly hard to make sudden reductions in costs immediately. But the AFL has told them that collectively, they are now going to receive a lot less in money - let's say $36m (i.e $2m per club).
Now look at the impact on the 3 groups of clubs.

Poorest 1/3rd: Now in deep shit. Can not afford to lose millions in revenue. You suggest that they are given that money by the league. This has to be taken away from other clubs already reeling from a $2m cut.

Richest 1/3rd: Unlikely to be that massive, a drop of couple of million in revenue would swallow up their profit, but cash reserves will likely get them through without much by way of spending cuts. Would be opposed to any further drop of distribution outside the cut given to all clubs as it could put them into a loss scenario. If you cut it by an extra couple of million per club and give it to the poorest 1/3rd, they are then in trouble. They aren't going to allow that quietly, because it's going to affect their football spending - after all, they're trying to win flags.

Middle 1/3rd: This is where your plan really hits the rocks. Some of these clubs currently require small annual distributions to be competitive. A $2m drop in income and they are then in a bit of strife, and if they get asked to subsidise the poorest 1/3rd they are then in serious strife. These are the clubs that will decide the fate of the poorest 1/3rd, and I reckon they're going to hang them out to dry. They are clubs that really should be in a solid financial position, but because of past AFL policy and their (understandable) desire to pump all their resources into the football department, they're the ones that could be in trouble in the future. And they shouldn't be.

The AFL then is put in an interesting position - with 2/3rds of clubs up in arms about distributions, and the other 1/3rd claiming they need the extra money or they'll go out of business. It's hard to see them going against a large majority of clubs when the issue is so important, and that could result in clubs folding.

Your answer will probably be that clubs should just cut back on costs. The idea that clubs can just suddenly cut back on expenditure is highly problematic. Clubs have forward contracts that go forward for years, and in any case, they exist to win premierships. Current experience is that clubs simply hate the idea - like I said, clubs actually see how much they're spending as a matter of pride. Even the poorest clubs love to crap on about how much they're increasing spending on their football department, even if the responsible thing to do financially is to reduce, or at least freeze spending.

The question i'd have for you is that if it's so easy to cut back on 'luxuries' as you put them, why not force clubs to do that now? Why maintain the incentive to do the opposite?

 

[Kwality]

Hopefully the AFL will see any reduced value in TV rights coming & act early to address the effect.

Clubs without a sustainable business model will be in the gun requiring as they do, AFL guarantees to trade even today.

 

[madmug]

Don't get me wrong I'm not saying a club in Tassie couldn't work or that there shouldn't be one. I'm all for it given teright circumstances. It's just that I don't think it would add any financial value to the comp and could actually reduce the value if a Vic club had to make place for it.

I guess it depends on your definition of value in relation to the benefit of the competition, or indeed the game of Aussie rules itself. Not rehash previous arguments but I do find it pretty poor that Tasmania cant get a team in an 18 club national competition. The question could be asked, is the AFL a competition with a 'national' focus, or just a life support system for old VFL clubs?

 

[Kwality]

I guess it depends on your definition of value in relation to the benefit of the competition, or indeed the game of Aussie rules itself. Not rehash previous arguments but I do find it pretty poor that Tasmania cant get a team in an 18 club national competition. The question could be asked, is the AFL a competition with a 'national' focus, or just a life support system for old VFL clubs?

The right question indeed, but we are where we are, with no appetite for hard decisions ... .... and many oppose change of any nature.

 

[Papa G]

The right question indeed, but we are where we are, with no appetite for hard decisions ... .... and many oppose change of any nature.

The hard decisions needed to be made before GC and GWS came in. It is now nigh on impossible to justify culling any legacy Vic teams.

 

[The_Wookie]

The hard decisions needed to be made before GC and GWS came in. It is now nigh on impossible to justify culling any legacy Vic teams.

Don't leave your club out of this discussion either. Two of the biggest financial basket cases of our current time are the Lions and Power. Adelaide arent exactly going gangbusters either. Regardless of whether the SANFL can be partially blamed. While we're at it, the Swans do not consistently make profits either, varying from small profits, to losses year after year. But sure lets blame it all on the nasty Victorians.

The facts remains, the league generates 400+ million a year, the majority of that a result of Victorian participation in the league. anyway you look at this, the majority of crowds, memberships, sponsorship, and the mother of them all, tv ratings, are driven by Victorians. Which should make the question really, COULD the AFL have a national focus without the former VFL clubs?

In the 90s when the league had bugger all money, it was almost possible to rationalise the reduction of sides in Victoria, with the league making hundreds of millions of dollars before distributions, NO club should be going to the wall. Even without TV rights, the league generates 200 million a year. [Note: The entire income of the AFL, tv rights included, in 1996 was $74.275 million.]

 

[Kwality]

A national comp with 18 teams, 8 in 4 states, 10 in one state & a looney tunes contribution is to attack the 2 clubs in Adelaide - clear thinker that man !!

 

[The_Wookie]

A national comp with 18 teams, 8 in 4 states, 10 in one state & a looney tunes contribution is to attack the 2 clubs in Adelaide - clear thinker that man !!

Right i forgot that financial problems are really only financial problems if they affect Victorian clubs.

if you cant contribute sensibly, stay out of the thread. And this is not the first time you've chosen to play the man in this thread, don't do it again.

 

[Rob]

Don't leave your club out of this discussion either. Two of the biggest financial basket cases of our current time are the Lions and Power. Adelaide arent exactly going gangbusters either. Regardless of whether the SANFL can be partially blamed. While we're at it, the Swans do not consistently make profits either, varying from small profits, to losses year after year. But sure lets blame it all on the nasty Victorians.

Don't tell half the story Wookie. The Lions (post merger) and Power up until a few years ago had received zero funding from the CBF, ASD or whatever it happened to be called over the years.

Who knows, if all those annual millions in assistance given to 3 clubs in particular had been distributed evenly across all clubs then its entirely possible the Lions and Power may never have needed any assistance from the AFL in the first place. At the very least, they certainly wouldn't have been the financial basketcases that they were.

The Swans I put in the basket of clubs that deliberately overspend knowing full well the AFL will bail them out if they get into trouble.

 

[The_Wookie]

Don't tell half the story Wookie. The Lions (post merger) and Power up until a few years ago had received zero funding from the CBF, ASD or whatever it happened to be called over the years.

Who knows, if all those annual millions in assistance given to 3 clubs in particular had been distributed evenly across all clubs then its entirely possible the Lions and Power may never have needed any assistance from the AFL in the first place. At the very least, they certainly wouldn't have been the financial basketcases that they were.

The Swans I put in the basket of clubs that deliberately overspend knowing full well the AFL will bail them out if they get into trouble.

They werent basket cases until a few years ago either.

Port were quite happily making money until a few years ago when they started going back down the ladder at the same time as the SANFL were ripping them off. Ports position is entirely South Australian in the making. And so is Adelaides. Brisbane turned a 3 million dollar profit 5 years ago, and has gone down hill since it began building its pokie palace - and that coincided with a downturn in both form and support.

Further, West Australian and South Australian teams knew the deal when they joined. That is, additional funding from the AFL would not be forthcoming if profits were returned to the league instead of keeping their clubs operating. The AFL was NEVER intended as a means to prop up state leagues which iswhy most of the operating profit is returned to the clubs, its also the reason why the SA and WA clubs recieve so little in the disequal funding and other competitive balance funds, and why the league is currently negotiating for the return of those licenses.

 

[Rob]

They werent basket cases until a few years ago either.

Port were quite happily making money until a few years ago when they started going back down the ladder at the same time as the SANFL were ripping them off. Ports position is entirely South Australian in the making. And so is Adelaides. Brisbane turned a 3 million dollar profit 5 years ago, and has gone down hill since it began building its pokie palace - and that coincided with a downturn in both form and support.

Oh, I know why both clubs went downhill financially. Port was because crowds took a massive slide. Turns out Port supporters don't like supporting losers. And sponsors don't like supporting teams with no supporters.

With Brisbane it was a combination of a drop in crowds and membership and some poor/unlucky financial decisions. I believe they lost a couple of million with the Lehman Brothers collapse. They had about 7 million in cash reserves 10 years ago and were one of the financial powerhouses of the league.

Further, West Australian and South Australian teams knew the deal when they joined. That is, additional funding from the AFL would not be forthcoming if profits were returned to the league instead of keeping their clubs operating. The AFL was NEVER intended as a means to prop up state leagues which iswhy most of the operating profit is returned to the clubs, its also the reason why the SA and WA clubs recieve so little in the disequal funding and other competitive balance funds, and why the league is currently negotiating for the return of those licenses.

Actually, at the time all WA and SA clubs joined up there was no policy of propping up clubs long term. Port were arguably a beneficiary of this policy given who they replaced in the league.

 

[The_Wookie]

Actually, at the time all WA and SA clubs joined up there was no policy of propping up clubs long term. Port were arguably a beneficiary of this policy given who they replaced in the league.

Thats because until the Demetriou era the league didnt have the money to justify the existence of all clubs. Since the 1999 deals were signed the leagues tv rights revenue jumped massively.

Oakley used license fees, and the 30 million dollar seven deal signed at the end of 1987 to bail out several technically broke clubs, then he and Jackson set out to reduce the clubs themselves, while introducing the very means that others would use to financially cripple clubs - ground rationalisation, maintaining a 22 round, single division competition, guaranteeing blockbusters to big clubs, pursuing the dollar instead of equality. They pushed several mergers and entirely destroyed Fitzroy as an AFL identity in the process.

 

[Rob]

Thats because until the Demetriou era the league didnt have the money to justify the existence of all clubs. Since the 1999 deals were signed the leagues tv rights revenue jumped massively.

Oakley used license fees, and the 30 million dollar seven deal signed at the end of 1987 to bail out several technically broke clubs, then he and Jackson set out to reduce the clubs themselves, while introducing the very means that others would use to financially cripple clubs - ground rationalisation, maintaining a 22 round, single division competition, guaranteeing blockbusters to big clubs, pursuing the dollar instead of equality.

You don't seriously believe ground rationalisation financially cripples clubs? It gives clubs in Melbourne access to world class stadia in central locations cheaply. Unless there was a government policy of funding suburban grounds and leasing them back for very little (Geelong style) there was no possible way any (small) club could exist having to maintain their own ground. The capital costs alone would kill them.

 

[The_Wookie]

You don't seriously believe ground rationalisation financially cripples clubs? It gives clubs in Melbourne access to world class stadia in central locations cheaply. Unless there was a government policy of funding suburban grounds and leasing them back for very little (Geelong style) there was no possible way any (small) club could exist having to maintain their own ground. The capital costs alone would kill them.

except for numerous clubs who have said its not cheap. And Geelong who freaking love their own stadium (and reports suggest the Suns as well as the Hawks in Launceston). Also Melbourne clubs already had access to the MCG for bigger matches. Clubs were forced to waverly which was crap for most, and then to Docklands which hasnt exactly been the land of milk and honey.

 

[Rob]

except for numerous clubs who have said its not cheap.

Beats blaming the management of the club for your own financial problems.
Cheapest tickets in Australia and they blame excessive costs as to why they can't make money. I mean really.....

And Geelong who freaking love their own stadium (and reports suggest the Suns as well as the Hawks in Launceston). Also Melbourne clubs already had access to the MCG for bigger matches. Clubs were forced to waverly which was crap for most, and then to Docklands which hasnt exactly been the land of milk and honey.

Geelong was paid for predominantly by the government and they have a sweetheart deal. As do the Suns (the fact it's a ground used for other events helps as well given it's the major stadium on the Gold Coast along with Skilled Park). The council would undoubtedly be favourable to them as well.
Melbourne suburban councils don't want AFL stadiums in their area. And the Victorian government doesn't want to fund them. Given that, you're dreaming if you think a small club could get a Geelong like deal. Good luck to them if they want to try though. The fact they haven't tends to indicate they know what side their bread is buttered. Much better idea to just bitch and moan about existing arrangements, you can't be proven wrong then. Optus Oval nearly sent Carlton broke, and they're a big club in Melbourne. And they had other clubs playing there.

I'll guarantee you one thing - whatever crowd a game draws at Docklands, it would be much much lower at a suburban ground.

 

[The_Wookie]

Optus Oval nearly sent Carlton broke, and they're a big club in Melbourne. And they had other clubs playing there.

Actually thats a far too simplistic version of what happened. Building the Legends stand with AFL commitments to scheduling which turned out not so firm once the holy grail of docklands was apparent almost sent Carlton broke, and by the time the legends stand no non carlton games were being played at the ground.

 

[Papa G]

Actually thats a far too simplistic version of what happened. Building the Legends stand with AFL commitments to scheduling which turned out not so firm once the holy grail of docklands was apparent almost sent Carlton broke, and by the time the legends stand no non carlton games were being played at the ground.

Even when other teams played at Optus Oval nobody rocked up as most fans of opposition clubs hated the ground, so you explanation is also a bit simplistic.

 

[The_Wookie]

Even when other teams played at Optus Oval nobody rocked up as most fans of opposition clubs hated the ground, so you explanation is also a bit simplistic.

given we're talking about the period after the legends stand was built, thats utterly irrelevant to the quote