The new AFL equalisation tax - harmful or helpful ?

[vjknight]

details were revealed today - and honestly i am amazed there isnt a thread already.

http://www.theage.com.au/afl/afl-news/afl-luxury-tax-aims-to-keep-footy-fair-20140604-zrxs2.html

With a goal to ensure "any team can win on any given day", the league will introduce a luxury tax on exorbitant football department spending, end the veterans and cost of living allowances but increase player wages.
"At the heart of these measures is the fans' experience. A determination to ensure each club has the on-field capacity to compete and potentially win each week," AFL chairman Mike Fitzpatrick said.
The tax works by setting a "soft cap" at the "projected industry average spend plus $500,000" in 2015 and increase according to inflation in 2016.
Clubs exceeding the limit will be taxed by the AFL at 37.5 per cent in 2015 and 75 per cent in 2016, to a maximum of $1 million each.
While players will see increased payments, Sydney-based players will lose the controversial cost of living allowance, with below-average waged players receiving a direct rental subsidy.
The on-field salary cap will be upped to $10.07m in 2015 and $10.37m in 2016. In 2017, the veterans allowance will be scrapped.
The AFL will also introduce a new "banking mechanism" for the salary cap, allowing clubs to exceed the cap for a season if they spent below the limit in any of the preceding two years.


from where i sit if it keeps all current 18 clubs on the park every week then i am all for it.

of particular interest are the changes to salary cap, and how the changes will assist us/hinder us into the future.

thoughts ?

 

[MightyPies1]

Not helpful.

 

[sirlothie]

I think it's a token measure to appease the smaller sides, but bigger sides having it capped effectively ended it as an off-field equalisation measure as to some clubs a $1 mill luxury tax won't break the bank, we will still spend just as much as we want to. Happy for struggling clubs to have our poo change.

The greatest issue at the moment is the stadium deal at Etihad, poor old St Kilda, Bulldogs and North have been roped into playing there by the AFL to satisfy the stadium agreement despite not being contractually obliged to do so themselves. The returns offered to clubs for playing at Etihad are abysmal.

To put it into perspective, last year St Kilda made us much in 8 games at Etihad as they did in 2 games at the MCG. They made the same amount in 1 game in New Zealand!

You can see why they are pissed off and coupled with poorer memberships and the current deal in effect until 2025, what chance do they really have?

This is the one burning issue that is threatening to send these clubs up against the wall. The AFL are sympathetic and as such will implement a raft of measures to help a little bit, but really until the AFL owns Etihad these clubs' futures might be at risk.

There is no easy way out and I believe the AFL have tried to purchase the stadium early, but the ground is operated by 5 superannuation companies who refuse to sell knowing there is greater return in keeping it.

How Gillon McLachlan and co. handle this will play a large part in his legacy.

 

[TradeDraft]

Just keeping the Poor Sides alive.

Fitzroy wished they had this

 

[MagpieJoel]

If the AFL are going to prop up the crap clubs, then we should stop all support we provide directly to them. ie. Queen's Birthday.

 

[MagpieJoel]

There is no easy way out and I believe the AFL have tried to purchase the stadium early, but the ground is operated by 5 superannuation companies who refuse to sell knowing there is greater return in keeping it.

The AFL have the right to purchase it for a $1 in 2025. What I would find interesting is how much the AFL would offer versus how much these investors are actually making on an annual basis until then.

 

[SpongePie]

The AFL have the right to purchase it for a $1 in 2025. What I would find interesting is how much the AFL would offer versus how much these investors are actually making on an annual basis until then.

Would not pay more than 50c.

 

[DaicosianMarvels]

Don't like it at all.

Clubs like Melbourne, WB and North should fold. They are nothing clubs, you go to their games and you find yourself yawning mid game because it's boring, there is no atmosphere. They have no fans!

These clubs always enjoy bagging Collingwood, but they are like when a child tells their parents your not the boss of me but 20 minutes later runs back to them asking for $20 to go the movies.

We never use to have a home game against the Dogs up until last year and even our home games against them are played at their ground. As for Melbourne, it was our idea that every year the Queens birthday game will beMelbourne's home game.

What more do they bloody want! Now there is a cap on our spending just to keep these bums in the league, this is communism at it's best.

 

[SpongePie]

Don't like it at all.

Clubs like Melbourne, WB and North should fold. They are nothing clubs, you go to their games and you find yourself yawning mid game because it's boring, there is no atmosphere. They have no fans!

These clubs always enjoy bagging Collingwood, but they are like when a child tells their parents your not the boss of me but 20 minutes later runs back to them asking for $20 to go the movies.

We never use to have a home game against the Dogs up until last year and even our home games against them are played at their ground. As for Melbourne, it was our idea that every year the Queens birthday game will beMelbourne's home game.

What more do they bloody want! Now there is a cap on our spending just to keep these bums in the league, this is communism at it's best.

While I dont think they should fold, you make some great points IMO.

I always love the "Collingwood should get ANZAC day because they dont need it"... yeah right, because we all know that WB vs North will get 90+k at the 'G.

 

[Wokko]

Why buy a membership when the money goes to other clubs? May as well go on the AFL dole.

 

[Scodog10]

Positive for us. Not so good if you're a middle rung club.

My personal favourite measure was the soft salary cap. I think the league has inadvertently given clubs like ours and Hawthorn a leg up in the short term, but in the long term it will work against a club like Sydney.

Under the new measures if a club pays below 100% of the cap in a given year they can go over the cap the year following. We would not be paying 100% in 2014 so will be able to go over the cap by a set amount in 2015 giving us greater scope to bring in a FA.

It's a smart measure because the best run clubs financially will be able to juggle contracts and seemingly bring in new big names every few years as long as they aren't on mega long deals. It feeds into what Eddie has been preaching that clubs need to be run smarter not just have money thrown at them.

 

[Seedsfan]

Such a joke, why should we have to give 1.3 mil to help other clubs, the AFL makes billions they should fund equalization

 

[TradeDraft]

Don't like it at all.

Clubs like Melbourne, WB and North should fold. They are nothing clubs, you go to their games and you find yourself yawning mid game because it's boring, there is no atmosphere. They have no fans!

These clubs always enjoy bagging Collingwood, but they are like when a child tells their parents your not the boss of me but 20 minutes later runs back to them asking for $20 to go the movies.

We never use to have a home game against the Dogs up until last year and even our home games against them are played at their ground. As for Melbourne, it was our idea that every year the Queens birthday game will beMelbourne's home game.

What more do they bloody want! Now there is a cap on our spending just to keep these bums in the league, this is communism at it's best.

Dees Fans be at the Snow Now

 

[sirlothie]

I didn't realise leftover cap could be used in following years, that's great news! We could be building a war chest!

 

[jonbe54]

I've been down this road before on quite a few related threads.

1. Throwing money at clubs with insufficient assurances of targetted spending to be sure of actually improving the basic structure of the club so that they can attract more fans and hold onto them is p1ssing into the wind and a certain fail.

2. We are seeing the results of 'welfare' minded clubs now where certain once great clubs runs to the AFL every time things go wrong and expects a handout to help them through.

3. It's not handouts we need but handups.

For those unsure of my last point I'll elucidate.

Give a man a fish and feed him for a day - teach a man to fish and he will feed himself for a lifetime.

Same with the clubs, help them build facilities and management structures to attract fans and quality players and they will be able to stand on their own two feet in the future.

OR

Prop them up with welfare top ups sourced from the rich few and build a welfare minded sub competition deeper and more dependent than it is now.

BECAUSE TWO THINGS ARE CERTAIN

1. The clubs will find a way of throwing it at players in a short sighted grab for an instant fix

2. The AFL is totally incapable of drafting rules to stop the above.

 

[sirlothie]

There are obviously too many clubs in Melbourne for a national competition. I'd like to see one relocate to Tasmania and another two merge. Simply throwing cash at a problem is not going to make it go away. This is not new, St Kilda, Bulldogs, Melbourne, North to an extent apart from flags have been unable to carry their own weight for decades. Sentimentality is nice but is holding the league back now. A good mate of mine was a big Fitzroy fan, he was shattered for a year but then he got over it somewhat and starting going for Brisbane and experienced what most of us would sell our mothers to see - 3 consecutive premierships.

And lifetime bragging rights over me.

 

[jonbe54]

There are obviously too many clubs in Melbourne for a national competition. I'd like to see one relocate to Tasmania and another two merge. Simply throwing cash at a problem is not going to make it go away. This is not new, St Kilda, Bulldogs, Melbourne, North to an extent apart from flags have been unable to carry their own weight for decades. Sentimentality is nice but is holding the league back now. A good mate of mine was a big Fitzroy fan, he was shattered for a year but then he got over it somewhat and starting going for Brisbane and experienced what most of us would sell our mothers to see - 3 consecutive premierships.

And lifetime bragging rights over me.

Three consecutive premierships???????

Three donations from the AFL more like it

 

[Scodog10]

Such a joke, why should we have to give 1.3 mil to help other clubs, the AFL makes billions they should fund equalization

Lol no they don't. The AFL's total revenue in 2013 was $446 million which last I checked is a fair chunk of change short of billions!

The AFL pays the MCC $6.45 million each year. If the state government stepped in and flipped that bill that money would go to the equalization fund and these measures would be seriously watered down from the wet lettuce leaf they are to us.

I find it laughable that there is posters on here complaining. Our combined profits since 2010 have been in excess of $30 million ($20 million if you subtract the government grant) yet the most tax we would have paid in that period is $2 million. Compare that to a club like Richmond who have been in severe debt in that time frame and probably put together profits in the range of $5 million, but would have likely paid an equalization tax of close to $1 million in that time frame.

These measures are a token gesture and we should all bow down to Eddie in his efforts to keep these equalization measures as light on as they are!

 

[jonbe54]

Lol no they don't. The AFL's total revenue in 2013 was $446 million which last I checked is a fair chunk of change short of billions!

The AFL pays the MCC $6.45 million each year. If the state government stepped in and flipped that bill that money would go to the equalization fund and these measures would be seriously watered down from the wet lettuce leaf they are to us.

I find it laughable that there is posters on here complaining. Our combined profits since 2010 have been in excess of $30 million ($20 million if you subtract the government grant) yet the most tax we would have paid in that period is $2 million. Compare that to a club like Richmond who have been in severe debt in that time frame and probably put together profits in the range of $5 million, but would have likely paid an equalization tax of close to $1 million in that time frame.

These measures are a token gesture and we should all bow down to Eddie in his efforts to keep these equalization measures as light on as they are!

But they are not fixing the problem dog, far from it they are excaberating it.

It's gone from emergency handouts to mandatory handouts.

True it basically doesn't harm us on face value but it's undermining any remaining independence from those clubs who will come to rely on subsistance revenue from the AFL and continue on in their poorly run daydreams instead of being helped to stand on their own two feet.

 

[Seedsfan]

Lol no they don't. The AFL's total revenue in 2013 was $446 million which last I checked is a fair chunk of change short of billions!

The AFL pays the MCC $6.45 million each year. If the state government stepped in and flipped that bill that money would go to the equalization fund and these measures would be seriously watered down from the wet lettuce leaf they are to us.

I find it laughable that there is posters on here complaining. Our combined profits since 2010 have been in excess of $30 million ($20 million if you subtract the government grant) yet the most tax we would have paid in that period is $2 million. Compare that to a club like Richmond who have been in severe debt in that time frame and probably put together profits in the range of $5 million, but would have likely paid an equalization tax of close to $1 million in that time frame.

These measures are a token gesture and we should all bow down to Eddie in his efforts to keep these equalization measures as light on as they are!

Yeah they may not make 1 bill this year but they say the next TV rights will be worth 1.7 bill fund it with that money. Not money from the clubs

 

[Scodog10]

But they are not fixing the problem dog, far from it they are excaberating it.

It's gone from emergency handouts to mandatory handouts.

True it basically doesn't harm us on face value but it's undermining any remaining independence from those clubs who will come to rely on subsistance revenue from the AFL and continue on in their poorly run daydreams instead of being helped to stand on their own two feet.

From a monetary perspective we get a favourable fixture to compensate, have a strong deal with Etihad and are provided with 14 games at the MCG so you won't hear me complaining!

The solution to equalisation is to provide a clean fixture which encompasses set minimums on FTA coverage, access to Friday night and soon to be Thursday night fixtures plus acquiring ownership of Etihad. We aren't seeing those in any of our lifetimes (except the acquisition of Etihad) with the money required for GWS so I'm comfortable with them funding equalisation this way.

At the end of the day I view complaints from Collingwood supporters on this issue as equal to Kim Kardashian's demands for free s**t at her wedding! Yeah it would be fantastic if we could keep the ball rolling on our off-field edge, but these measures don't reduce the gap they just keep it at semi manageable levels to placate those involved with lower end clubs...

On a separate note I'm happy with mandatory handouts as long as they are means tested and there is an effort to have the best people in high positions. For example St Kilda were the bounce of a ball away from a premiership just 4 years ago and will be in excess of $10 million in debt by years end in no small part to decisions made along the way. Yes they should definitely qualify for assistance, but not to the level of say a club like the Bulldogs or Melbourne.

 

[Scodog10]

Yeah they may not make 1 bill this year but they say the next TV rights will be worth 1.7 bill fund it with that money. Not money from the clubs

That $1.7 billion is over 5 years (not that I think it's an attainable figure anyway unless they can find a place for SOO footy) so equates to $340 million a year.

Let's say the AFL pulls in $100 million in sponsorship and another $100 million from memberships, match day revenue and corporates plus $50 million in merchandise and other contributions that equates to yearly revenue of roughly $590 million which is still considerably short of billions.

Buying Etihad stadium, lowering the cost to attend matches for fans and further investment at grass roots level are far greater priorities for those funds anyway...

 

[Seedsfan]

That $1.7 billion is over 5 years (not that I think it's an attainable figure anyway unless they can find a place for SOO footy) so equates to $340 million a year.

Let's say the AFL pulls in $100 million in sponsorship and another $100 million from memberships, match day revenue and corporates plus $50 million in merchandise and other contributions that equates to yearly revenue of roughly $590 million which is still considerably short of billions.

Buying Etihad stadium, lowering the cost to attend matches for fans and further investment at grass roots level are far greater priorities for those funds anyway...

Either way we are both guessing, with 590 mil a year they could foot the bill instead of handballing the responsibility to others

 

[Scodog10]

Either way we are both guessing, with 590 mil a year they could foot the bill instead of handballing the responsibility to others

Speak for yourself. I'm using recorded figures and then adjusting for inflation.

http://m.afl.com.au/news/2014-03-04/afls-446m-record

http://mobile.news.com.au/finance/afl-announces-1bn-tv-rights-deal/story-e6frfm1i-1226046325694

The AFL currently receives circa $250 million pa from the broadcast deal. If the next agreement equals $1.7 billion that equates to roughly an extra $80-85 million a season plus inflation gets us to a figure of roughly $600 million.

Stating that the AFL can "foot the bill" when we make money hand over fist due to a good fixture from a monetary perspective is just selfish, IMO. I want what's best for Collingwood, but not at the expense of the overall health of the league and I would prefer the AFL spend money in other areas...

 

[Big Bryza]

I didn't realise leftover cap could be used in following years, that's great news! We could be building a war chest!

Yep save money where possible and have a crack at a FA. Also, if guys like Langdon, Seedsman, Frost, Williams, Thomas, Grundy, Witts, Adams etc all play well and continue to improve we'll have the coin to accommodate them too.