Financial survival of the AFL and its' 18 clubs

[ReaperX]

Richmond CEO outlines the “big” figure clubs stand to lose due to empty stadiums

“You extrapolate that and it’s a big number.”

www.sen.com.au

“It’s hard (to predict) an average - it does really depend on club to club. It’s an impossible exercise because we don’t know the impact of this at this stage,” he said on SEN.

“We don’t know how long we’ll be playing games without crowds. Simple maths, if you look at our game on Thursday night we’d probably expect a crowd of around 90,000.

“A crowd of high 80s, 90,000, would probably return a gate of $1.2 to $1.4 million. That’s one game.

“You extrapolate that and it’s a big number.”

We've all been focused (and rightly so) on the health crisis that is currently in-front of us as a society, however at some point in time, whether it be weeks/months/etc, things WILL return to normal.

When this happens, the world will be left to count the cost of this virus from a financial perspective, and the true scope of the damage will start to come forward. It is something that is, at this point, already inevitable, and the impact will be felt across every single industry that involves finance, which is pretty much everything we know in this world.

My question is this... with a recent article detailing the NRL's "runway" of funds being only able to realistically cover that league for approximately 3 months if there was a suspension of the league, will the AFL or its' clubs ever find themselves in a similar position, should this carry on for many more months into the future, or the season needed to be called off entirely?

And more specifically, how will this financial impact be felt by some of the "poorer" clubs in the league?

Could this virus potentially signal the end of our 18 team competition, with several poorly funded clubs not being able to survive when it's all said and done? And if so, which of the 18 clubs would most be at risk of going bust, should worst come to worst?

It sounds crazy to even imagine it, but there are many AFL clubs who are already struggling when it comes to finances, and with pressure on the finances of companies providing sponsorships that many AFL clubs (big and small) rely on, what are the real world impacts that AFL clubs and the AFL itself need to deal with when this is all over?

FWIW, I don't believe that any AFL club will actually have to fold, and I think the league's rainy day fund of $120 million (which the NRL don't have) will probably help save the day, but 2 weeks ago, I also didn't believe that Richmond Vs. Carlton in Round 1 would be played in an empty MCG either, and now that is happening. The landscape changed far quicker than anybody anticipated.

So that begs the question - if it DOES get much worse, which AFL clubs are most at risk of folding entirely due to this situation?

 

[joop]

Richmond.

 

[ReaperX]

Richmond.

This thread isn't intended to be a troll thread, this is a legitimately serious implication that ALL 18 clubs are already preparing for behind closed doors.

There are some clubs better positioned than others, and the AFL has contracts that say they need to produce 9 games per week in a 22 game fixture for years to come, so ANY club "going under" is a disaster for the whole league, not just that club.

But if you take this situation 3 months down the line, and every club has lost $10 million dollars each from no crowd attendances/a season that gets cancelled entirely, that IS going to have a severe impact on many of the 18 clubs.

It's literally fact at this point... unless COVID-19 completely disappears in the next couple of days, every single club will lose money in 2020. And if those losses become significant... not many clubs are in a position to lose $10-15 million dollars in one season.

 

[PetterdHoisted]

This thread isn't intended to be a troll thread, this is a legitimately serious implication that ALL 18 clubs are already preparing for behind closed doors.

There are some clubs better positioned than others, and the AFL has contracts that say they need to produce 9 games per week in a 22 game fixture for years to come, so ANY club "going under" is a disaster for the whole league, not just that club.

But if you take this situation 3 months down the line, and every club has lost $10 million dollars each from no crowd attendances/a season that gets cancelled entirely, that IS going to have a severe impact on many of the 18 clubs.

It's literally fact at this point... unless COVID-19 completely disappears in the next couple of days, every single club will lose money in 2020. And if those losses become significant... not many clubs are in a position to lose $10-15 million dollars in one season.

Will people still go out and play pokies?
Isn't the pokies crowd of an age group that are more at risk?

Reckon that revenue stream will hammered too, pretty much only North would be unaffected by that.

 

[PetterdHoisted]

This thread isn't intended to be a troll thread, this is a legitimately serious implication that ALL 18 clubs are already preparing for behind closed doors.

There are some clubs better positioned than others, and the AFL has contracts that say they need to produce 9 games per week in a 22 game fixture for years to come, so ANY club "going under" is a disaster for the whole league, not just that club.

But if you take this situation 3 months down the line, and every club has lost $10 million dollars each from no crowd attendances/a season that gets cancelled entirely, that IS going to have a severe impact on many of the 18 clubs.

It's literally fact at this point... unless COVID-19 completely disappears in the next couple of days, every single club will lose money in 2020. And if those losses become significant... not many clubs are in a position to lose $10-15 million dollars in one season.

Membership revenue would be solid I think- if they called the league off tomorrow and the clubs sent a letter saying we can refund you, or you could support us and let us keep the cash-90% will let them keep it IMO

 

[joop]

This thread isn't intended to be a troll thread, this is a legitimately serious implication that ALL 18 clubs are already preparing for behind closed doors.

There are some clubs better positioned than others, and the AFL has contracts that say they need to produce 9 games per week in a 22 game fixture for years to come, so ANY club "going under" is a disaster for the whole league, not just that club.

But if you take this situation 3 months down the line, and every club has lost $10 million dollars each from no crowd attendances/a season that gets cancelled entirely, that IS going to have a severe impact on many of the 18 clubs.

It's literally fact at this point... unless COVID-19 completely disappears in the next couple of days, every single club will lose money in 2020. And if those losses become significant... not many clubs are in a position to lose $10-15 million dollars in one season.

If clubs were privately owned then yes it would be a legitimate concern, but they aren’t.

 

[Ron The Bear]

Will people still go out and play pokies?

Only silly people. The virus can survive for up to three days on plastic. All those buttons...

 

[ReaperX]

If clubs were privately owned then yes it would be a legitimate concern, but they aren’t.

Actually I think it'd be better if the clubs WERE privately owned by very rich individuals who could back them up from their own wallets.

What people don't realize is that if the AFL season is suspended or cancelled completely, the AFL administration itself would be in a very precarious position financially, and wouldn't be able to offer the financial support required to clubs, because their main source of income is the TV deal, and that gets thrown out the window if there are no games being played.

This is on a knives' edge of becoming a cataclysmic event for the league as a whole, which is something nobody had really spoken about in the media until a day or two ago. The AFL CEO's get it though... they know how bad this could truly end up becoming.

The harsh reality is, a cancelled season could very well be the permanent end of the league.

 

[PetterdHoisted]

Only silly people. The virus can survive for up to three days on plastic. All those buttons...

Then by Kennet's own admission, Hawthorn for one are stuffed, big loss coming.

RFC diversifying but into gyms right? Another industry that will be smashed.

 

[Ron The Bear]

Then by Kennet's own admission, Hawthorn for one are stuffed, big loss coming.

Not sure what their exposure is on Dingley. Reckon Geelong would be at risk with new stands that need to be filled to pay the bills.

TBH I nominated 11 clubs, and I'm not too sure about the rest.

 

[ReaperX]

Will people still go out and play pokies?
Isn't the pokies crowd of an age group that are more at risk?

Reckon that revenue stream will hammered too, pretty much only North would be unaffected by that.

You'd have to think that at some point, pubs and bars would be closed down, as they are very social locations, and if social distancing is being encouraged, many of the people who want to have a punt/gamble on something, or have a few beers, would just stay at home and do it online with a 6 pack from the Bottle-O.

Membership revenue would be solid I think- if they called the league off tomorrow and the clubs sent a letter saying we can refund you, or you could support us and let us keep the cash-90% will let them keep it IMO

I agree people would under normal circumstances, however if the majority of those people need that money to help with loss of income, the survival of their family would be more important to them than the survival of their football team.

It's a very grave situation... not the virus itself, but these "social bans"... as controversial as it is to say right now, we're much better off putting all of our resources into helping the hospital system when it crashes, rather than trying to avoid the crash. The crash is actually unavoidable at this point already, and every single country in the world is going to have a crash.

It really doesn't matter what we do at this point, the virus will NOT be contained, and it's only a matter of "when" a player gets it, not "if" a player gets it.

And once a player gets it, I think the AFL might be at the beginning of the end, and while that sounds outlandish right now... it sounded outlandish to most people 2 weeks ago that Round 1 would be an attendance lockout, and now that is cold, hard, brutal reality.

I hope to god that in 6 months time, I can look back on this post and laugh at myself for being too extreme... but our obsession with "containment" has ruined the global economy in about 3-4 weeks. It's not working.

 

[PetterdHoisted]

You'd have to think that at some point, pubs and bars would be closed down, as they are very social locations, and if social distancing is being encouraged, many of the people who want to have a punt/gamble on something, or have a few beers, would just stay at home and do it online with a 6 pack from the Bottle-O.



I agree people would under normal circumstances, however if the majority of those people need that money to help with loss of income, the survival of their family would be more important to them than the survival of their football team.

It's a very grave situation... not the virus itself, but these "social bans"... as controversial as it is to say right now, we're much better off putting all of our resources into helping the hospital system when it crashes, rather than trying to avoid the crash. The crash is actually unavoidable at this point already, and every single country in the world is going to have a crash.

It really doesn't matter what we do at this point, the virus will NOT be contained, and it's only a matter of "when" a player gets it, not "if" a player gets it.

And once a player gets it, I think the AFL might be at the beginning of the end, and while that sounds outlandish right now... it sounded outlandish to most people 2 weeks ago that Round 1 would be an attendance lockout, and now that is cold, hard, brutal reality.

I hope to god that in 6 months time, I can look back on this post and laugh at myself for being too extreme... but our obsession with "containment" has ruined the global economy in about 3-4 weeks. It's not working.

I'm not that worried, footy is a gravy train that attracts enormous numbers of hangers on, there is so much fat to cut in club-land and AFL House.

The 12-person AFL executive took home 14 million last year, right?

This lot can do a Joyce and not take their pay this year, would keep several clubs afloat.

Better yet, cut the executive in half, bloated as all heck.

 

[HaroLad]

Bring back pokies.

 

[Bunk Moreland]

Players have got a big (short term) pay cut coming.

As do coaches and the highest paid execs.

 

[wagstaff]

None. If it came to that the AFL would use public pressure to help get government funding to cover the losses.

 

[rumply]

None. If it came to that the AFL would use public pressure to help get government funding to cover the losses.

That won't be happening given the more pressing needs for public funds in coming months.

 

[Colonial]

None. If it came to that the AFL would use public pressure to help get government funding to cover the losses.

Considering the response to the NRL saying that yesterday I doubt any other major sporting organisation growing down that path.


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[Geoffa32]

I got told last week that the AFL will lose most of the TV rights money if they don't put the games on. Hence they are scrambling to play as many games as possible. Even wanting the players to continue if a player is infected.



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[ziad]

Only silly people. The virus can survive for up to three days on plastic. All those buttons...

So the same demographic then

 

[HBF]

Players have got a big (short term) pay cut coming.

As do coaches and the highest paid execs.

This.
And then whatever they lose this year can be made up over the next few seasons.

 

[madmug]

That won't be happening given the more pressing needs for public funds in coming months.

You'd think the NRL would be in a worse position seeing they have their hand out already, RU would be even worse one would think.

 

[citizen-erased]

I can't see the govt bailing out a football club because of this. Not immediately anyway
There are far too many higher priorities to deal with, and the economy will time to recover after this too.

AFL could drop the minimum cap % and allow struggling clubs to drop their TPP to below 80% (writing seasons off, but staying above water)...but the converse of that is other clubs may need to be able to go over the maximum so the players have somewhere to go

Or clubs may fold.

Both Rugby codes will be in some serious hot water.

 

[Sttew]

Not sure what their exposure is on Dingley. Reckon Geelong would be at risk with new stands that need to be filled to pay the bills.

TBH I nominated 11 clubs, and I'm not too sure about the rest.

In theory Geelong would be at risk, just like any business straddled with capital debt, but the football club is SO important to the local economy I don't think the banks, local government, and local businesses would allow the club to go under. At the end of the day, GMHBA Stadium is not owned by the football club.

ANZ (which is not the club's bank) has already come out and said it will show leniency towards any businesses struggling to repay loans because of the impact of Corona virus. Other banks will follow suit.

 

[Sttew]

I can't see the govt bailing out a football club because of this. Not immediately anyway
There are far too many higher priorities to deal with, and the economy will time to recover after this too.

AFL could drop the minimum cap % and allow struggling clubs to drop their TPP to below 80% (writing seasons off, but staying above water)...but the converse of that is other clubs may need to be able to go over the maximum so the players have somewhere to go

Or clubs may fold.

Both Rugby codes will be in some serious hot water.

I had to laugh at Peter V'Landys' statement yesterday:

"An Australia without 'RUGBA' league is not Australia"

The guy is deluded

 

[Colonial]

I had to laugh at Peter V'Landys' statement yesterday:

"An Australia without rugby league is not Australia"

The guy is deluded

He did think that League had been played for 100’s of years and called it Rugba on multiple occasions.

It kinda hurts them that they had a savings fund for if it ever rained and they spent it on a shiney new digital platform