Dont think the AFL admin should be held responsible, I do.
I'd like to see the TV rights holders having a round table with both Gil & Richard Goyder about this time of year.
2019 Financial Results
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Dont think the AFL admin should be held responsible, I do.
I'd like to see the TV rights holders having a round table with both Gil & Richard Goyder about this time of year.
telsor
Hall of Famer
I think they SHOULD, but I also recognise that there is nobody to hold them responsible and don't waste my efforts chasing what will never happen.
I'm more optimistic that with Gil gone it will be ripe for change.
That's not entirely true. The solution is transfer fees. Non-free agents can be traded for not just draft picks or other players, but cash as well. Effectively a wealth transfer mechanism between the rich clubs and not-so-rich clubs.
Not that i'm advocating that, but there is likely to be a time in the future when the AFL simply won't have the financial capacity to be giving clubs millions of dollars in discretionary payments. There would need to be wholesale changes to the system to avoid quite few clubs going to the wall.
Thats the mechanism they are trying to avoid, so its A solution, but it certainly isnt THE solution. I follow WC, over Freo, but in my opinion, if we ever get to a point where a club like WC, is buying Freos best players off them, because Freo needs to get the transfer fees to stay afloat, then the death of Australian football as a serious professional sport isn't far away. The world of Australian football isnt big enough to support such a mechanism.
Why is that likely? The system is precisely designed to stop such an outcome
The AFL introduced a soft football department cap a few years back and changed its funding formula to explicitly enable all clubs to be able to spend to that cap.
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Ultimately if league finds itself, for the first time since a blip in the 80s (when transfer fees were still a thing ironically!), with its revenues declining and a number of clubs are struggling the AFL can just re-balance its funding formula and tighten its football department cap
In terms of the article, it is remarkable that the AFL is expected to pull combined profits of $90 million this year.
I doubt Freo would need to sell West Coast players - they'd be more likely to be dealing with the GWS/Gold Coast/North/Dogs/St Kildas of the world. Freo is a big club, albeit not at the same level as West Coast (and the reality is that no club is close to being as big as West Coast).
Despite the big handouts to other clubs, the profits that some clubs make is ridiculous. If the players had the choice of a wealth transfer system like that or a wholesale reduction in the salary cap, I bet I know what they'd pick.
Why is that likely? The system is precisely designed to stop such an outcome
The AFL introduced a soft football department cap a few years back and changed its funding formula to explicitly enable all clubs to be able to spend to that cap.
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Ultimately if league finds itself, for the first time since a blip in the 80s (when transfer fees were still a thing ironically!), with its revenues declining and a number of clubs are struggling the AFL can just re-balance its funding formula and tighten its football department cap
That doesn't suddenly make up for millions in handouts that go missing for some clubs because the league can't afford it.
A system funnelling transfer fees works in soccer, where there are huge numbers of lower tier pro leagues, that need the money, and are able to develop talent to sell. These lower tier clubs compete against other lower league clubs, in the same situation as them. However, soccer has a huge number of lower league clubs compared to the number of cashed up big clubs. Transfer this system to AFL, the transfers will be occurring within the same league. Clubs will effectively become second tier clubs, but within the AFL. Over time, as the biggest clubs monopolise the best players, smallest clubs rationalise themselves to the idea their goal each year is to not go broke, not compete for premierships, and the middle tier clubs gradually turn into bottom tier clubs, trying to compete.
If clubs gain the ability to buy and sell players, the amount of time until only 4 or 5 clubs can ever win will be really short, a handful of years at most. Unlike Scampaignerhorp, or Blackpool, where fans can rejoice at winning the division 1 title, or div 2, St Kilda, GCS, North etc, will have to resign themselves to never winning. It will be the death of them as clubs.
The financial stress of transfer fees and inequality is what lead to the creation of the AFL. It isnt going back.
No, you're making the assumption that if the AFL increases the tax then the rich clubs will pay it.
At a time of extreme financial stress I reckon that's a ridiculous assumption.
Captain chaos
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I see the tigers have 24 mill of cash reserves. I hear they ate thinking of buying a plane (10mill) and leasing it to other clubs when they arent using it.
telsor
Hall of Famer
Wont happen.
Both because it's a dumb move, and because the AFL (sponsored by Virgin) wouldn't allow it.
(it'd also disadvantage WA clubs, who'd lose their 'perk' of extra business class seats if all clubs were treated the same).
AFL already refused to let Fremantle hire a chartered plane.
I am not making that assumption at all. I am not even talking about increasing the tax
The assumption I am making now - and I'm pretty confident on - is that you don't really understand the model.
If the league fell on hard financial times in the future it could just lower the football department cap and lower the base distribution to the wealthier clubs.
The bottom line is the model is based precisely on the objective of ensuring all clubs can fund their football departments to the same level. The purpose of basing it on this objective is to ensure competitive balance and control costs. "Extreme financial stress" is not going to make the league abandon this model.
I understand the model, i'm just saying that it's likely that at some time in the future the AFL won't be able to fund it. And I doubt that lowering the distribution to "wealthy" clubs will even come close to covering the shortfall. Let's say that the next TV rights come in 20% less than now (not a completely absurd scenario). That's close to $100 million a year. That's more than the entire distribution received by the wealthiest (i.e recipients of the smallest AFL distribution) 7 clubs in the league combined. The AFL can't just dock a million or 2 from the rich clubs and expect that they can still hand out $20 million a year to other clubs.
The model works when things are going well. But the model also embeds a spending culture in clubs that otherwise can't afford it. Fine when there's money coming in, but when it's cut off then what's going to happen? I assume the AFL does have a plan for this, even if they may never need to implement it.
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when? As far as I can tell, chartered planes have been used a number of times to get from and to Perth by AFL clubs. Freo used a charter for their Geelong Final.
You've demonstrated you don't in the same sentence you claim you do
Let's accept that the TV rights coming down 20% is a plausible scenario. Fuggit, lets actually go with your $100m a year which is actually over a quarter of AFL's reported broadcast revenue.
Currently, the AFL and clubs are banking $90 million a year which presumably includes the AFL paying down the cost of its advanced purchase of docklands. But lets put that aside as the main point is "we" are trying to learn how the AFL funding model works.
For a start under the CBA the player salaries would come down by 28% of that 100 million. So that is 28 million.
Secondly, there would no doubt be a range of reductions in other expenditure categories, lets say 10% of the AFL's non-club distribution expenditure - that's about $40M.
The base distribution to clubs is very roughly 2/3rds of the TPP so we can assume about $50M would be coming from reduced distributions to clubs with about 20 million of that directly offset by reductions in player salaries.
You now have $30 million to account for. Under current arrangements, the clubs are pulling $40M in aggregate profits. From there:
1. tiighten football department cap by $1.5M
2. make any amendments to funding formula to ensure smaller clubs can still pay is sustainably
The model embeds a spending culture the game can afford in a way that ensures competitive balance and - thus far - has seen perpetual revenue growth averaging 7 to 8% a year for decades.
Hang on, is that how the CBA works? Are you saying that if AFL revenue drops, the salary cap drops with it? I remember discussions around this area, but I thought they came to nought. Part of the AFLPA claim was that they wanted a share of revenue if it increased, but not if it went down.
Happy to be educated on this though.
Arbitrary, but I agree that a whole range of programs would get cut. I'm certainly not suggesting that all revenue losses would be borne by clubs.
You're talking about all clubs as a whole though. That's not how it works.
Then you're talking about hypotheticals that may not happen. You tighten the football department cap you're basically saying that the 2nd tier (financially) clubs need to sack a pile of staff because they'd have to pay the tax, even though they could otherwise be in a position to afford it. You think clubs will just cop that, just so small clubs can keep getting millions a year? Bollocks. The first thing to get cut will be the discretionary handouts.
I can imagine Eddie: "The AFL is now telling us that despite getting a huge reduction in our distribution, we're going to have to pay all this extra tax to prop up GWS because they can't keep spending under control".
I just don't think the AFL would do what you think they would. Clubs would cry blue murder.
Well, 2 decades. And it has been during a period to which TV rights for sport have been increasing exponentially worldwide.
The AFL may be a very well run organisation, but there are significant factors outside their control.
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My understanding is that theres no provision for wages to go down if revenue drops. If that day comes, interesting times ndeed.
Before the AFL removes equalisation measures though it needs to set a base standard for a stadium, and then allow clubs to play their home games wherever they like with their own deals, and the fixture has to be made fair. As long as theres an overarching deal at the MCG that isnt going to happen.
Increasing revenue outside of TV deals is going to be interesting. You cant just keep adding clubs and hoping for the best. Theres no tests, no origin, and they screwed up the short game - Id suggest that the lack of any of these in the current climate is pretty poor of the leagues management, but its another discussion.
No provision for wages to go down, but at a certain point, hard reality has to hit home. I have no doubt players will hang tough if the drop is 10 - 20%, but if there is a large drop, and players take the same amount, then that causes a whole range of issues that will definitely impact on players long term.
The CBA is for the duration of this TV rights cycle. In the end, the AFL signed up to a revenue sharing model
The upshot of the AFL agreeing a revenue sharing model is that, in the unlikely event of a significant downturn in revenues, the AFLPA have implicitly committed themselves to agree a proportionate reduction.
But that is what I'm saying. It effectively is how it works.
Yes, that's precisely what we are doing here!
No, it will be tapered over time. The only way (itself of very small probability) the AFL could face a sudden shock in revenues (beyond broader socio-political and economic cataclysm) is the next TV rights are worth a lot less next time around. If that were the case, the AFL would have a full season ahead under the existing rights to begin tapering down the football department.
The discretionary handouts are minimal. The funding model distributes higher amounts to smaller clubs based on "structural inequities".
The base distribution is determined to ensure every club can meet the football department soft cap.
here is the AFL statement when the released the competitive balance policy that introduced the cap
AFL statement: Competitive Balance Policy
League details its Competitive Balance Policy to the 18 clubs
Well you don't need to imagine it. It already happened. The football department soft cap and tax was introduced rather quickly earlier in the decade when Collingwood was flying and implementing a strategy of dominating with football department spend. We paid over $1 million in "tax" one of those years.
In the last year of the 2002 to 2006 $100M a year TV deal, the AFL and club revenue was less than $600M. Last year it was about $1.55B. So for every dollar in extra TV rights revenue the game is generating an extra $2 in revenues from else where.
On a compound average growth rate basis, while TV revenues have grown at over 12% per annum, other revenues have still grown by over 7%.
Exactly. The football department cap is a necessary evolution of the principle of competitive balance and fairness.
If, for whatever reason, a decision was made to regress to a financial free for all, you could only do it alongside the AFL devolving the power to independently manage things like stadium deals (as a start). So we are at least 38 years away from that
AFL revenue growth will come overwhelmingly from the main game.
I agree the the AFL probably stuffed the "small pitch" version of the game in the short term but that was never going to be a big money spinner. The rugby world 7s apparently generate 20 million pound a year for world rugby - less than the turnover of the smallest AFL club.
International rugby league bleeds the NRL, it certainly doesn't make it serious money net of costs.
I still think the AFL could easily introduce a successful periodic (say once every three years) SOO tournament in October / November.
lol.
There's no methodology used outside of which club needs more money. And you know it.
There's a difference between a financial free for all and a reduction in discretionary handouts.
But the stadium arrangements in Melbourne is a shameful chapter in the evolution of the national league. The AFL have no business renting stadiums for anything other than the grand final and should have weaned themselves off them.
No, I don't "know it"
You are the one trying to assert something that is directly at odds with a publicly stated policy.
You don't have any basis to do so beyond "naaaah go on.............the AFL just does hand outs willy nilly, everyone knows that"
The competitive balance policy and associated funding model was agreed by the 18 clubs after substantial negotiation
Your "yeah....naaaaah.....yeah nah" up against....
OK...and? The bottom line is the whole point of the competitive balance policy is to achieve competitive balance. There is no "half way" out of it due to a range of factors of which stadium deals are but one
is it really? You haven't really made any sort of a case. Just assertion again
The model the AFL has adopted is going gang busters. Absolutely gang busters. Surely that puts the onus of proof on someone asserting otherwise?
