The Revolution Will Be Televised

The economics of professional sports should be pretty straightforward; charge spectators an entry fee, add in revenue from sponsors, merchandise and TV broadcast rights, and there’s your pool of money to run the game. Given Australia, and particularly Melbourne, is sport obsessed, with relatively little competition, this pool has become a goddamn ocean for the AFL.

Indeed, in 2012 alone the AFL pulled in $425 million in combined ticket sales, sponsorships, television rights and merchandise. And with the recently announced TV rights deal worth more than $2.5 billion over 5 years, this will only increase. As such, (and as reported in the Age) AFL clubs, along with the AFL Players Association, are pushing for an annual set percentage of revenue from the AFL, rather than a negotiated sum. This comes as the clubs look for more financial transparency as more and more policies aimed at equalisation, i.e. funding and taxation, have taken effect this year.

Yet, despite the heady figures mentioned above, somewhat unbelievably AFL clubs combined to, collectively, lose more than $3m in 2014, with club debt swelling to an alarmingly $91.5 million. As one AFL official conceded to The Australian newspaper, “There’s just too much debt in the system. We are going to have to break the present business mould.” This got me thinking about revenue sharing, the seeming paradox of an “equal competition”, and the whole of the AFL as a financial microcosm. How are some clubs going broke? What is this “present business mould”?

Most AFL clubs are “member-owned”, with club members passively endorsing (through lack of organized opposition) a volunteer board of directors who in turn appoint paid professionals (CEO, Coaches, Etc.) to run the club. The club directors then endorse the AFL commission, who is in charge of the AFL as a league and of Aussie rules as a sport in general.

Most clubs are member owned but the Western Australian Football Commission (WAFC) still owns the Eagles and Dockers licenses, although this has been flagged to change as soon as 2018.  The club licenses for Sydney, GWS, Brisbane and the God Coast are all owned by the AFL Commission itself, yes, the very body that runs the sport, a conflict of interest to say the least.

[Note: It has been recently alleged that the AFL were wrangling hard to get Buddy Franklin to GWS and then installed trade restrictions on Sydney as petty revenge. But, I digress.]

So, you have clubs apparently owned by the general public (members), governed by volunteer boards (usually high-powered business people with ties to sponsors, if not the sponsors themselves), participating in a league run by a paid commission (that the club presidents approve), who run the AFL as a not-for-profit entity, deciding how profits are re-invested back into the game (including grassroots footy programs) as well as how much money is given back to the clubs who employ them (who then apparently just piss it away).

If that all sounds self-serving and a little tangled, it’s probably because I deliberately made it sound so through dramatic, long-winded punctuation. However, it is curious that financial information about the AFL and how exactly they distribute their revenue is not available to the public, something extremely rare for an entity of its size, not to mention a little shady for a “not-for-profit” organisation.

But I’m getting slightly off-track here. Regardless of any insider-trading type corruption I may have just baselessly implied, the AFL knows the current situation is unsustainable. They own four club licenses, meaning they essentially oversee their finances, and have other clubs constantly coming to them for money because either, a) they’re poorly run or, b) there’s just not enough money to sustain 18 football clubs at their current dollar value.

[Note: The AFL does have the power to revoke licenses in “extraordinary circumstances” but apparently consistently being millions of dollars in the red isn’t “extraordinary” enough to warrant such action. Indeed, even installing a systematic performance-enhancing drug regime that the 1984 East German Olympic team would have been proud of isn’t enough. Sorry, “allegedly installing...”]

Interestingly, the AFL has long equated on-field success off-field viability. So while they implement strategies to maintain “competitive balance” in the playing arena (the salary cap and draft system), club mismanagement is not only financially absorbed, and absolved, by the AFL, it is rewarded with priority draft picks, extra salary cap space, and larger lump sum payments. This runs completely counter to the idea of competitive balance and, again, seems bizarrely self-perpetuating.

The AFL’s financial policies appear contradictory, or perhaps confused, or maybe half-assed. They want clubs to operate independently (well, except the ones they own), and to also dictate where clubs spend their money; they try their best to spread the wealth and yet are repeatedly forced to prop up struggling clubs using money taken from the well-run clubs. The AFL is a socialist system. And it isn’t working.

The usual process of capitalist natural selection is not allowed to take place. And the circular logic of a club’s heritage – the fact that it still exists, even though that existence is due almost solely to previous AFL handouts – is seen as the reason enough for continued AFL handouts. This financial assistance may be enough for club’s to survive but it is never enough to catch up to the ‘Bourgeoisie’ of the league; contrary to intended purpose, the gap just grows wider.

Things like differing stadium deals, non-participation in “blockbuster” games, and low-ball sponsorships all play a part in that, but it may simply be a population/popularity issue: Victoria, try as it might, cannot support 10 organizations that essentially rely on donations. It simply can’t. But there is a way to guarantee the survival of all 18 clubs, provide a truly level financial playing field, and greater overall fiscal transparency: Communism.

Don’t tax the successful clubs, don’t cap football operation spending, and don’t assist struggling clubs. Instead, take the entire, dump truck full of AFL money, from all revenue sources, and share it evenly. I’m talking everything, not just the TV money, but the ticket money, sponsorship money, membership money, merchandise money, the goddamn 12-year old kids selling ‘Footy Record’ money (shout out to Mrs Watson), everything, and cut it up into 18 even slices (minus operating costs). That’s the only way to properly even out the monetary imbalance between clubs.

Granted, there are some issues with this model, and communism in general, mainly being that it greatly reduces the incentive on the individual to invest and innovate, but there is certainly some benefit in an allegedly not-for-profit league embracing the big C-word.

The AFL could negotiate stadium deals as a whole, for example, or subsidise existing arrangements. It could set the market price for being the club’s number one sponsor, not to mention control the prices of tickets/ memberships; a victory for the proletariat!

Sure, I’m being kinda facetious, but it’s gonna come to a head soon. Clubs like Brisbane, Melbourne, St Kilda, North Melbourne and the Bulldogs have been struggling since the AFL became a national competition, and at the moment are being propped up as nothing more than sparring partners; given just enough to get in the ring but never a shot at the title.