The football war will be fought with smaller wallets
Roar Guru By Steve Kaless, 14 Oct 2008 Steve Kaless is a Roar Guru
- Tagged:
- Australian sport, English Premier League, Facebook, Germany, salary cap, West Bromwich Albion, western Sydney
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So we have all cancelled the early retirement plans and started stockpiling baked beans. The global credit crunch has had a world wide effect, but what impact will it have on the Australian sporting landscape? And if there is a football war going on, what will it do to the war chests?
Wearing a different hat than that of a humble Roar columnist, I spoke to the NBA’s commissioner David Stern last week about the financial robustness of the competition, given that plenty of football fans in Europe are nervously watching the news as their chairmen deal with eye-watering debts as assets often secured by the football club plummet in value.
Stern was confident that the system of debt limitation and salary caps would help limit the exposure of the franchises to the problems of the wider business world.
He is a strong advocate of strong central regulation, which was interesting given that he hails from a country that prides itself on being the home of market liberalism (or at least, was until the word ‘bailout’ was on everyone’s lips).
His jargon would have almost had him in front of the House Committee on Un-American Activities during the McCarthy era.
Stern argued the cap prevented the owners from “spending to oblivion” and it was clear he had little time for the business models of the Abramovich’s of this world.
However, it was equally illuminating given that it seems only yesterday people were claiming the need for the abolition of such caps in Australia.
We were told, “there is no limit on what a CEO can earn.”
We are now finding out the precise problem with such a situation.
It is interesting to note that the sports facing the biggest problems currently are ones who weren’t policed by a salary cap.
There is even talk of one being brought into European football. However, I’d be quick to dismiss that as hollow rhetoric.
Stern admitted that season ticket renewals are slower this year in the NBA, but he believed that this coupled with an increase in new season ticket purchases as well as opportunity for an increase in general sales.
Still, the experienced commissioner did agree that sporting tickets fell into the category of “disposable income” and when this gets tight, the competition for that income increases.
In Australia, with greater scarcity of the punter’s dollars, our football codes have the tougher challenge of making the spending decision of the fan tip in their favour.
First of all, let’s dispel the myth that the economic downturn is bad for everybody.
That is simply not the case.
Already seeing an upturn in fortunes are Domino’s pizza (nothing makes you feel better about a plummeting house price than an extra large Hawaiian), Tie Rack (a new tie might make the boss think twice about firing you, despite you spending the last eighteen months on Facebook) and, interestingly, movie cinemas, as people seek escapism and simple pleasures.
This last one was especially salient for sporting administrators as the line trotted out is often that lean economic times automatically equate to a drop in attendances.
I’m not so sure this should be the case.
Surely if the credit crunch means it is more likely someone will fork out their hard earned to watch the latest offering from Adam Sandler over 93 minutes, then they might also want to take the opportunity to also watch their team strut their stuff.
Anyone who has spent any time listening to talk back radio will no doubt have heard the tales of woe of the cost of a family man taking his kids to the footy.
I’ve never heard the same complaints about the cost of getting them in to see Wall E on the big screen.
But maybe that has something to do with our mindset: we feel like we can complain to our local footy team but not to Hoyts.
Despite the general admission to most club games being comparable to a full priced ticket at the movies, it does seem that people need to be enticed more to attend the footy than they do to roll up to the multiplex.
It is often argued that ticket prices shouldn’t be dropped because it then appears that you are cheapening the product.
However, in the English Premier League, newly promoted West Bromwich Albion actually cut the price of season tickets to a three year low at the same time as going up, despite having a greater wage bill to sustain.
It was all about locking supporters and guaranteeing income rather than allowing their fate to be dictated by whims of form during the season.
But if we are not watching games at the ground, we seem to be doing so at home.
The crunch is likely to have a big impact on the next wave of television deals that football codes have been eying off since the ink dried on their last one.
Sporting CEOs have resembled Enron executives as they seemingly pluck an enormous figure out of the sky and claim this is their new target for the next deal.
It was an easy job because everywhere was awash with cash, but now that this isn’t the case, it is likely the respective bean counters are starting to revise their figures as the cash to support those deals are drying up over night.
And if that happens, there may be a few questions to consider.
How might the AFL fund their raid into Western Sydney without the next bonanza of TV cash?
What effect will any drop in funding have on the NRL grants system?
And with the Foxtel deal keeping most A-League clubs afloat, what happens if the big increase that has been banked on at the end of the current deal simply doesn’t arrive?
I had coffee recently with an A-League insider who claimed their next television deal would surpass the NRL’s. It was simply a matter of the clubs surviving until then.
That survival suddenly might not be so simple.
What of John O’Neil’s grand plan to see private benefactors from the big end of town pouring cash into rugby franchises?
As Spiro has pointed out in a previous article, they might have a few other things on their mind at present.
The collapse of TV money has had disastrous effects on sports in the past in both the UK and Germany. And while it may seem a little dramatic to predict the downfall of a channel in Australia, it might not be so radical to predict some serious belt tightening.
Then again we might have said that before C7 checked out.
My prediction is that fans of one code will have plenty of optimism about their chosen sport but dire predictions about the health of others,
This off-season could have more drama than most.
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October 14th 2008 @ 11:59am
Michael C said | October 14th 2008 @ 11:59am | Report comment
oikee, millster -
as Steve indicated “My prediction is that fans of one code will have plenty of optimism about their chosen sport but dire predictions about the health of others,”
funny that most people seem to bemoan the existing tv coverage and covet some improved coverage from an other channel…………we AFL folk have seen the offerings of each and every primary commercial network & fox……………reality, they’ve all got limitations and compromises and the deal is invariably only as good as the contractual nouse of the sporting administration.
Re the HAL – - so, we’ve what? half way into the 7 years $120 mill deal……when does negotiation in earnest begin?
Would it be about 2 years out – so, in about 18 months time.
AFL also has 3 years to run, so negotiations will be coming up around then – - it’ll be interesting times.
The rest of this HAL season and next year will be super important – - the whole premise of increasing crowds and interest – that has been flown from city hall so proudly over the first 3 seasons – - may be challenged, as appears the case presently 1/3rd through season 4. The HAL may just rely too unhealthily upon the coat tails of the Socceroos – should they qualify – but it might be just the thing required to get through the ‘consolidation’ tough times – - so – from a code wars perspective, the champagne is on ice still pending a few more Asian qualifiers??
The ACL is still interesting, as, for now, in the main, it’s unreliable with only 2 teams qualifying – and no real idea of whom, where and when and into which market you’ll be selling. The value proposition is very vague. And the capacity to generate extra market interest is limited given that the ACL outside of Adelaide at present, for example, has been completely obscured by AFL and NRL seasons and their culmination…..and those 2 codes very effectively overlap each other to absolutely dominate the states.
It’ll be very interesting to see how the parts or the whole are valued, and where the gamblers are willing to roll the dice.
October 14th 2008 @ 12:00pm
oikee said | October 14th 2008 @ 12:00pm | Report comment
October 14th 2008 @ 12:13pm
oikee said | October 14th 2008 @ 12:13pm | Report comment
That
was for you millster, you seem like me about futbol as i was to league, not knocking the world game its just funny how easy a nation can get into the world cup , to me it seems like theres really no competition, anyone can play the game and this is why i lose interest, the other sports you have to earn the right to make it, thats where i am coming from millster just so you know.
Like i said before these other codes are no threat to your game, its already got world following, i wont change that nor will M.C, but we can still debate the issues involving the smaller codes. Cheers, and your points are valid.
October 14th 2008 @ 12:19pm
True Tah said | October 14th 2008 @ 12:19pm | Report comment
Millster,
I can’t argue with your last paragraph. For all the hoopla about the little guys getting up (Im thinking 2002 WC here – Senegal beating France, Korea beating Italy albeit assisted by questionable umpiring), the reality is the futbol royalty seem to always be present at the business end.
In the history of the futbol World Cup stretching back to 1930, there have been 7 winners – Uruguay, Brazil, Argentina, Italy, Germany, France and the UK, now Uruguay only has a 4 million population and is flatout even qualifying for the event these days, despite their “divine right”, so I doubt they will ever get close again. Apart from these guys, I think the Dutch, Mexicans and the Portuguese are the only nations which have really pressured the top order, and the Spanish until this year, had an appalling record at international competitions, when you consider the strength of their domestic league.
So far, since 1987, union has had NZ, Australia, England and South Africa win world cups, France has featured strongly throughout, and Argentina really shook up the order last year, although I feel it may have been a one off event for them. Hopefully in my lifetime, we will see the likes of Georgia, Fiji, Italy, Wales and other smaller countries push the big guys, and I reckon Georgia will win a world cup before Wales, Scotland or Ireland.
October 14th 2008 @ 12:44pm
Millster said | October 14th 2008 @ 12:44pm | Report comment
To Oikee – You simply dont have to “earn the right” to make it in Union or League or Cricket World Cups (lets leave AFL’s alone
) In fact if you look at the minor teams in the finals of those three World Cups its like a sheltered workshop not an elite competition. I get the feeling of “lets let in anyone who might even be able to name the sport let alone play it”. I just checked the RLWC playing and saw that 6 of the 10 nations competing are from the region people called Oceania (essentially Aust, NZ and pacific islands)… some kind of a lop-sided world that is… And its not only League. Namibian Rugby Union team anyone? Netherlands or Canadian Cricket Teams? I mean seriously… where is even the attempt to qualify from the majority of the significant nations in the world?
In contrast, football has a sophisticated system that is spread between the 5 continental groups of the world which gives all entrants a path to the finals, but which means that the 32 finalists that make it to the World Cup are tried and tested.
True Tah – sometimes upset results are valid too you have to remember. In 2002, Turkey and Korea played some wonderful football. France was also not on song at all and while at the time were top 10 in ranking, they were not top 10 on form. Remember they were not only beaten by Senegal but also by Denmark, a respectable but not awesome country. And again going back to what I said to oikee in the last para, Senegal, Korea and Turkey were there after a proper qualification process. They earned their spot in the finals. They were not just there as a “grab bag” of nations like happens in the other so-called World Cups.
October 14th 2008 @ 12:53pm
Michael C said | October 14th 2008 @ 12:53pm | Report comment
Millster -
the AFL does NOT have a ‘world cup’………………
……..because, if we did, then Italy and Greece for example would most certainly be there – - however, in the international cup as a development tournament for other nations – they do not participate.
rightly or wrongly.
………….otherwise, I might’ve scored a tournament representing Denmark……………………..ah gosh darn it all!!!!!!
October 14th 2008 @ 1:13pm
True Tah said | October 14th 2008 @ 1:13pm | Report comment
Millster,
Im going to start by saying that the rugby world cup is nowhere near the size and importance of the futbol world cup which is hardly surprising, but you may be surprised to hear that in 2011, 8 nations will enter qualifying stages for the World Cup, in fact some nations have already entered into qualifying. I don’t know how many nations, I doubt it would be anywhere near as big as the futbol world cup.
It is far from a “grab bag of nations”, it is actually serious stuff. Like when Portugal had to travel to Uruguay to qualify for the 2007 world cup, Uruguay did everything it could to upset the Portuguese, including restricting their access to proper training facilities. As a consequence they got to play against the All Blacks and show the world that Portugal plays sports apart from futbol.
Just to illustrate the qualifying nature for the Cup, the Makis of Madagascar recently played against Uganda and Botswana to qualify.
For the record, the game between Madagascar and Botswana drew a crowd of 30,000…Ive checked the FIFA website for the Barrea (Malagasy futbol team) drew crowds of about 9,000 and 16,000 for world cup qualifying games against the Comoros and Mozambique respectively at the same ground. Unfortunately Uganda beat the Makis, so they won’t be going any further.
And also, I note the Phillippines withdrew their futbol team from the World Cup qualifying a nation with a population of 70 million, I would have expected that somehow they could afford to take part…however their national rugby team has continued to take part in qualifying for Asia, its probably a minority game there and highly unlikely to make it any further,
October 14th 2008 @ 1:15pm
True Tah said | October 14th 2008 @ 1:15pm | Report comment
sorry,
I meant to say that of the 20 countries at the 2011 world cup, 8 nations will qualify from various regional qualification tournaments in Africa, Asia, Europe, Oceania and the Americas.
October 14th 2008 @ 1:31pm
Millster said | October 14th 2008 @ 1:31pm | Report comment
True Tah – I’ll admit to a small amount of revision of my views but not total as your only examples to push back were small nations that would be influenced by the cultural reach of South Africa and surrounds in terms of Union adherence.
Although I have educated myself by going to the qualifiers part of the Union World Cup site and have seen that there is indeed a reasonably solid qualification tournament in place across a number of regions.
I’ve also checked the League World Cup site and seen no such evidence, and a really laughable set of nations.
Shall go to Cricket now to verify my view. I expect the story will be better than League but not as good as Union.
October 14th 2008 @ 1:41pm
True Tah said | October 14th 2008 @ 1:41pm | Report comment
Millster,
there was some qualification for RL, but it didn’t amount to much, it meant the Lebanese didnt qualify.
And I haven’t worked out why the Malagasy are even interested in rugby, but I can assure you it would have bugger all to do with them being close to South Africa…Im going there later this year, maybe Ill find the answer out? As a partial Frenchman, you would know that they once fell under the French empire!
You wont find any argument about cricket from me here, Im not a huge fan of it to be honest.