AFL’s massive tax break won’t stop them crying poor

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Andrew Demetriou and Eddie Maguire recently came out in the press to declare war on the Federal Government’s proposed mandatory pre-commitment legislation for poker machines.The main concerns for the AFL is the growing revenue that comes from club-owned poker machines.

Victorian AFL clubs run over 2500 poker machines, which currently generate about $50 million per annum in revenue, and this number is set to double in the current financial year.

No doubt why the AFL oppose the legislation.

“To suddenly, out of nowhere, without any consultation, to have what looks like being a footy tax imposed, is going to absolutely hit football clubs right between the eyes,” declared Collingwood President Eddie Maguire.

Tony Abbott, the Liberal party’s federal opposition leader, understandably agrees with Maguire and condemns the Gillard “footy tax disaster”.

Hawthorn AFL president and former Victorian Liberal premier Jeff Kennett argues that “the Gillard government is going to wipe out AFL clubs right throughout the state.”

AFL chief Andrew Demetriou did agree that the government needed to help raise awareness around problem gambling and actually tackle that issue, but not at the expense of AFL clubs. Andrew would like someone else to pay for the problem and not in the AFL’s backyard, if you don’t mind.

There are two galling aspects to the AFL’s stance on poker machines.

Firstly, the AFL is not particularly in need of any money, nor likely to go broke any time soon because of any government initiatives, especially ones aimed to help reduce problem gambling.

The AFL has annual revenues of over $300 million, and recently signed a $1.3 billion media rights deal to make sure that its bank balance will continue to fatten.

The claims by Demetriou and other AFL figures that the government’s initiatives will harm AFL are ludicrous and quite frankly insulting to its membership, which would certainly contain a number of problem gamblers.

The second exasperating aspect of the AFL’s ridiculous complaints is that the AFL and AFL clubs pay no taxes. That’s right, not one cent of any AFL revenue goes back to the government or taxpayers. Every cent of every dollar they earn is spent on AFL, including poker machine revenue.

The AFL isn’t a charity, it’s a business. It certainly pays its executives like a business, with bonuses for increased revenue.

So why doesn’t it pay any taxes like a business?

As its annual report explains, the AFL is exempt from income tax because its activities “are solely the promotion, administration and development of Australian Rules Football”.

How are poker machines classed as solely the promotion, administration and development of Australian Rules Football? I find that hard to swallow. Poker machines are installed at AFL clubs to provide revenue for the AFL, pure and simple.

The AFL executives increased their payouts to over $5 million, based on their ability to derive increased revenues, of which poker machines played a part.

Andrew Demetriou signed off on a $200,000 cash pay rise for himself, which took his package up to $1.8 million. The charitable tax-exempt AFL sporting organisation now pays its CEO five times more than the Prime Minister bringing in the pokie legislation receives.

Certainly businesses will structure their organisations to minimise their tax outgoings, but how much longer should the federal government allow a business like the AFL to pay no taxes? And how can the AFL claim that it is hard done by when its tax arrangement would be the envy of any business?

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