FFA needs to ask for an advance
FFA CEO Ben Buckley at the A-League's Western Sydney club announcement (Image courtesy Fox Sports)
We all recognize that the A-League has a cash crisis. The ten clubs collectively lost $25 million last year, with some clubs obviously losing more than others.
Whatever the individual club losses, the most common request from all clubs to relieve their financial burden is for the FFA coffers to fund the entire salary cap rather than approximately 50 percent of the cap, as is currently the case.
In round terms, the cap is around $2.5M per club so a 100 percent salary cap funding model would cost the FFA an additional $12M per annum over their current A-League dividend.
The new TV deal is seen as the solution to the financial woes but the current TV deal has one more season to run (until June 2013). With clubs struggling financially it would make sense to put this funding debate to bed now rather than wait for another 12 months and another year of poor financial press releases and club disharmony.
If we turn to the TV deal, Foxtel currently pays around $17M per annum. Many figures are being suggested for the next deal. Some say the FFA will be lucky to match the current deal in the next one. Some suggest $40M+ per annum, some say $30-35M.
Inflation alone takes $17M to around $21M per annum. The 2006 move into Asia has resulted in better quality Socceroo fixtures. With a ten team A-League competition there are 51 more games per year than in season one when only eight clubs competed (although this may have been factored into early calculations).
Next year we have the introduction of Western Sydney and, ignoring all the hype and overblown expectations, it’s obvious they will draw bigger match day crowds than GCU. In addition it provides three real intra-city derbies per year, which will generate heightened local and interstate interest, as opposed to the notional 80km M1 derby between CGU and the Roar.
These few facts alone should be enough to suggest that $30M+ per annum is an achievable target. And by good fortune, $30M is $13M more than what the FFA get today which nicely resolves the salary cap funding issue.
Obviously Ben Buckley and Frank Lowy will be trying to do better than $30M but it establishes their base line target and the revenue needed to remove the A-League’s biggest beef with the FFA.
So how does that solve the current financial problem? In short it doesn’t, but with some creative thinking the opportunity exists to do so. The simple solution is that the FFA needs a $12M ‘advance’ to fully cover the salary cap for the 2012-13 season.
I believe they should be approaching Foxtel and seeking an advance, or pre-payment, for the next TV rights deal. As a trade off the FFA could offer Foxtel ‘last rights’ on negotiating the next deal simply for providing the advance (remember Ch7 paid the AFL $10M for the opportunity to make the final bid in 2006).
Once the new TV deal is concluded the $12M advance could be refunded through the course of the next deal if Foxtel were successful, or repaid if Foxtel were not successful.
Foxtel have every reason to support the FFA in this matter. They have done very well out of the A-League which exceeded expectations in the early years. The FFA pushes the Government to keep Socceroo matches off the anti-siphoning list which (putting aside arguments for or against the benefit to the casual viewer) is incredibly beneficial for Foxtel, as it is their only hope of being able to secure these popular matches on their network.
It would give Foxtel the nominal benefit of a last bid in the event a free-to-air broadcaster suddenly became interested in A-League football. And finally, it would further cement Foxtel’s partnership and support of the FFA and the A-League.
With some foresight and negotiating nous the FFA could bring a deal to fruition today that would immediately lessen some of the financial pain that the A-League is suffering.