Outlook brightens for A-League clubs
Roar Pro By Sports Candy, 26 Jul 2012 Sports Candy is a Roar Pro
The FFA has moved a giant step closer to honouring it’s promise of paying all of the A-League club’s salary cap costs. The A-League Salary Cap currently stands at $2.8 million.
The second meeting of the Joint A-League Strategic Committee (JALSC) between Football Federation Australia (FFA) executives and a representative group of A-League club owners was held yesterday.
At this meeting A-League clubs were offered a substantial increase of their share of A-League revenue to $1.9 million per club for the 2012-2013 season.
This represents a massive increase of $1.45 million per club or a 422% increase on the FFA’s contributions to clubs last season of $450,000 per club.
A-League owners were obviously delighted and received additional concessions from the FFA regarding owners’ advertising rights and local sponsorship, merchandise and signage deals, which will also lead to increased club revenue.
The FFA added that once the Media rights deals with Foxtel, other free-to-air TV stations and Electronic media and internet companies are all finalised, A-League clubs would expect to receive additional revenue sharing.
The FFA is then expecting to be able to cover the whole of the $2.8 million salary cap costs for all A-League clubs. That would mean that if an A-League club had all players within the salary cap, they would not have any player payment costs, a huge boost for any club.
The FFA advised that the media deal negotiations are at an advanced stage and the Fox Sports deal would be worth at least double the existing contract, plus other additional and new revenue streams from other sponsors and media and internet outlets.
The increased offer of $1.9 million per club is not dependent on the new media rights increases, they will be additional to the offer put on the table yesterday.
Club representatives have been told at the meeting that when the new Fox Sports deal is finalised later this year, they can expect to no longer have to meet the costs of the salary cap.
The FFA’s increased funding for clubs comes as a result of new sponsorship deals, reduced costs of not having to fund a FIFA World Cup bid, increased revenue from the AFC World Cup qualification tournament, not having to fund another World Cup campaign until 2014 and increased revenue from A-League operations last season.
This increased revenue stream doesn’t take into account the new federal government funding package for football which will be announced shortly, which is additional to the $8 million investment by the federal government in Western Sydney and women’s and junior football announced a few months ago.
The increase funding for A-League clubs is based on the FFA’s recently completed financial modelling done by Price, Waterhouse Coopers on a number of initiatives including the 2015 Asian Cup, which allows for the increased dividend without taking into account other potential sources of increased revenues.
However, the increased A-League club package is based on the financial forecasting for the remaining matches of the World Cup qualifying campaign, including three home games and the new A-League season revenues with the addition of the West Sydney Wanderers.
The FFA offer is not guaranteed, but only a marked collapse in gate and sponsorship income from those World Cup matches and a decline in the upcoming A-League season could possibly reduce the amount of the distribution.
“Increasing the annual distribution to the level of the salary cap is the priority and we can see good progress towards that target in 2012-13,” said an FFA spokesman. “As we’ve said before, building a financially sustainable A-League is the core strategic objective.”
Yesterday’s meeting of the JALSC is also believed to have involved discussions about the future of the women’s W-League and National Youth League and assisting Perth Glory and Newcastle Jets to fully commit to fielding teams in both competitions.
The FFA’s remarkable change in fortunes from its “imminent collapse” and the Clive Palmer rebellion continues strongly.
The FFA should be congratulated for not only surviving the huge challenges thrown at it in the last few years, but growing its core domestic business to move within touching distance of a financially viable national football competition.
Most importantly, it has also turned around the disgruntled owner’s and fan’s perceptions of the league.
July 26th 2012 @ 9:09am
Fact said | July 26th 2012 @ 9:09am | Report comment
FFA was already paying $1.45m. The increase will take it to $1.9m. Your comments are inaccurate.
July 26th 2012 @ 9:37am
Sports Candy said | July 26th 2012 @ 9:37am | Report comment
http://www.smh.com.au/sport/football/aleague-clubs-get-a-pay-rise-20120724-22nkv.html
July 26th 2012 @ 9:42am
Qantas supports Australian Football said | July 26th 2012 @ 9:42am | Report comment
Yes you are right this article is misleading..
July 26th 2012 @ 9:50am
Sports Candy said | July 26th 2012 @ 9:50am | Report comment
Raising the revenue share to A-League clubs to $1.9m and the promise to go to $2.8m once the new deal with Foxtel comes in is not good news for A-League clubs?
July 26th 2012 @ 10:40am
Qantas supports Australian Football said | July 26th 2012 @ 10:40am | Report comment
QSAF. Please support Australian Football in your own way – but if it’s about complaining about Frank Lowy or Gold Coast – we’ve heard it all 100x before and don’t want to hear it again. Get some positivity in your life. Address the articles, not your own soapbox arguments. Thanks, Roar Mods.
July 26th 2012 @ 2:48pm
Minister for Information for the Democratic People's Republic of Football said | July 26th 2012 @ 2:48pm | Report comment
Thank you Roar Mods. Our thoughts exactly. There must be a Gold Coast United forum for him somewhere?
July 26th 2012 @ 9:19am
ItsCalledFootball said | July 26th 2012 @ 9:19am | Report comment
That’s great news for the A-League clubs and will take the financial pressure off the owners so they can spend more on promotion and marketing.
It also has implications for expansion. If clubs become more profitable and the FFA can meet the salary costs then more owners, local and around the world, are likely to invest and within a year or two we will be talking expansion once again.
July 26th 2012 @ 9:43am
Sports Candy said | July 26th 2012 @ 9:43am | Report comment
One of the most important things is that the FFA is talking with A-League owners and listening and making concessions. That will attract new investors as well.
Its a big turn around from where we were a couple of years ago and has helped lift the veil of secrecy over what the FFA is doing. When you don’t communicate, your critics assume the worst and start negative press about you. Maybe we can thank CLive Palmer in some small way for that.
I think its mainly related to the World Cup Bid and the FFA not having the time or resources to focus on the A-League and letting it slide a couple of years ago.
Obviously with their heavy involvement with WSW now, they are shifting focus and resources back to building the domestic national football competition and not too soon either.
July 26th 2012 @ 9:44am
Australian Rules said | July 26th 2012 @ 9:44am | Report comment
This is wrong.
The increase was $450k, up from $1.45M, not the other way around.
Also, the increase in this initial funding is not yet guaranteed, it depends on the FFA meeting its cashflow budgets from the HAL finals series as well as corporate targets. Of course, once the impending media deal is done, its expected that the FFA will be able to cover the full cap for all clubs.
July 26th 2012 @ 10:18am
Fussball ist unser leben said | July 26th 2012 @ 10:18am | Report comment
Apologies: Posted in the wrong location
July 26th 2012 @ 12:47pm
Sports Candy said | July 26th 2012 @ 12:47pm | Report comment
I did say that in the article – para 13-15.
It would take a large collapse of the Socceroos attendances and A-League revenues to reduce the figure, but given the Socceroos are likely to qualify for Brazil 2014 and that WSW has replaced GCU, its hard to see that happening.
The Fox deal will cover it to $2.8m anyway, so its a mute point till then.
July 26th 2012 @ 9:59am
mahony said | July 26th 2012 @ 9:59am | Report comment
Yep – payment numbers around the wrong way. Regardless the general point of the article is spot on. The FFA is to be congratulated. We rolled the expansion dice on the World Cup bid and it backfired. We have brrn paying the price simes, but it is turning around.
Well done!
July 26th 2012 @ 10:20am
Futbanous said | July 26th 2012 @ 10:20am | Report comment
We should never underestimate that WC bid focus period in taking the eye off the ball,it was Frank Lowy’s big picture gamble.
He lost & IMO in some respects it was a good thing, as it brought the focus of football back to where it should have been in the first place ,building a strong sustainable domestic league.
July 26th 2012 @ 11:36am
Sports Candy said | July 26th 2012 @ 11:36am | Report comment
The FFA have admitted that to the clubs, but they also pointed out that if Australia had won the bid, it would have brought substantial benefits for football and the A-League as well.
Owning the WSW also guarantees that the FFA are very much involved in making the A-League competition a success.
And while the A-League revenues are not that great on a world scale, the costs aren’t that huge either with a growing supply of great young players, so they don’t need a billion dollar media deal to be profitable.
The FFA should be back in the black again this year.
July 26th 2012 @ 10:16am
Titus said | July 26th 2012 @ 10:16am | Report comment
I think he is saying, if the FFA increases the payment to $2.8mill to cover the salary cap as expected the following season, then that will represent an increase of $1.4mil on the current payment.
July 26th 2012 @ 10:33am
Sports Candy said | July 26th 2012 @ 10:33am | Report comment
Thanks Titus.
Sorry, but I did misunderstand the comment by Mike Cockerill “$450,000 of last season” in his article above.
It seems that that is the increase, not the amount of last season’s payment.
You are absolutely right, when the new Fox deal comes in, which may even be this year, the payments to clubs will grow to $2.8m or more which is an increase of $1.4m or more.
Anyway, if you look at the comments as a whole its absolutely great news for the A-League and its prospects into the future, because it will have a flow on effect for clubs viability and investment in the league by owners, players, managers and sponsors into the future.
For the first time ever, in a few years we will have a financially viable national football competition.
July 26th 2012 @ 11:18am
Qantas supports Australian Football said | July 26th 2012 @ 11:18am | Report comment
$450,000 per club… Congratulations now I get it…
July 26th 2012 @ 10:18am
Fussball ist unser leben said | July 26th 2012 @ 10:18am | Report comment
Yup – all coming along nicely.
So far, the evolution of the HAL has followed the life-cycle one expects from any start-up.
If we look at the HAL as “the brand” and football as “the product” …
… we know that, in AUS, we have a huge pool of customers for our product.
However, the market is highly fragmented with football customers currently spread across a wide array of brands: AUS State leagues, EPL, Serie A, Bundesliga, Sth American leagues, Asian leagues, etc. etc.
Our focus now is is to entice these football customers to have the HAL brand part of their annual football experience – in addition to, or instead of, their existing brand purchases.
Blue Sky Ahead – WE ARE FOOTBALL!
July 26th 2012 @ 11:20am
Sports Candy said | July 26th 2012 @ 11:20am | Report comment
Fussball amazing turn around by FFA in the last 6 months.
In boxing parlance the FFA have climbed back up off the canvas after being king hit by Clive Palmer and kicked in the guts by Nathan Tinkler to land a left hook right on the chin of Jesse Fink and Professor Foster.
The bell has rung and can’t wait till they come out swinging in the next round.
July 26th 2012 @ 10:35am
Ian Whitchurch said | July 26th 2012 @ 10:35am | Report comment
This is the most interesting para for me.
“The FFA advised that the media deal negotiations are at an advanced stage and the Fox Sports deal would be worth at least double the existing contract, plus other additional and new revenue streams from other sponsors and media and internet outlets. ”
OK, so the current deal – and correct me if Im wrong – is $120m over 7 years. Lets say the increase is a bit better than double, so the new deal with be $120 over 3, or $40m a year (more probably, it’s $160 over 4, to match with World Cup cycles).
Thats $40m a year, or about a fifth of the AFL or a quarter of the NRL, which is about right. At $2.8m a club for 10 clubs, that leave FFA net $12m to do all the other things they need to do.
For back of the envelope numbers, that sounds pretty realistic, and it isnt a bad model.
July 26th 2012 @ 10:41am
Sports Candy said | July 26th 2012 @ 10:41am | Report comment
Yes, seems like $40m is realistic enough for the Fox deal and maybe in hindsight they should have taken the $60m a year offered a couple of years ago.
But they are also hinting at “other TV interests”, maybe FTA and the electronic media and internet which could be worth another $10-15m per year.
So the total media package could still be as high as $50-60m a year, which will help fund a lot of new initiatives at all levels.
July 26th 2012 @ 10:48am
Titus said | July 26th 2012 @ 10:48am | Report comment
It will also be interesting to see if there is some FTA content. We know that the WCQ’s will be on FTA and the talk is that the a-league will have a FTA presence in the new deal, so a doubling of the rights that includes FTA is pretty good.
July 26th 2012 @ 11:06am
Ian Whitchurch said | July 26th 2012 @ 11:06am | Report comment
Sports Candy,
I’d be surprised if the ‘other TV interests’ added to more than 10% of the deal, at least initially.
In the long run, you want to move to the model the AFL are going to, which is selling games directly to punters, with no media whatsover.
Titus,
I hope FFA will take less money to get guaranteed FTA exposure.
For me, $160/4 with guaranteed FTA TV that supports A League teams on a circa $3m cap that makes the A-League a decent-quality feeder league is better than a $180/4 with no free TV and a circa $3.2m cap.
The latter scenario will maybe replace one donkey with a decent player on each side, leading to a marginal increase in quality – but it will be quality fewer people will be exposed to.
Guarantee your survival, and then plan for the long term.
July 26th 2012 @ 11:26am
Sports Candy said | July 26th 2012 @ 11:26am | Report comment
Its hard to say what the “other revenue” will be and how much they allow for FTA or other overseas networks.
Maybe FFA are dealing directly with ESPN, FOX Soccer, Star Network, Sky Sports and the other overseas networks instead of letting Fox Sports Aust sell the rights like they did previously. That could be worth another $40-50m a year. Who knows.
You also have to add state and federal govt grants with a new deal to be announced later this year. The last deal was worth $12m a year and the federal govt recently gave the FFA an $8m one off payment for West Sydney, Women’s and Youth football.
July 26th 2012 @ 3:27pm
Ian Whitchurch said | July 26th 2012 @ 3:27pm | Report comment
Sports Candy,
Stop imitating Fussball and thinking with your hopes. FFA have given their clubs indiciative numbers so they can do cash flow planning. They’ve quoted a number, and its a realistic number, based on a minimum increase of double in the TV contract, which they should get (association football in Australia *is* currently worth about a fifth of what AFL is worth).
They’ve done this because they are confident that number will turn up.
If they were confident of defnitely getting an extra $10m a year from overseas rights and whatnot, they’d have put a number on it.
Therefore, FFA arent confident of that money. If it shows up, great, but they are telling their people not to plan on it.
Likewise, I wouldnt be counting on Federal money, especially not Federal money that can pass through to private club owners. If it shows up, great, but they are telling their people not to plan on it.
July 26th 2012 @ 7:15pm
Fussball ist unser leben said | July 26th 2012 @ 7:15pm | Report comment
“FFA have given their clubs indiciative numbers so they can do cash flow planning”.
Ian Whitchurch
What are you on about?
How could extra FFA revenue have any impact on any HAL club’s cash flow planning?
The quantum of dividend the FFA disperses is dependent on the actual broadcast revenue it receives.
So,
a) If the FFA has OVER-estimated their broadcast rights revenue and the FFA receives LESS revenue than forecast, then, “yes”, this will impact the dividend paid to HAL clubs & will impact HAL clubs’ forecasting & planning.
However,
b) If the FFA has UNDER-estimated their broadcast rights revenue, and the FFA receives MORE revenue than forecast, the dividend paid to HAL clubs will not be impacted.
It’s simply absurd to think otherwise & displays a poor grasp of basic accounting principles.
July 26th 2012 @ 11:39pm
Sports Candy said | July 26th 2012 @ 11:39pm | Report comment
Ian,
stop being an Ian Whitchurch and pouring cold water on the FFA every time there’s some positive news about the A-League.
The FFA are going to cover the $2.8m salary cap costs by the end of this year, whatever the media deal is worth. That’s a very generous offer and gives the A-League clubs a big boost in their quest to be profitable.
If they get a lot more than that, then the FFA will spend it on Australian football from juniors up to the Socceroos so the sport and ultimately the A-League will benefit in other ways.
Why not count on the government to keep up the annual grants to the FFA. They just gave them 8m to kickstart west Sydney and women’s and junior football in the area.
The government realises that football is the biggest participation team sport in the country, so the social, economic and health benefits will be returned to the country in so many ways that you can’t put a figure on it.
July 26th 2012 @ 12:36pm
Sports Candy said | July 26th 2012 @ 12:36pm | Report comment
Titus,
there must be an FTA compnent in the next media deal because the Socceroos WC Qualifiers are going to be on the Anti-Siphoning list when its made law later this year.
July 26th 2012 @ 11:03am
Fussball ist unser leben said | July 26th 2012 @ 11:03am | Report comment
Sounds right – all p.a. figures
Foxtel:
Current: $17-21m
Future: $35-$40m
FTA
Current: $0
Future: $7-10m
Digital/on-line
Current: $0
Future: $10-15m
(Note: I think the digital could be much, much higher if the FFA is serious & creates its own pay-per-view HAL.com.au broadcast channel to the world)
Total:
Current: $17-21m
Future: $52-65m
Note:
1. Not included – broadcast rights for any of the AUS NT matches (men, women, youth) that are NOT owned by WSG.
2. World Cup cycles have no direct impact on any broadcast revenue for AUS football. The FFA doesn’t own the rights to any of the WCQs or ACQs, but receive a flat $1m per match from the media company – World Sports Group – who purchased the broadcast rights from the Asian Football Confederation.
July 26th 2012 @ 11:04am
Futbanous said | July 26th 2012 @ 11:04am | Report comment
To put any new TV deal in perspective need to see what the A-League kicked off with in 2005.
Wasn’t it 750,000 a year?
John O’Niell said something like were selling promises at the time.
July 26th 2012 @ 11:22am
Midfielder said | July 26th 2012 @ 11:22am | Report comment
Fut
Very true but even further .. Football had no track record … today it has and it is well above what was tho when the original deal was done..
I assume FFA will point out our current ratings reflect very little media …give us a bit more coverage and the ratings will go up further maybe to 40% of the AFL …
What Football has that neither the NRL or AFL has is heaps of blue sky .. it’s hard to see ratings fall but it is easy to see them go up… especially now we have a WS team .
July 26th 2012 @ 11:43am
Futbanous said | July 26th 2012 @ 11:43am | Report comment
Football always had some blue sky,but I would suggest that even if we were in Asia 30 years ago it was more grey clouds.
Now its definitely clear blue skies in Asia,its up to us how far we can travel.
July 27th 2012 @ 11:01pm
Zac said | July 27th 2012 @ 11:01pm | Report comment
Not true!
First season Foxsports paid $750K.
During the early part of the second season after the euphoria of the 2006 World Cup and great attendance figures for the first season of the HAL, Foxsports moved quickly to ‘STEAL’ the rights for $120M over 7 years OR a pathetic $17M per season!!!!!!!!!!!!
It was Highway Robbery!!!!!!!!!!!!! AND they’re at it again trying to ROB US on the next deal!!!!!!!!!!!!!!!!
July 26th 2012 @ 11:47am
Sports Candy said | July 26th 2012 @ 11:47am | Report comment
The original media deal in 2005 was with Fox Sports exclusively for $120m over 7 years or about $17m a year.
It was an unknown start up league and a business risk, so Fox got the exclusive rights to all FFA’s games including the Socceroos and the most benefit and sold the rights to other media and internet and overseases cable networks.
The next deal should be more equitable and in the FFA’s words, worth at least double that just for the Pay TV rights alone.
The FFA will also be more media savvy and business wise and the total revenue package should be $50m a year or more.
July 26th 2012 @ 11:57am
Futbanous said | July 26th 2012 @ 11:57am | Report comment
I’ll think you’ll find that the 120m over 7 years was not the original media deal it was around 750,000 a year or 4.5 million over 5 years. That deal came soon after.
July 26th 2012 @ 12:06pm
Futbanous said | July 26th 2012 @ 12:06pm | Report comment
750,000 over 3 years. The 120m was signed after the first A-League season according to this article in 2006:-
http://www.theage.com.au/news/soccer/aleague-poised-for-tv-cash/2006/03/05/1141493548536.html
July 26th 2012 @ 12:43pm
Sports Candy said | July 26th 2012 @ 12:43pm | Report comment
Thanks Futbanous,
wasn’t aware of that and thought it was from year one.
That makes sense since the deal expires at the end of this season and the FFA are hoping to sign a new deal by the end of this year.
Interesting Neil also said back then that it would allow the FFA to give back to clubs between $1.5 and 2 million a year to “wipe out their debts”.