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Brisbane Roar’s ownership is “in the balance” according to FFA chief executive David Gallop, and today the Bakrie Group may finally find themselves stripped of their A-League license. Yet even though FFA’s intervention would bring a welcome end to the farce in Queensland, it could pose problems for future investment.
The Roar’s dramas have been well documented in mainstream media, especially through AAP journalist Vince Rugari.
In short, the club’s owners have failed to pay player and staff wages twice within three months amid a well documented fall from billionaire status to sinking ship with a reported $9 million debt.
There have been accusations of financial mismanagement thrown between the Bakrie Group and former Roar managing director Sean Dobson, further muddying waters that will likely never become clear.
Bakrie Group chairman Chris Fong has been promising fans and FFA that a sale is imminent, ever since a premature statement back in July announced that a price had been agreed with a third party.
It is now almost two months since that release, and FFA have finally issued a hardened response ahead of showdown talks today with Bakrie Group officials.
“The choice is very clear. If the Bakrie Group wants to stay in the A-League, the debts need to be addressed immediately, wages need to be paid to staff and stability restored,” Gallop said.
“We are very confident that, if necessary, we can stabilise the club, find a new investor and create a bright future for the club.
“But the current uncertainty is damaging the club and we are no longer in a position to tolerate the situation.”
Unless the Bakrie Group stumps forth a guaranteed cash injection by today or provide reasonable proof that a sale is close, it appears FFA are no longer willing to hand out second chances.
A backflip from the Bakrie Group would be no surprise if they can find parachute funds to keep the Roar on life support – they value the club at $10 million and will understandably not give that up easily.
However, FFA could still attempt to strip the license, and then likely build on the Bakrie Group’s existing negotiations with third parties to finalise a sale.
Sound familiar?
FFA are still reportedly thrashing out a deal with Dundee United chairman Stephen Thompson for the ownership of the Newcastle Jets. Former embattled owner Nathan Tinkler first sounded out Thompson earlier in the year but was forced to relinquish the Jets license after placing the club into voluntary administration.
FFA are on target to profit from one owner’s financial empire crumbling, albeit having to step in and take control of operations momentarily, and look set to do the same with another.
There is no question that both Tinkler and the Bakrie Group must cop the blame for poor governance, yet FFA have questions to answer of their own structures and practices.
Welcoming millionaire or billionaire investors with open arms and pocketing a neat license fee is a breeze. Conducting due diligence on said investors and putting in frameworks for financial sustainability is a lot harder.
Australian football ownership is not an investment at the moment. It is a charity. Owners are unlikely to see returns on their investment for years if not decades. The collective losses between A-League owners over 10 years has been reported as between $100 and $200 million.
Prior to the 2014-15 season Gallop boldly claimed that half of the 10 A-League clubs would break even or make a profit, so he clearly believes it is possible for the league to become sustainable in the near future.
Yet only Melbourne Victory made a profit, of about $1 million, and Adelaide United and Western Sydney Wanderers were the only two teams to break even. The total losses in the league from 2014-15 are thought to be $10 million, with about $2 million attributed to the Roar.
One wonders whether Gallop thought the Roar were set to break even, or at least which other two clubs he had in mind. Why were Gallop’s expectations not met? It is FFA’s job to investigate, assess and produce solutions in partnership with A-League owners.
Poor business management is not exclusive to the A-League, the NRL are currently propping up three clubs, and Australian businesses in general struggle at times in the current financial climate. Yet more has to be done to identify new, reliable owners, and also to appease them. It makes sense for FFA; they cannot continue to run A-League clubs forever.
Foreign investors are unlikely to be convinced to enter A-League ownership when they see the track record of failed ventures and the ability of FFA to strip away licenses when they fall into trouble.
That a club which has won three grand finals and two premierships can fail to break even with average crowds hovering around 15,000 is worrying, especially with the salary cap covered.
The A-League has had many winners over the first 10 years of existence – the fans, the FFA, the Socceroos, the players, the coaches, the sponsors and the broadcasters – yet there has been one distinct loser – the owners.
Improved communication and increased collaboration with owners has to happen. Loosening sponsorship restrictions – the NCIP for one – and giving clubs increased control over promotions – the generic club websites come to mind – would be a start.
A-League owners have expressed displeasure previously, and if not for Clive Palmer’s erratic nature there could once have been significant pressure placed on FFA to introduce change. Unfortunately the philanthropists get forgotten by the general football fan, much like philanthropists in the rest of the world.
A-League supporters are transfixed on the next broadcast deal and the supposedly inevitable two-team expansion, but the real concern should be directed towards how FFA can assist clubs to break even.
A further cash injection through TV money would help, but so too would the identification of reliable investors, through detailed assessment, and continued collaboration with owners to find better solutions.
Otherwise FFA may see the next bumper broadcast deal scuppered due to the collapse of one or two existing clubs.
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