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

ItsCalledFootball Roar Guru

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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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    The Crowd Says (292)

    • January 12th 2012 @ 6:59am
      Fake ex-AFL fan said | January 12th 2012 @ 6:59am | ! Report

      But the good thing is ICS you’re not remotely obsessed or fixated upon the AFL and its affairs! I look forward to the next in your regular series of hard hitting exposes about why it’s unfair that Australian Football is so much more successful than soccer in Australia.

      • Roar Guru

        January 12th 2012 @ 7:11am
        Redb said | January 12th 2012 @ 7:11am | ! Report

        Exactly. Perhaps an expose on Pay TV ratings and how the A League is disadvantaged by an AFL conspiracy to keep the ratings numbers low, very low 🙂

        • January 12th 2012 @ 7:40am
          Fake ex-AFL fan said | January 12th 2012 @ 7:40am | ! Report

          There must be a conspiracy to explain some of the terrible A-league numbers. For example, the biggest soccer audience for wk 1 on Pay TV was Adelaide v Brisbane with 73K, whilst the corresponding BBL game on at the same time gathered an audience nearly 400% GREATER!!!

          Real concerns for the FFA , as it appears that their Harry Kewell led early season increase in TV ratings and crowds was a dead-cat bounce, with both sets of figures back down near historical lows. Melbourne in particular has seen a massive drop off, with the victory struggling to half-fill its purpose built rectangular arena, while the heart continues to attract NBL-like crowds.

          • Roar Guru

            January 12th 2012 @ 7:50am
            Redb said | January 12th 2012 @ 7:50am | ! Report

            Maybe A League clubs should look at installing pokies as a means of raising revenue. The pay tv ratings are not likely to yield a good TV deal.

            http://assets.astra.org.au.s3.amazonaws.com/ec7a1db42a25d7805242494a0f7592c4/ASTRAWeek1.pdf

            • January 12th 2012 @ 8:33am
              Fake ex-AFL fan said | January 12th 2012 @ 8:33am | ! Report

              Ouch! Being trounced by a competition with even less history than theirs, the gap between soccer and the mainstream Australian sports seems to be getting even wider, not narrower as soccer fans had hoped with the signings of a couple of ageing hacks earlier this year.

              • January 12th 2012 @ 11:38am
                Jaceman said | January 12th 2012 @ 11:38am | ! Report

                Funny my first poker machine playing was at the Apia Italian soccer club in Leichhardt!!

              • Roar Guru

                January 13th 2012 @ 8:19am
                Redb said | January 13th 2012 @ 8:19am | ! Report

                Its pretty clear their market is not mainstream and with their weird views on Australia and difficulty in understanding even basic structures who can be surprised.

            • Roar Guru

              January 12th 2012 @ 10:09pm
              ItsCalledFootball said | January 12th 2012 @ 10:09pm | ! Report

              Didn’t take you long to stray off the topic.

              What are you going to quote next – the 2001 NSL attendance figures.

              Are you able to form an opinion on your own about the topic and can you answer the question I asked you as to whether you support the AFL’s move to acquire more poker machine licenses and if they should pay no tax on poker machine profits.

    • January 12th 2012 @ 7:00am
      Boomshanka said | January 12th 2012 @ 7:00am | ! Report

      If sporting codes were able to realise the full value of their tv rights instead of being hampered by anti siphoning legislation then they wouldn’t need to be crying poor with respect to the need for pokie reform.

      • Roar Guru

        January 12th 2012 @ 1:44pm
        ItsCalledFootball said | January 12th 2012 @ 1:44pm | ! Report

        AFL isn’t hampered by anti-siphoning Boomshanka and gets a pretty good treatment from the TV stations.

        Ten and seven continue to broadcast AFL on FTA prime time even though it doesn’t rate with Sydney viewers.

        • Roar Guru

          January 12th 2012 @ 1:56pm
          The_Wookie said | January 12th 2012 @ 1:56pm | ! Report

          And the AFL takes a big financial hit for that privelige. Its why the contra part of the AFL deal is worth as much as it is, and the AFL isnt crying poor over pokies in any case.

        • January 12th 2012 @ 5:37pm
          stabpass said | January 12th 2012 @ 5:37pm | ! Report

          Ten does not show the AFL at all now, but i did notice that watching the Hopman cup in Perth, that there was quite a lot of promotion for some AFL teams during the telecasts , do you think that the AFL is paying Ten ICF ?, or do you think that in general people are interested in the upcoming AFL season.

          • Roar Guru

            January 12th 2012 @ 10:11pm
            ItsCalledFootball said | January 12th 2012 @ 10:11pm | ! Report

            That’s paid advertising and different to reality TV shows.

            • Roar Guru

              January 12th 2012 @ 11:09pm
              The_Wookie said | January 12th 2012 @ 11:09pm | ! Report

              and again staterments made without evidence. You failed to provide a single link in your thread on this and in any subsequent replies.

              • Roar Guru

                January 12th 2012 @ 11:46pm
                ItsCalledFootball said | January 12th 2012 @ 11:46pm | ! Report

                And where’s your proof that it isn’t?

                All through the tennis in Sydney, they had paid ads for AFL.

              • January 13th 2012 @ 10:55am
                TomC said | January 13th 2012 @ 10:55am | ! Report

                ICF, I look forward to your next article about how the AFL is murdering cute little puppies. And when we complain that it isn’t true, no doubt you’ll respond with ‘Where is your proof that it isn’t happening?’

    • Roar Guru

      January 12th 2012 @ 7:07am
      Redb said | January 12th 2012 @ 7:07am | ! Report

      Firstly, ‘AFL’ is not the only sporting body concerned with the pokie changes, in fact it has been relatively low key compared to the NRL who launched an advertising campaign. Surf life saving clubs, RSL’s, etc have pokies. Most clubs do, so don’t single out AFL clubs.

      Secondly, the AFL itself does not earn any pokie revenue so your point about tax breaks and execs salary is ridiculous. AFL clubs individually earn pokie revenue. However It does not change their not for profit status as it is one form of revenue raising (albeit insidious) like a raffle ticket competition,etc by any club.

      I have no objection to the pokie changes as I can’t stand them. My only objection is the Nanny State thinking that people can’t take responsibility for themselves so the Government steps in to think for them.

      • Roar Guru

        January 12th 2012 @ 1:51pm
        ItsCalledFootball said | January 12th 2012 @ 1:51pm | ! Report

        AFL is investing heaily in poker machines and plans to double its pokie armada this year.

        Yes, other sporting clubs do have pokies, but I am against poker machine gambling as a rule. The fact that the AFL are diving headlong into this is of concern.

        Its also a bit rich that they oppose any government changes on the grounds that it will “kill off AFL clubs”. I think that claim is a bit absurd.

        What do you think redb?

        Also the majority of sporting codes including the FFA and A-League clubs don’t own poker machine licenses and you would have to admit they need the money a lot more than the AFL do.

        Its also a bit abhorent and going over the mark to be a tax free sports support organisation and then collect Poker machine money tax free.

        I think that the government should tax any revenues that are not directly football related or even take away their tax-free exemption if they continue to expand their poker machine operations.

        • Roar Guru

          January 12th 2012 @ 1:57pm
          SportsFanGC said | January 12th 2012 @ 1:57pm | ! Report

          So can we expect a similar article regarding the NRL stance on pokies and the proposed reforms?

          Also would you continue to support the A-League if it was announced that all 10 clubs were going to get pokie licences and start generating revenue in that manner?

          The question is – Are you just concerned by the AFL or does this concern spread to other sports and organisations that rely on the “Pokie Dollar” to survive?

          I have no objections to the proposed reforms, it is obvious that some people cannot control themselves when the lure of a jackpot is just a spin away!

        • Roar Guru

          January 12th 2012 @ 2:04pm
          The_Wookie said | January 12th 2012 @ 2:04pm | ! Report

          TWo club presidents oppose it. The AFL does not oppose pokie reform and the CEO of the AFL has publicly said so. The AFL is not investing heavily – although some clubs may be doing so – and are well behind their NRL counterparts in doing so. Your FFA clubs may not have pokie machines, but your lower level clubs do, as will be the case in most codes.

          The Government has acknowledged the AFLs desire to work with the reformers. You cant do much more than that.

        • Roar Guru

          January 12th 2012 @ 3:34pm
          Redb said | January 12th 2012 @ 3:34pm | ! Report

          AFL and AFL clubs are different entities. Got it?

          • January 12th 2012 @ 6:12pm
            amazonfan said | January 12th 2012 @ 6:12pm | ! Report

            He never will. ICF still doesn’t get that AFL and Australian Football are not one and the same. His entire anti-Australian Football mentality is based around him believing that the AFL, AFL clubs, and the game itself are a monolithic entity that is out to dominate the world.

          • Roar Guru

            January 12th 2012 @ 10:19pm
            ItsCalledFootball said | January 12th 2012 @ 10:19pm | ! Report

            The term AFL is used in a number of ways and the confusion is not caused by me.

            AFL is the game, as in a game of AFL.

            AFL is the competition.

            AFL is the AFL Commission that administers the AFL clubs and runs the AFL competition and governs the game of AFL.

            The AFL clubs report to and are licensed and affiliated to the AFL commission.

            I’m not the only one who has an opinion on this
            http://www.latrobe.edu.au/fbel/about/news/news-articles/flm-news-85

            There are plenty of articles like this, if you want to take the time to read them.

            • Roar Guru

              January 12th 2012 @ 10:42pm
              The_Wookie said | January 12th 2012 @ 10:42pm | ! Report

              That actually says nothing about the nomenclature issues you have here. AFL is not the name of the game, even if its acceptably promoted as such in NSW and QLD.The code has been Australian Football for more than a hundred years. Its why the league is called the Australian Football League and not the AFL AFL

              • January 12th 2012 @ 10:54pm
                Ian Whitchurch said | January 12th 2012 @ 10:54pm | ! Report

                The Wookie,

                But words mean what ICF wants them to mean.

              • Roar Guru

                January 12th 2012 @ 11:47pm
                ItsCalledFootball said | January 12th 2012 @ 11:47pm | ! Report

                AFL is AFL

              • Roar Guru

                January 13th 2012 @ 12:08am
                The_Wookie said | January 13th 2012 @ 12:08am | ! Report

                right. so tell me how you arent trolling again..

            • Roar Guru

              January 13th 2012 @ 8:17am
              Redb said | January 13th 2012 @ 8:17am | ! Report

              Still don’t get it do you.

              The AFL does not own or run pokies.

              The AFL has not cried poor. (except to the AFLPA lol )

              End of argument.

            • January 13th 2012 @ 11:38am
              Jaceman said | January 13th 2012 @ 11:38am | ! Report

              Why pick on the AFL is our point – Pokies are much more prevalent in nSW

      • January 15th 2012 @ 7:05am
        chris said | January 15th 2012 @ 7:05am | ! Report

        The AFL earns from pokies indirectly – money generated at a club level is less headquarters has to provide.
        This is why the AFL are buying into the debate and its TAX FREE and getting FREER.
        And your nanny state argument must logically suggest that heroin should be freely available and toys that kill babies should not be banned.

    • Roar Guru

      January 12th 2012 @ 7:24am
      The_Wookie said | January 12th 2012 @ 7:24am | ! Report

      I assume we can expect more anti-AFL articles from you as times go by. A couple of things you failed to mention:

      Big headline in the Australian on September 26th, 2011:
      “AFL chief Andrew Demetriou slaps down clubs movement over pokies push”

      The AFL itself did NOT complain about the pokie reform. As opposed to organisations not worthy of an article by this author, notably the NRL. In fact, Andrew Demetriou is on record as saying that while the proposed pre-commitment scheme would almost certainly reduce club revenues, the AFL was also cognizant of the issues related to problem gambling and would be happy to work with the government on the matter.

      Andrew Demetriou himself said that the actions taken by some AFL clubs, the NRL and clubs Australia was NOT supported by the AFL at all. The AFL stance was applauded by the Governments Families minister, Jenny Macklin who said that Demtriou had shown the holes in the anti reform campain, ““I think the AFL have demonstrated they agree with the government that we have a duty of care to people with poker machine addiction”

      Clubs may oppose the legislation – none more violently than NRL clubs, some of whom rely on the grants from Leagues clubs which are almost solely based around pokie machines. As usual two of the louder club presidents, Mcguire and Kennett, were the only ones to speak up. These two, while colourful, do not represent the AFL. They dont represent a majority of the AFL. It is however their job to look after their revenue sources. Estimates put the income reduction by around 20-40% depending on the club.

      Of the 300 million in revenue the AFL makes a year not one cent comes from pokie machines.

      As for the tax exempt part, you should know that your beloved FFA clubs, and indeed most sporting clubs are tax exempt in accordance with section 50-45 of the Income Tax Assessment Act 1997, that is the exemption status of a club put together for a game or sport. You may also wish to note that Government funding for the FFA – just so it can operate – exceeds the total funding supplied to the AFL and the NRL put together and Im doubting that tax is paid on that.

      While you find it hard to swallow, the income derived from these pokie machines is spent on football. Further, ALL clubs are required to spend a certain amount of the income in community objectives that are somewhat sporadically audited by the Victorian Government. The AFL itself spends millions upgrading community facilities across the country every year – and is the only code to do so. In this case we arent just referring to big stadiums either, we’re talking about your average community sports oval. Clubs spend money on youth sport and education, aboriginal development assistance, education and the AFL supplies support and infrastrucutre for any Australian football club across the country for insurance and administration assistance.

      Eagerly awaiting your next article trolling the AFL district of the Roar.

      • Roar Guru

        January 12th 2012 @ 7:42am
        Redb said | January 12th 2012 @ 7:42am | ! Report

        Good points. In fact Demetriou reacted angrily and publicially rebuked the head of Clubs Australia for suggesting the AFL was right behind them.

        Its interesting that troll comments will get deleted but an entire troll article is published by a known AFL hater.

        • Roar Guru

          January 12th 2012 @ 10:25pm
          ItsCalledFootball said | January 12th 2012 @ 10:25pm | ! Report

          The moderators decide which articles get published not me and I congratulate them for having an open mind about these issues.

          There seems to be a tendency in Victoria not to criticise the AFL, and cover it with candy floss as they are trying to do in Sydney with the GWS manufactured interest.

          I just like to see some balance in the reporting, as you should too.

          I have also written negative articles about football and posted critical comments about football articles too if you would like to take the time to read them.

          So its not a hate campaign, just trying to get some genuine discussion going amongst sports fans – not just invented hype – you should appreciate that, I would have thought.

          • Roar Guru

            January 12th 2012 @ 11:28pm
            The Cattery said | January 12th 2012 @ 11:28pm | ! Report

            There ain’t a problem introducing general sporting issues for discussion – but if you were interested in the general issue of sporting bodies not paying income tax on pokies revenue – you would make it a general issue – it’s not an AFL issue – which does not get one single cent from pokies revenue in any event.

            In other words your whole article is based on an entirely false premise. Either you’re ignorant, or being mischievous, but I will give you the benefit of the doubt, and conclude that you’re ignorant.

            • Roar Guru

              January 12th 2012 @ 11:50pm
              ItsCalledFootball said | January 12th 2012 @ 11:50pm | ! Report

              Financialy the AFL is in a unique position in Australia and doesn’t deserve to have tax free status on revenues obtained from pokies and I am not the only person who is saying that, if you care to read the articles I have quoted.

              If anyone is ignorant on the topic it would seem to be those who react to everyting I say without reading the literature surrounding it.

              • Roar Guru

                January 13th 2012 @ 12:00am
                The_Wookie said | January 13th 2012 @ 12:00am | ! Report

                Actually you are the ONLY person saying it should only apply to the AFL. Everyone else is saying it should apply to all clubs. From the Grassroots to the pros. The AFL issue with pokies isnt a patch on certain other leagues, but you dont care about that.

              • January 13th 2012 @ 7:43am
                Boomshanka said | January 13th 2012 @ 7:43am | ! Report

                Businesses in general (including many sporting codes and media moguls) spend much time privatising profit while lumping costs and losses onto general society. We see this with polluters, pokie operators, insurance and more recently banks.

                The AFL is not alone in this and to put a bit of balance into the argument the NRL also plays the loss / profit game, but is nowhere near as successful as their southern counterparts.

                By maximising income into the non profit and tax free side of the business (ie the commission), whilst minimising clubs profitability, then one could argue the AFL (and others) are playing a large tax avoidance game.

                As money is normally only important when you have a lot or none (ie the AFL is doing quite nicely at the moment), then I do feel ICF has a case to single out the the AFL as an example of the extremes (at the moment).

                The AFL Commission as it stands is there to primarily make money (as should all football administrations). Maybe given the extremes of the AFL at the moment then a question as to the validity of its tax free status is valid (as I would question all commercial sporting organisations that operate close to a billion dollars worth of turnover a year)

                The following recent link should put a perspective on how a profitable commission is maintaining other parts of the business at a loss whilst enjoying large windfalls.

                http://www.smh.com.au/afl/afl-news/nine-afl-clubs-to-post-losses-20111217-1p06e.html

              • Roar Guru

                January 13th 2012 @ 8:30am
                Redb said | January 13th 2012 @ 8:30am | ! Report

                Boomshanka,

                Football clubs exist to win games period. The reason many make losses is they spend on the football department to do just that. Criticially any competition with a compulsory (92.5%) salary cap forces all the clubs to pay their players at cap levels whether they can afford it or not. The poor performing clubs or those that are rebuilding always struggle and will make losses and vice-versa.

                You have also blundered in not understanding the structure. AFL clubs are independently owned by their members not the AFL. AFL HQ is a separate entity and does not report the clubs revenue or expenses in their own results. So the tax treatment of individual clubs and the AFL are separate, the whole basis of this article and your argument is redundant.

              • January 13th 2012 @ 9:06am
                Boomshanka said | January 13th 2012 @ 9:06am | ! Report

                Redb

                When you say ..”So the tax treatment of individual clubs and the AFL are separate” I agree, however this does not make the argument redundant as the whole AFL / Club relationship is a cartel (legal but a Cartel nonetheless).

                As a cartel it is easier for monies to be slotted to where ever the structure dictates to maximise return through the use of grants and fees (as clearly demonstrated in the smh link).

                The cartel dictates how much money can be used for players (through the salary cap) which in any other industry would be a restraint of trade.

                The clubs and the AFL enjoy a privileged and protected status whilst being the recipients of a lot of taxpayer money, all the time being a successful private enterprise. Every reason why the tax status of such should be questioned.

              • Roar Guru

                January 13th 2012 @ 9:26am
                Redb said | January 13th 2012 @ 9:26am | ! Report

                Boom,

                The AFL and AFL clubs are not a cartel. A cartel is a group of major competitors who secretly join forces to set pricing in a market or control supply to it.

                Still missing the point, the AFL does not coordinate half the clubs to make a loss to improve its tax status. Its absurd.

                The AFL is a governing body, the clubs are separate entities.

              • January 13th 2012 @ 9:32am
                Boomshanka said | January 13th 2012 @ 9:32am | ! Report

                Redb

                With respect, the AFL is a Cartel. Better explained here by Braham Dabscheck, a Senior Fellow, Faculty of Law, University of Melbourne who wrote the following;

                http://www.theage.com.au/afl/afl-news/afl-cartel-reaches-a-crossroads-20110627-1gnhr.html

                The AFL have ultimate control over revenue and therefore can pay as much or as little as it wants, hence some clubs will post a loss while others will do better. AFL HQ seems to do the best.

              • Roar Guru

                January 13th 2012 @ 9:54am
                The_Wookie said | January 13th 2012 @ 9:54am | ! Report

                You’ll have noticed that the article says ALL sporting leagues are effectively Cartels.

              • January 13th 2012 @ 10:06am
                Boomshanka said | January 13th 2012 @ 10:06am | ! Report

                Nothing new here.

                Cartels are allowed for sporting bodies (as they need to “level” the playing field to improve competition by fiddling with salary caps and other allowances / draft picks etc), but its a tenuous exception particularly the larger and financially successful ones).

              • Roar Guru

                January 13th 2012 @ 10:28am
                The_Wookie said | January 13th 2012 @ 10:28am | ! Report

                You’d have to change the law and put a threshold on success, something which would freak out not just the AFL, but Cricket Australia, Tennis Australia, and the NRL – all of which are on massive TV deals worth hundreds of millions. Not to mention the FFA, which would like to be.

              • Roar Guru

                January 13th 2012 @ 10:42am
                The Cattery said | January 13th 2012 @ 10:42am | ! Report

                Boomshanka
                You could make an argument about the AFL being a cartel as far as professional Australian Football goes, i.e. only the present 18 clubs are allowed in the comp, and only the AFL and clubs jointly can decide to admit new entrants, but even then, there are a stack of semi-professional footy comps running their own show and making their own decisions about who to admit.

                But in terms of the sports industry, the AFL is one of maybe 10 big players (incl soccer, League, Union, cricket, horse racing, tennis, Formula 1, plus other assorted sporting events). So from that perspective, it’s impossible to make an argument that the AFL is a cartel.

                And then once you agree that sport is part of the entertainment industry generally, which it is, then the argument of a cartel goes out the window well and truly.

                In any event, I’m not sure if you have noticed, but the nature of a sporting competition is such that entry of new clubs is strictly regulated, which makes sense, you can’t have a club turn up mid-season and expect to play, etc.

                All in all, you are like a few of the others – you’re main beef is that the AFL is successful – that’s the thrust of your argument.

              • January 13th 2012 @ 11:21am
                Boomshanka said | January 13th 2012 @ 11:21am | ! Report

                The Cattery

                I agree with you that sport (particularly the larger stuff) is entertainment and this reinforces the validity of the tax status argument. I’m sure as tax payers we should really ask why should we be exempting these large entertainment organisations which appear to be in receipt of a lot of public money with good access to our politicians.

                Like The_Wookie says, “it would freak out not just the AFL, but Cricket Australia, Tennis Australia, and the NRL……”

              • Roar Guru

                January 13th 2012 @ 11:27am
                Redb said | January 13th 2012 @ 11:27am | ! Report

                Note the use of ‘cartel’ is in commas. Sport is different to business. The author uses ‘cartel’ to attract attention, it’s falsely applied.

              • January 13th 2012 @ 11:51am
                Boomshanka said | January 13th 2012 @ 11:51am | ! Report

                Redb

                It’s not restricted to one article or authors opinion;

                From: The Australian Football League’s Recent Progress: A Study In Cartel Conduct And Monopoly Power;

                The transformation of the AFL from a parochial suburban competition to heavily commercialised national league is analysed through the prism of cartel structure and conduct.

                It is concluded that first, even in its previous guise as the VFL, it adopted many cartel-like features, including controls over player transfers, fixed admission prices, and gate equalisation policies.

                Second, the establishment of a governing Commission in 1984 strengthened its monopoly power, and enabled it to set a singular vision for the game’s development. This vision, in turn, enabled the AFL to create a national participation program that became the envy of every other sport association in Australia.

                Third, in achieving this outcome, the AFL tightened its authority over its member teams, administrators, coaches and players. Finally, within this cartel arrangement, member clubs surrendered their autonomy in return for an assurance that they would share the benefits from the AFL’s growth and national expansion.

                In short, the AFL has strategically exploited its cartel features and monopoly power to become Australia’s dominant sports league.

                For what it’s worth i sincerely believe the NRL should not be afforded the same tax free status.

              • Roar Guru

                January 13th 2012 @ 2:14pm
                The Cattery said | January 13th 2012 @ 2:14pm | ! Report

                Boomshanka – what you are describing there applies to any sporting competition. As Redb points out, the law professor used the expression in quotation marks, the AFL is no more a cartel than any other sporting competition you care to mention, i.e. new entrants cannot just join in the competition, players cannot just move from one club to another whenever they feel like it – all sporting competitions have these features to varying degrees.

                Furthermore, cartels are a form of collusion, which are prohibited under the Trade Practices Act (as the good law professor would understand), in other words, clearly they are not a cartel as defined by the Trade Practices Act.

              • January 13th 2012 @ 2:37pm
                Boomshanka said | January 13th 2012 @ 2:37pm | ! Report

                The Cattery,

                Agree with you that this applies to most sporting organisations.

                What makes the AFL special is they strategically exploit the exemptions for sporting bodies aggressively promoting the “business” hence their success. They’ve also done well to protect their heartland (Victoria) from any outside codes as well.

                Definition of a Cartel (from ACCC website) What is a cartel?

                Generally speaking, a cartel is an anti-competitive arrangement between two or more competing businesses. Common forms of illegal cartel conduct are;

                price fixing occurs when competing businesses make an agreement that has the purpose or effect of fixing, controlling or maintaining the price of goods or services (such as Salary Caps or Draft Picks)

                market sharing refers to agreements between competitors that divide up the market so that the participants are sheltered from competition (as what occurs in the Melbourne Media so other sport is hoarded and unable to compete fairly with the local code)

                Cartels harm the Australian economy and public. Consumers, businesses and even governments can be forced to pay higher prices for goods and services. Cartels also distort economic markets, and serve to slow innovation—after all, companies charging supra-normal prices have little incentive to spend money on research and development.

              • Roar Guru

                January 13th 2012 @ 3:41pm
                Redb said | January 13th 2012 @ 3:41pm | ! Report

                Grasping at straws Boomshanka.

                The Trade Practices Act provisions are designed to protect consumers from anti competitive behavior. The salary cap and draft are equalisation mechanisms to run a sporting competition. They do not impact on the consumer.

                If the AFL, NRL and Super rugby with the main stadiums got together to fix the price of admission or membership prices that would be anti-competitive behaviour where the consumer is disadvantaged.

                If you look at the AFL and its highly affordable admission prices the ACCC would applaud its model.

              • January 14th 2012 @ 12:02am
                JVGO said | January 14th 2012 @ 12:02am | ! Report

                Congratulations Boomshanka, you’ve actually introduced some analysis and intelligence into an another episode of brain frying hysteria and lunacy. An amazing achievement on the roar actually. Of course you’ve been greeted with bomb threats and derision and accusations of bias. What else could we expect?

                But in my view the whole process represents a movement away from sport organised as a grassroots participation based bottom up community activity towards a corporatised and capitalistic entertainmant industry top down model. In this process the AFL is of course the market leader in what is principally a battle for market share and dominance.

                In order to promote itself and establish itself in some new markets AFL seems to have taken advantage of a fortuitous period when its main commercial competitor RL has been engaged in a long term battle between its community based grass roots model and the power of one of the most aggressive noxious corporations in the world, News Ltd.

                Under threat from this aggressive competitor RL is attempting to rid itself of the debilitating influence of News Ltd and reorganise itself into a similar structure in order to expand and compete nationally with the new corporate predator in the AFL.

                In this battle between the two most powerful sports who knows how the lesser sports like RU, soccer, basketball et al are going to fare. Even cricket is hastily trying to find a new model that can compete for dollars in this hyper competitive market. But the inevitable fact is that if one sport significantly increases its market share all other sports are likely to suffer.

                I’d say that the aggessive seemingly risky move by AFL into western Sydney is aimed largely at reducing the possibility of soccer and RU, (both of whom have more legitimate community claims in the region), actually setting up new franchises by sucking corporate and sponsorship dollars.

                That’s just my amateur analysis of the situation but thank god you’ve introduced some more legitimate and authoritative voices into the debate despite the inevitable howls of the AFL is better brigade and their religious fervour. Who cares what any of them think and say anyway. It is all extremely predictable.

              • January 14th 2012 @ 7:16am
                Boomshanka said | January 14th 2012 @ 7:16am | ! Report

                Cheers for that JVGO.

                As Redb points out above “The Trade Practices Act provisions are designed to protect consumers from anti competitive behavior.” I’m just looking forward to the day when the Melbourne Media stop colluding and placing the AFL out of reach of competition in its heartland.

                Its like the Emperors New Clothes down here at times, with any criticism of the AFL or media circus that surrounds it, shot down in a flurry of personal attacks. I find the fact that some supporters can’t keep to the topic just reinforces the strength of our arguments.

              • Roar Guru

                January 14th 2012 @ 7:42am
                The_Wookie said | January 14th 2012 @ 7:42am | ! Report

                It does seem to be based on what sells though. Commercial reality is that the AFL makes big money for media outlets in Melbourne. Its why even in the offseason theres a scramble to print news – any news – concerning footballers. Its why during the season theres football shows on multiple FTA channels and paytv dedicated to the sport – and rating well or theyd have been cancelled (like 7s offering were so many times).

                What JVGO believes to be a risky move aimed solely at denigrating the influence of soccer and union, ignores the commercial realities that have seen every major sport focus on the same areas in recent times. Hell you only have to look at statements from Cricket Australia saying they’ll put a BBL team on the Gold Coasst if they can,not to mention the Commonwealth Games bid and then theres soccer trying valiantly to get a team going in Western Sydney.

                The time to take expansion risks is when you can afford them. The AFL currently can and is, has been planning it since 2006, and has a 20 year plan in place from 2011. GWS has comparable sponsorship to most mid level teams in the AFL already (see the telegraphs article on Penriths sponsorship compared to GWS).

                Much of what you are saying can just as easily be written off to commerical reality, in fact, theres more evidence of this than there is of the apparenty consipracy to keep other sports down in the media in Melbourne. Some of it can be written off to incompetence from the management of other leagues. It remains a mystery how a sport like the NRL backed and half owned by one of the worlds largest media companies was never able to take advantage of that fact.

              • January 14th 2012 @ 12:51pm
                JVGO said | January 14th 2012 @ 12:51pm | ! Report

                Commercial reality Wookie? Your arguments are just so inspiring and uplifting.

            • January 14th 2012 @ 11:24am
              Bondy said | January 14th 2012 @ 11:24am | ! Report

              I agree with JVGO i dont see Boomshanka that much here but he / she makes alot of sense .And the hoarding .Cheers i enjoy your reads .Capitalist’s ( cannibals ) .

              • January 14th 2012 @ 11:46am
                db swannie said | January 14th 2012 @ 11:46am | ! Report

                Apparent conspiracy ,there is no apparent about it…look at the treatment that RL got when Eddie collingwood was running nine.He made sure (after a Bris V Storm game in 2009 rated 203K in Melb) that it was shunted to midnight ,so not to take ratings away from the sport he loves.
                Plus there is the blatant lying by the AFL ,when the WS team was announced,A senate committee asked how many juniors in WS…AFL said 20K,..turns out 20 K was for the whole of NSW & ACT..

                http://www.aph.gov.au/senate/committee/rrat_ctte/afl_tasmania/report/c02.htm

                We looked at the absolute size of the Western Sydney market and the need for the AFL to have a presence in a market that has the second strongest growing LGA in Australia. Blacktown and Baulkham Hills have significant support from migrant groups … We are very aware of our challenges in growing that market, and ultimately we need an AFL franchise to continue the work we are doing at the base. The participation in the greater west of Sydney was of the order of 20,000 participants in 2008. We continue to invest in that region and are building a base to be a team at the top

                2.53 The committee requested that the AFL provide statistics on participation levels in Western Sydney, the Gold Coast and Tasmania, including the proportion of participants made up of the Auskick program. Unfortunately, the AFL only provided the committee with figures for the entire NSW/ACT region, rather than Western Sydney alone. They are included in Appendix 3. These statistics are not helpful in assessing meaningful participation in the code in that area as they include far Western NSW, the Riverina, Canberra and the far South Coast of NSW, where Australian Rules football enjoys strong support and well established club competitions exist.

                2.54 Information on the public record, attributed to the New South Wales Minister for Sport suggests that actual participation in Western Sydney is fewer than 3,000.[47] In contrast Tasmanian participation is about 24,000 or nearly five per cent of the Tasmanian population. In the absence of more authoritative figures the committee is inclined to accept that participation in Western Sydney is, as a proportion of its population, relatively insignificant.

              • Roar Guru

                January 14th 2012 @ 3:11pm
                The_Wookie said | January 14th 2012 @ 3:11pm | ! Report

                Maybe the AFL lied about its Sydney numbers, but what the hell was the Senate doing investigating AFL expansions anyway.

              • January 14th 2012 @ 3:56pm
                Boomshanka said | January 14th 2012 @ 3:56pm | ! Report

                db swannie

                Eddie McGuire and his side kick Jeff Browne (Channel 9 Melbourne Managing Director) not only shunt RL to midnight to take ratings from the sport they love, they also have a financial interest in the ongoing success of Collingwood.

                As you say, there is no “apparent about it”. As late as last year when Channel Nine chose to top bill the Manly vs Storm game, Melbourne viewers had the one sided Collingwood vs Fremantle as their only sport of choice. Despite the immense pressure applied to Nine (through facebook and other social media) Nine steadfastly refused to show the game which was played in Sydney, further denying already isolated fans.

                When rugby league is shown at a reasonable time into Melbourne, it rates (enough to be on one of the multi channels or on sold to Pay TV). The current hoarding or warehousing by Nine of the most watched sport in Australia to 45% of the populous is both unacceptable and unjustifiable in 2012.

                The senate committee inquiry into the AFL’s choice of Sydney over Tasmania reinforces the commercial nature of the AFL, the lack of its commitment to its stakeholders (the fans, players in a heartland state) and further strengthens the call to pay Tax like the rest of us.

                Interesting to note the both Demetriou and chairman Mike Fitzpatrick declined to attend. Being recipients of public money, they should have been subpoena’d.

              • January 14th 2012 @ 4:03pm
                db swannie said | January 14th 2012 @ 4:03pm | ! Report

                I believe the enquiry was instigated by a Tasmanian Senator wanting to find the reasons why his AFL mad state was missing out on a team & the financial benefits that would result from it.
                Especially when the city that was selected already had a team.

              • Roar Guru

                January 15th 2012 @ 6:58am
                Redb said | January 15th 2012 @ 6:58am | ! Report

                Straying off topic JVGO and cohorts – don’t make me laugh.

                The bleeding heart poor ol’ Storm and Ch 9 conspiracy, Eddie McGuire – love it.

                None of you have a clue about the Trade Practices Act, its provisions and how to apply them, least of all Boomshanka. It’s just the same old anti AFL rhetoric from RL spuds.

              • January 15th 2012 @ 8:18am
                Boomshanka said | January 15th 2012 @ 8:18am | ! Report

                Redb

                Go on, have a laugh and face reality that the AFL enjoy privileged status in its heartland.

                Last year, even Channel Seven delayed the return of “Packed to the Rafters” into Melbourne so Channel Nine could show the EJ Whitten (AFL has beens) game unaffected by competition.

                Believe what you want to believe re conspiracy but the behavour of Melbourne Media strongly demonstrates otherwise.

                As to your understanding of the Trade Practices Act, you rightly commented above “..are designed to protect consumers from anti competitive behavior”, exactly the kind of behaviour the Media here conducts and Melbourne consumers have to endure.

                2012 will see changes to the anti siphoning legislation so Nine have no excuse to not show rugby league into Melbourne at a semi reasonable time and in 2013, a new contract will be in place without the compromised conditions of earlier. I have a lot to look forward to. Embrace the change.

              • January 16th 2012 @ 12:06am
                JVGO said | January 16th 2012 @ 12:06am | ! Report

                Redb, and the Trade Practices Act is such a brilliant and effective means of stemming the concentration of economic power in fewer and fewer hands isn’t it? In fact Redb, it’s not how it works but how it doesn’t work that is being pointed to here. maybe you somehow missed that.

                Many sectors of the economy like sport, (and maybe even the spudgrowers association) were once organised along cooperative lines where producers and participants had ownership. Now the TPA prioritises our role in the economy as that of consumers. Such an improvement.

                Maybe this is why watching AFL is these days about as inspiring as watching a shopping queue at Woollies.

              • January 16th 2012 @ 6:51am
                Boomshanka said | January 16th 2012 @ 6:51am | ! Report

                JVGO

                It’s an old cliche, but Seagulls fighting over a few chips can be just as entertaining.

                Personally, for me, the game looks at times like grown men chasing a chicken, but when there’s no other sport to watch, no wonder it rates its socks off.

              • January 17th 2012 @ 10:57am
                me, I like football said | January 17th 2012 @ 10:57am | ! Report

                The last posts from Boomshanka and JVGO, is the real reason for all these crazy conspiracy theories. keep it comin’ fellas your true colours are showing

              • January 17th 2012 @ 2:23pm
                Boomshanka said | January 17th 2012 @ 2:23pm | ! Report

                me, I like Football

                ………all these crazy conspiracy theories are just figments of imagination by AFL haters..
                ……….nothing to do with the actual behaviour of the media down here….just crazy conspiracy theories with no substance or evidence…….that’s the real reason…..

                You keep telling yourself that if it makes you feel better. Better still, don’t listen to the message, just attack the messenger (as with most pro AFL posters – except The Wookie and for the most part TC).

                Remember Rugby League is coming to Victorian screens soon at a family friendly time. Enjoy!

              • January 17th 2012 @ 5:51pm
                me, I like football said | January 17th 2012 @ 5:51pm | ! Report

                Boomshanka, lets just say that Ch9 are deliberately trying to keep the NRL down despite the fact Storm tend to go live into Melbourne if Ch9 have the game and no AFL is on. plus the 3 SoO and NRL GF being shown live.
                What exactly is their motive, how do they benifit?.

                Becuase Eddie works for Ch9, and he is president of the Collingwood Football Club, which is in the AFL, which feels threatened by the NRL, because it the “greatest game of all”.

                Oooookay………..next please

              • January 17th 2012 @ 6:18pm
                Boomshanka said | January 17th 2012 @ 6:18pm | ! Report

                Simple,As with the Packed to the Rafters example, both channels collude and therefore not split the advertising dollar.

                If rugby league was ever shown into Melbourne against the AFL (god forbid – a bit of competition), the advertising revenue stream would not be as good because the market is subsequently split.

                It’s not about the sport, its about the dollar.

              • January 17th 2012 @ 6:57pm
                me, I like football said | January 17th 2012 @ 6:57pm | ! Report

                So what’s the problem?
                commercial TV station’s doing what’s best for their shareholders. I was hoping for something a bit more outrageous to hang my tin-foil hat on. mind you I wouldn’t go as far as to say it’s colluding more conceding that they might just get a different market if they show something other than sport, therefore better ratings.

              • Roar Guru

                January 17th 2012 @ 7:06pm
                The Cattery said | January 17th 2012 @ 7:06pm | ! Report

                milf
                are suggesting that a commercial TV station might be seeking increased ratings? that’s an outrageous suggestion!! what are you trying to say? that they exist to make profits?? it wouldn’t happen in North Korea!!

              • January 17th 2012 @ 7:18pm
                Titus said | January 17th 2012 @ 7:18pm | ! Report

                Come on guys, “Little Bo Peep goes to Azabaijan” would outrate the Swans on a Friday night. You can stop playing dumb.

              • January 17th 2012 @ 7:20pm
                Boomshanka said | January 17th 2012 @ 7:20pm | ! Report

                Wouldn’t happen in North Korea but at least they can enjoy rugby league while fans in melbourne are locked out of the big games.

                http://www.dailytelegraph.com.au/sport/nrl/dictatorships-and-holiday-isles-get-origin-live-but-not-sa-and-wa/story-e6frexv9-1225739610369

              • January 19th 2012 @ 4:24pm
                Jaceman said | January 19th 2012 @ 4:24pm | ! Report

                Its the Competition and Consumer Act Lads not TPA anymore. All sports codes are cartels – would you Boom like another Super league breakaway…

              • January 19th 2012 @ 4:36pm
                Boomshanka said | January 19th 2012 @ 4:36pm | ! Report

                Jaceman

                FYI: Super League is alive and well in the UK. Channel Nine also paid for and hold the exclusive broadcasting rights for Australia for this.

                Care to hazard a guess as to how much gets shown into Melbourne?

                Yet another example of watching sport in the so called “sporting capital of the world”

      • January 12th 2012 @ 10:37am
        Tony said | January 12th 2012 @ 10:37am | ! Report

        Expecting a negative post from ICF on your excellent article about Sydney, Wookie. Closely followed by the predictable AFL-haters!

        • Roar Guru

          January 12th 2012 @ 10:40am
          The_Wookie said | January 12th 2012 @ 10:40am | ! Report

          tis a free country. haters are gonna hate, as they say

    • January 12th 2012 @ 8:41am
      Chris said | January 12th 2012 @ 8:41am | ! Report

      Maybe clubs (of any code) can learn how to run a business properly instead of installing a bunch of pokies and living off the proceeds.

      • Roar Guru

        January 12th 2012 @ 10:28pm
        ItsCalledFootball said | January 12th 2012 @ 10:28pm | ! Report

        Agree.
        I am against problem gambling in any form and I would have thought the AFL could have taken some leadership in this social issue, but seem to be more concerned about losing a few million of their growing pile of tax-free money.

        Eddie Maguire’s comments border on hypocracy.

    • January 12th 2012 @ 8:46am
      Ian Whitchurch said | January 12th 2012 @ 8:46am | ! Report

      To back up the headline and “The claims by Demetriou and other AFL figures that the government’s initiatives will harm AFL are ludicrous”, I’d expect some sort of direct quote from Demetriou.

      The author doesnt provide this. In fact, I’d agree its the other way around.

      “”What we would want to do is work with the government, work with Andrew Wilkie and Nick Xenophon and others to address and tackle the issue of problem gambling … like we’ve done with racial and indigenous vilification, like we’ve done with responsible alcohol.

      ”We just don’t think this proposed legislation is the way to go.”

      That says, very loudly, he is looking to cut a deal and compromise.

      http://www.heraldsun.com.au/news/more-news/afl-chief-andrew-demetriou-tells-clubs-australia-to-shut-up/story-fn7x8me2-1226147090778

      The author makes another false claim in saying AFL clubs dont pay tax – the overwhelming amount of what they do gets taxed via GST.

      As an example, Hawthorn player sponsorships – see the ‘inc gst’ – thats tax.

      http://www.hawthornfc.com.au/tasmania%20player%20sponsorship/tabid/13871/default.aspx

      • Roar Guru

        January 12th 2012 @ 9:14am
        The_Wookie said | January 12th 2012 @ 9:14am | ! Report

        I believe they also have to pay payroll tax where applicable, and indeed the salary cap is not just monitored by the AFL but by the ATO for this very reason.

      • Roar Guru

        January 12th 2012 @ 3:36pm
        Redb said | January 12th 2012 @ 3:36pm | ! Report

        C’mon Ian play fair, facts are not required to write an article just an agenda. lol

      • Roar Guru

        January 12th 2012 @ 10:33pm
        ItsCalledFootball said | January 12th 2012 @ 10:33pm | ! Report

        ”We just don’t think this proposed legislation is the way to go.”

        He said the legislation would cost clubs millions of dollars and force them to increase the price of memberships and entry to matches.”

        He hasn’t changed his tune at all, he was just reacting to the initial public backlash. To the AFL its all about money.

        • Roar Guru

          January 12th 2012 @ 10:39pm
          The_Wookie said | January 12th 2012 @ 10:39pm | ! Report

          well that seems to be at odds with comments from Andrew Wilkie (dated nov 16th) after a meeting with the AFL claiming that – and i quote –

          “Andrew Demetriou does care, and I’m happy to continue working with Andrew as we progress these reforms,”

          ref: http://www.heraldsun.com.au/news/more-news/afl-meets-with-reform-mp-andrew-wilkie/story-fn7x8me2-1226196038125

          • Roar Guru

            January 13th 2012 @ 8:33am
            Redb said | January 13th 2012 @ 8:33am | ! Report

            haha gold Wookie.

            ICF’s had so many holes poked in his argument it resembles swiss cheese. 🙂

            • January 13th 2012 @ 9:58am
              Tony said | January 13th 2012 @ 9:58am | ! Report

              Actually, by the smell of it it’s actually the month old Jindi Deluxe Blue in my fridge 🙁

              • Roar Guru

                January 13th 2012 @ 3:45pm
                Redb said | January 13th 2012 @ 3:45pm | ! Report

                Pewtrid for sure lol

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