FFA needs to ask for an advance

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    FFA CEO Ben Buckley at the A-League's Western Sydney club announcement (Image courtesy Fox Sports)

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    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.

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    The Crowd Says (13)

    • May 2nd 2012 @ 9:53am
      phutbol said | May 2nd 2012 @ 9:53am | ! Report

      Interesting thoughts, but there is a major flaw with your ‘last bid rights’ idea – FTA was clearly interested in securing the AFL rights so there was clearly some monetary value in securing the right to the last bid.

      To date, there is no real evidence that the same interest exists for the rights to the A-League, so where is the saleable value of a ‘last right’ in this case?

      • Roar Guru

        May 2nd 2012 @ 10:00am
        The Cattery said | May 2nd 2012 @ 10:00am | ! Report

        Maybe it could be given away free of charge this time round, and some value may build up in having it in the ensuing decades.

      • Roar Guru

        May 2nd 2012 @ 10:02am
        Philip Coates said | May 2nd 2012 @ 10:02am | ! Report

        I’m not saying ‘last rights’ is saleable. Just that it might be enough leverage, combined with the other goodwill factors, to secure an advance which will be repaid.

    • May 2nd 2012 @ 10:45am
      JamesP said | May 2nd 2012 @ 10:45am | ! Report

      FFA needs to have Socceroo matches on FTA for mine – especially world cup qualifyers. Yes there may be a funding shortfall for not having all games exclusive on FOX – I am sure Lowy can cover it.

      • Roar Rookie

        May 2nd 2012 @ 11:34am
        ItsCalled AussieRules said | May 2nd 2012 @ 11:34am | ! Report

        Socceroos WC Qualifiers are now on the FTA Anti-Siphoning List, so there must be a FTA component to the next deal.
        There will be some lively FTA bidding you would think for Socceroos WCQ games which will rate well.
        One of the Olyroos games in the Beijing Olympics rated nearly 2 million.

        I think Fox would come to the party to keep their A-League exclusivity and help ensure the salary cap was maintained or increased and better quality players keep coming to the A-League. Look what players like Hernandez, Besart and Broich have done for the entertainment value and the increased ratings.

        If you can believe the Daily Rugby League Telegraph, Fox offered the FFA 300 million over 5 years for the rights a couple of years ago, but the FFA turned it down and were expecting more with the expansion teams.

        Now that both those expansion teams are gone, not sure if the FFA will still get that sort of money, but you would expect at least a doubling of the 17M amount to about 40M a year, which would be a big boost for the A-League.

        Also, Fox onsell the A-League games to networks around the world and they have got a nice little earner with that one, that the FFA get nothing for, so they would agree to paying more, especially if they kept the A-League exclusivity clause.

        How much more is the 60 million dollar question.

        • May 3rd 2012 @ 9:43am
          phutbol said | May 3rd 2012 @ 9:43am | ! Report

          I certainly hope the Terror is correct then ICAR… Even though we have lost the NQF and GCU since the alleged offer of $300m, which I’m sure most of us recall hearing or reading about at the time, there is still a 10-team league which now includes W.Sydney which i’m sure demographically dwarfs the NQ and GC areas combined.

          Add to that the resurgence in crowd and TV ratings and one might be cautiously optimistic about the new TV deal.

          Personally I think $300m over 5 years would be sensational, but maybe I’m a small thinker. Not sure what an ‘acceptable’ minimum would be but I’d guess it would be hard to move forward easily without at least $200m.

          I also think B. Buckley would take $300m in a heartbeat if offered it again… lets hope he’s as good at this negotiating game as he’s cracked up to be…

      • May 2nd 2012 @ 1:18pm
        Jerome said | May 2nd 2012 @ 1:18pm | ! Report

        The exposure for the sport with NT games on FTA cannot be measured in dollars and cents.

        • Roar Rookie

          May 2nd 2012 @ 2:06pm
          ItsCalled AussieRules said | May 2nd 2012 @ 2:06pm | ! Report

          And the more NT players in the A-League, the more the A-League will be worth to FTA.

    • Roar Guru

      May 2nd 2012 @ 12:16pm
      Fussball ist unser leben said | May 2nd 2012 @ 12:16pm | ! Report

      Interesting article, Philip and you seem right on the money!

      Mike Cockerill reports in today’s SMH: “While the current deal has one more season to run, FFA is trying to bring forward the new deal by a year to offer the dividend in time for next season.”

      Source: http://www.smh.com.au/sport/football/aleague-entering-era-of-trust-says-buckley-20120501-1xx96.html#ixzz1tfskYgd2

      • Roar Guru

        May 2nd 2012 @ 4:05pm
        Philip Coates said | May 2nd 2012 @ 4:05pm | ! Report

        Crickey, I dont usually agree with anything Cockerill says so I had better have a rethink 🙂

    • Roar Rookie

      May 2nd 2012 @ 2:04pm
      ItsCalled AussieRules said | May 2nd 2012 @ 2:04pm | ! Report

      The actual amount of money the A-League loses and how much money Tinkler and Palmer have actually spent is still a bit of a mystery. Tinkler apparently has only paid the FFA 500K of his licence fee and still owes the FFA 3.5 million, so he hasn’t really forked out 12 million yet. Plamer owes the FFA money too.

      The Sokka beat up press look at the worst figure, that is the total operating losses – not counting distributions and disbursements from the FFA for media and sponsorship revenues and receipts from the sale of players.

      So the actual combined losses of A-League clubs is more like 10 to15 million or about 1 to 1.5 million for each club, on average.

      According to latest reports from the A-League Joint Steering Committee, the FFA have agreed to working on all the owners 10 major demands, including increasing the clubs share of media money, sponsorship dollars, their share of Finals gate receipts, increased travel and accomodation subsidies and increased prize money – for a total increase in revenue of about 1.5 to 2 million per club.

      If that is true, then A-League clubs will be able to operate pretty close to break even from next season. This is not factoring in the increased media deal to come next year and with a second Sydney team and increased attendances, ratings and revenue, more revenue will come as clubs move closer to making a profit.

      The FFA is also looking to fast track the increases for the start of next season, even before the next A-League Media Rights deal is finalised.

      No wonder Sage is happy, the owners are happy, Tinkler is back and Palmer wants his licence back!

      • Roar Guru

        May 2nd 2012 @ 4:42pm
        Philip Coates said | May 2nd 2012 @ 4:42pm | ! Report

        You cant actually say that because Tinkler hasn’t paid, then the loss is reduced. The loss is a P&L result whether bills are paid or not. So the FFA forecast of A-League losses for 2012 at $26.7M stands as the right figure. (if you don’t pay your bills it reduces your cash flow but it doesn’t reduce your profit/loss)

        Also, if the Steering Committee just ask to be given more money in terms of a bigger share or bigger subsidies without more money coming in then they just move the loss from the A-League to the FFA. “Buckley said FFA would prepare detailed costings in time for the next JALSC meeting on June 5 to see if the governing body could afford what the clubs were asking. ”Whether we can offer those savings in the next six months, or in 12 months, remains to be seen,” he said.” http://www.smh.com.au/sport/football/aleague-entering-era-of-trust-says-buckley-20120501-1xx96.html#ixzz1tfskYgd2

        FFA need to get more money coming in so they can spread more money around. Hence my suggestion to bring forward some money from the next tv deal.

        Still, I like your optimism.

        • May 3rd 2012 @ 10:37am
          Nathan of Perth said | May 3rd 2012 @ 10:37am | ! Report

          Yeah, liability != expenses/loss.

          Still, picture just got rosier overall.

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