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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.
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