There has been an interesting flurry of activity in the media concerning football recently.
Overshadowing the FFA Cup Round-of-32 results was an intriguing back-and-forth media releases between the Professional Footballers Association (PFA) and Football Federation Australia (FFA).
Putting aside the issues this raises about the FFA’s relationship with the game’s stakeholders, it will undoubtedly raise the issue of the salary cap once again.
Firstly, it is important to point out the lessons from the English Premier League. England’s top tier has seen a broadcast revenue driven exponential rise in the past two decades following the introduction of the Premier League model.
It is highly debatable as to whether this revenue has trickled down into the English football economy. There has been investment in top level stadiums, but it can be argued this relates as much to product presentation and season ticket revenue generation as it does the benefit of the English football fraternity.
Outside of that, the extra money has gone into the substantial inflation of player wages. Despite there being more money flowing through the top tier of the English game, the financial instability of clubs has increased and many have faced near liquidation.
This then brings us to the local sporting scene. Recently the substantial rises in AFL broadcast revenue has seen a sharp rise in AFL player wages.
This comes on the back of a push for a rise on player wages as they came towards the end of the previous broadcast rights deal. One line in particular stands out: “The AFLPA is also considering the American model of pegging the salary cap to the total revenue of the sport, a system that has been used by the National Football League in the United States”.
This bears an intriguing resemblance to what the purported stumbling block appears to be if we look back just over a month to comments attributed to Damien de Bohun – “Instead, the PFA wants 30 per cent of all game revenues…That’s economic madness. FFA and the clubs will not entertain a proposal that would cripple the A-League”.
Naturally there is a lot of conjecture as to what is really happening and so this author won’t jump to conclusions.
Instead I will affirm my belief that the best mix is one where we have a fixed cap allowing for a living wage as it is now, and adjusted for inflation. This cap for each team should quite simply be fully subsidised by broadcast revenue specifically.
The larger teams can naturally elicit comparative advantage from membership and sponsor revenue through taking advantage of marquee provisions as is effectively the case now if they so choose.
It is hardly surprising as a phenomenon that the players are going to want a larger share as revenue rises substantially, but it needs to be affirmed that it is important more than ever to maintain the basic structure of the cap as it has existed up until now to keep operating costs down.
In essence the talent pool within Australia will remain effectively unchanged as many players of note tend to get poached either by European or Asian teams. The football fraternity will be paying higher wages for a similar level of talent.
The international nature of football means that player wage inflation for A-League level talent can in effect be “outsourced” to overseas countries – particularly Asia – which has been the case thus far so this relationship goes two ways and isn’t without its benefits for the Australian football fraternity.
The main priority for surplus income is for it to be invested in building physical infrastructure owned by the football fraternity.
This will be of vital importance in reinforcing the economics of running a professional level football competition in Australia as it can help alleviate the substantial costs in leasing or sub-leasing council of state government-owned facilities.
A perfect example is the very recent criticism of Brisbane Roar owners the Bakrie Group by Queensland Rugby Union officials over unpaid usage of Ballymore.
If increased revenue simply goes into inflating player wages and hence the operating costs of A-League teams even further, it not only acts as a further disincentive for private investors to get involved. It bloats the complexity of the A-League and makes it less flexible in being able to face economic downturns and changes in the broadcasting business models.
From this perspective, while it may be considered behind the AFL and NRL in terms of size and revenue growth, there is a leanness to the A-League in that it is the sport the least bloated by complexity.
This can be of great strength in certain circumstances as football is the most adaptable to a changing economic paradigm, for example in TV broadcast industry as smaller online oriented players move into the market.
Key to maintaining this is to keep a lid on operating costs. This involves maintaining the A-League as an eight-to-ten team competition for the foreseeable future and focusing on developing the FFA Cup as a dual competition.
Importantly, however, it means keeping a lid on a rise in the costs of accommodating player wages.
nordster
Guest
I wrote an article on the Boz and didnt want to give yours any oxygen!!! :) And if im doing my job u should already know what my take is .... Open Playing Field > level playing field ! Youse can tinker i'll go with broad strokes big pickcha finking....
Midfielder
Guest
NU Been away most of the day and only now catching up. You make some excellent points .. I posted the other day the single biggest issue we have going forward is people involved in the game treating as a well established and profitable competition... more over the league is still in a fragile state in many ways and it still could all fall over... To this end the PFA and their bed fellows SBS are arguably the worst ...if they got what they want in two years they would all be out of work.. WE have not even discussed the NPL teams and their needs... Will add more latter as I said I have had a very long day...great article BTW..
Midfielder
Guest
Ben long time since I have seen that.
NUFCMVFC
Guest
Yeah it's a bit of a strange day Not many comments going around except for the latest "South Melbourne makes sense" article Must be "no comment day" lol Maybe tomorrow lol
Doug Graves
Guest
Where's nordster? He's usually banging on about how bad salary caps are. Cat got your tongue nordster? What do you have to say about this?
NUFCMVFC
Guest
lol Players can chase higher wages in the industry - via Asian based clubs. They get $55k minimum atm which is a living wage As for the code here, it's not like the money is lining the pockets of greedy capitalists, ideally it would go into funding physical infrastructure out sport sorely needs. Mainly to lower leasings costs, make running a HAL team more economical which means they are more stable Look at it from the other way, partly because of the FFA's model we are having issues with the Bakrie Group and Nathan Tinkler just over the past six months. If Charlesworth keeps getting put into a box and expected to lose $ how long do you reckon he would stick around at CCM? There is a major problem with attracting investors, what's the result, CCM players weren't getting paid at one point, and now Brisbane players have had pay issues If player wages become too high, and if this cut of all revenue stream idea gets up, there is even less interest from private investors which ultimately means there is less teams which ultimately means there is less players getting paid at all, let alone "higher"
Ben of Phnom Penh
Roar Guru
This reminds me of a poem I read in the late 80's, my apologies to the poet as I can't recall who composed it: "It was crisis day in Parliament, as the House stood hushed and still, As a member rose with the question, 'are we doomed to go downhill?' 'I'm confident of an upturn,' the PM made reply, 'If workers' pay is held at bay we'll all be home and dry!' 'How true, how true,' cried the workers, 'let's end this wicked strike', 'We don't want a rise in wages, they can stick it where they like,' 'Thank God, thank God,' sobbed the bosses, 'there's faith on the factory floor,' 'And now we have this extra lot, we'll give it to the poor!' They stuffed their pockets with money, and ran with eager feet Pressing their surplus profits upon the people in the street, They moved amongst the dole queues, and boarded every bus With streaming eyes and heartfelt cries, 'you need it more than us.' Soon the land prospered, and the Devil became a Saint, Now the sobre unions had exercised restraint, and the people were all happy and the sound of laughter spread, as hand took hand in the golden land, and pigs flew overhead."