This is not a discussion about whether Australia needs a national second division football league (henceforth referred to as “the A2 League”), nor is it a discussion about whether huge numbers will watch it in stadiums, or on the screen.
This discussion will explore the likely increased costs that existing clubs will incur if they moved from their state or territory based National Premier League (NPL) to the A2 League.
Finally, I want to make it very clear that this analysis requires acceptance of a major assumption: that the FFA will fully subsidise the A2 League salary cap from increased revenue generated by the next broadcast deal.
I’ve identified four major costs involved with operating a football club in the A2 League:
1) Stadium hire
2) Wages for full-time professional players
3) Interstate travel and accommodation
4) Wages for non-playing staff (back office, football operations: coaches, medical, etc.)
NPL clubs already operate from locally-based, low-cost stadiums. In an A2 League, each club would continue to play in its local stadium. There is absolutely no need to play in large, high-tech, high-cost stadiums that are far removed from a club’s home base and will never be filled.
While clubs will not incur additional stadium hire costs above existing levels, some teams may need some capital investment to ensure infrastructure (toilets, fencing, cabling for internet broadcast, lighting, playing surface, etc.) is at the minimum standard that will be set for the A2 League.
The A-League salary cap for 2016/17 is $2.6 million and covers a maximum squad of 23 players. This sets the average wage for A-League players at $113,000 per annum.
Currently, the average annual wage for full-time employees in Australia is $78,000 per annum (before tax). If we set the average wage for the A2 League at $78k, this equates to a salary cap of $1.8m per year for squads with a maximum of 23 players (and minimum 20 players).
If the A2 League is operating with the blessing of the FFA, the salary cap will be fully funded by the FFA. An A2 League with fourteen teams will cost the FFA $25m per year, which will be funded by the new broadcast deal.
Additionally, NPL clubs already pay players as semi-professionals. If we estimate the average wage for semi-professional players at the top NPL clubs is $750 per match, NPL clubs will save $450k per year on player wages by playing in the A2 League.
Travel and accommodation
If the A2 League has 14 teams and the format has each team playing each opponent once at home, each club will have a maximum of 13 interstate matches. Clubs from NSW, the ACT and Victoria will have less interstate travel since there will be more than one team in the A2 League from these two regions.
If we budget for two nights accommodation, I estimate the average cost of travel and accommodation over 13 interstate trips to be $1-1.5k per person. There will be 25 people (players, coaches, medical staff) travelling to away matches, so total travel/accommodation costs per club will be $325-500k.
There will be an increase in the cost of non-playing staff as roles become full-time instead of part-time. Some roles may have been voluntary in the past and these may now require a wage.
I estimate non-playing wages to be not more than $1m per year for A2 clubs. A CEO would earn $150k, a COO $100k, administrative, media and marketing personnel would take home $250k and coaches and medical staff would demand $500k.
If my assumptions are correct, NPL clubs moving from state or territory-based competitions to a national A2 League will have to fund additional costs of $1 million per year.
Stadium Hire: $0
Player Wages: -$450k
Non-playing staff wages: $1m
In reality, this amount could be significantly less, depending on how many non-playing staff, coaches and medical staff are currently receiving wages in the NPL.
So, existing NPL clubs may only need to raise approximately $1.0m per season ($75,000 per home match) if they moved to the A2 League. Can they do it with new sponsorship, memberships, merchandise, match tickets, corporate hospitality, food/drinks? It is certainly possible.