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.)
Stadium hire
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.
Player wages
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.
Non-playing staff
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.
Conclusion
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
Travel/accommodation: $500k
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.
Peter NPL
Guest
One error above. NPL clubs already have non playing staff and paid coaches. I'm not sure where your $1Million esitamte came from but thes top clubs already pay a TD, CEO, first team coaches, medical, usually around $400k-$600k so perhaps you could say $400k-$600K would be the shortfall.
Get real
Guest
Dear nemises, i appreaciate your optimism, but from a business point of view an A2 league WILL NOT SURVIVE one season. Think about it; total cost for one season is $39 million dollars. How many people go to watch npl in sydney? About 300... Bite my head off if you wish, but i think this article is non sensical, unrealistic
daniel
Guest
will need at least $2 million per year per club to run a professional comp. $2 million per club for 1 year
daniel
Guest
ALEAGUE OWNERS WONT COMPLAIN SEEING THEY ARE STILL MAKING MONEY OR WAIT UNTIL 2034 AND I MEANT NO ALEAGUE- 2 CLUBS WILL GET RELAGTED. ALEAGUE 2 CLUBS COULD GET PROMOTED AND ALEAGUE CLUBS COULD GET RELAGTED. p/r only bewteen national 1st and 2nd tier with the 3rd, 4th and below will be the npl and will stay the same as its currnet state based format making room for ALEAGUE 2. not every state has 2 npl comps. i meant the 3rd will be npl and the 4th will be the league that the state has now . varies bewteen states
daniel
Guest
and stadiums should be upgraded and that doesn't always mean includes seats and a better capacity it means better facilities and redevelop the place and make it more suitable and make new fences and put cement all around the field so people can walk and replace it with new stuff rather than old ageing facilities and crappy infrastructure at current npl grounds. it needs to be more opened up so broadcasters and fans can come to the ground to watch a match and im kinda referring to MELB KNIGHTS FC as an example. and an ambulance might be in around or make a gateway for it and i meant for broadcasters to get their van inside and maybe put the camera on their roof or something i dont know but INFRASTRUCTURE NEEDS TO BE IMPROVED DESPERATELY FOR A 2ND TIER national competition
daniel
Guest
what are FFA thinking about in their offfices, nobody really knows for sure but went to a match and saw david de bohn, i shouldve asked him
daniel
Guest
and i think they would cover security and travel and accommodation costs by earning more than enough money to pay those off and earning extra money to keep the club afloat and make profit and revenue
daniel
Guest
30k for semi-pro, isnt that a lot i know they have to travel on the weekend seeing there is work on monday to friday. well all games will have to be on saturday and sunday or a public holiday and that means they leave on friday night and have a saturday night game and travel back on sunday morning or leave early saturday or midday or afternoon and have a afternoon game like 2pm on sunday. they cant skip work for a few days every week or will get fired so matches on saturday and sunday will be okay. and will a broadcaster actually pay money to broadcast these matches or could broadcast 1 game per week on free to air, like channel 7 and even though they wont pay money you will recieve more sponsership money and i meant maybe fox sports will broadcast it seeing they have the hal rights and actually care about grassroots football
TFPJOURNALIST
Roar Pro
Great article - I've seen a lot of pieces lately with these in-depth analysis with financial statistics and they're honestly very entertaining to read. This has made me a lot more interested in what goes on behind the scenes of the FFA. Thanks mate!
Nemesis
Roar Guru
Good work, Waz. I'd really like to get some hard data on travel costs for teams travelling interstate. I've relied heavily on my own experiences for business trips. No doubt the costs for a team from Perth will be much higher than the costs for NSW based teams. If the 2nd Division remains semi-pro (which I now think it should) then, maybe, the FFA can cover the travel costs. Or, if the FFA covers the semi-pro wages, then clubs can reallocate the funds currently used to pay players, towards the travel costs.
Nemesis
Roar Guru
Thank you for those very kind words, Cameron. I hope these type of blogs can stimulate the football community to debate and discuss issues and, maybe, we can help to raise the profile of the most issues so that it at least enters the radar of the decision-makers at the FFA.
Nemesis
Roar Guru
Thanks, asanchez. I think I'm now convinced about having a semi-pro 2nd Division to move this forward. Later if the market embraces it the 2nd Division can evolve into something bigger and more professional. It may also help to filter out those players who just make up the numbers in the 2nd Division and promote players who really want to pursue a football career. One final point, you are correct to say Stadium Costs will not be $0. My costs (in the article) refer to the likely additional costs current NPL clubs may face if they moved from State NPL to a national NPL. In my view, the stadium operating costs won't increase if the visitors are from interstate, rather than locals.
Fadida
Guest
Agree
Waz
Guest
Fadida - p/r is the most contenscious of issues, and quite decisive. But the operation of a national second division is not dependent upon it; in fact, if you take p/r out of the equation between A2 and HAL many of the barriers that currently exist to setting it up evaporate.
Waz
Guest
* first line should read "a national second division is a separate question to p/r" darned auto complete :(
Peeeko
Guest
Well perhaps you should stop what you are doing and move into sports administration if it's that easy David gallops position must be in jeopardy
Cameron
Roar Guru
Fantastic writeup! I've had a busy day and will look to see if I can add more to this discussion tomorrow. If not, I'd go as far to say it's one of my favourite on TheRoar.
asanchez
Roar Guru
Nemesis, A great conversation to be had here, great piece. I've said all along that a 2nd Div, at least in its infancy (minimum 3-5 years) needs to remain semi professional for 2 main reasons. Firstly, it's what those clubs are today, and they're still running which means they can sustain themselves as semi pro clubs. And secondly, this competition needs to survive and thrive, while sucking the least amount of money possible from the overall TV deal before it can grow in all areas. Keeping all the costs down to begin with, are a key to the 2nd Div success. The stadium costs are not zero, especially when you add in security and other running costs for games that need to be televised, but those costs wouldn't be huge either. Player wages, I'd say a salary cap of $750k per club per year ($30k each for 25 players - semi pro wages) is sufficient. That means for a 2nd Div of 12 clubs you'd need $9m per year to run this comp from any future TV deal. And if the recent rumours are true, that the next TV deal could possibly bring in $80m-$100m annually, then $9m per year for a 2nd Div isn't too much to ask to add another layer to the Australian football pyramid, and by doing that you'd bring back another layer of supporter and fan back into the game, which would be great. Also, I know some might say $30k isn't much, but it's not bad for 3 nights per week of training, and a game on the weekend, while possibly still holding down a regular day job, and showing off your skills nationally every week, sometimes on TV, where you could realistically be picked up by an A-league club and play football professionally. Travel and accomodation would be picked up by sponsors, much like the FFA cup is run today with NAB, Westfield, Harvey Norman and a few others chipping in to pay for this costly part of running a competition. I know of a few NPL clubs in Victoria that generate up to $500k per year in sponsorship today, while just playing in the NPL. Imagine if those clubs could get the national exposure again, I'm sure they could generate double that at least. And that money would pay for the coach and other club staff. Also, membership numbers would increase 10 fold at these clubs, if they were to compete in a national 2nd Div, so there's more income that could be spent in other areas. I'm not saying that this would be an easy gig to setup, and not all clubs would be in the same position or find it as easy to do, but giving some a chance to grow they'd explode back onto the national scene. It can definetely be done. The FFA needs to get a better TV deal to pay for this dream of course, but it also needs to stop holding the game back and have the balls to make a statement like this. A 2nd Div is badly needed and would be awesome for the game. Even without P/R to begin with.
Waz
Guest
What a bloody good article, and no coincidence that the debate that followed has been much better than elsewhere. A few thoughts: 1. As MelbCro points out, there's no need for the players to be fully professional - let each club decide for itself ranging from all pros, all semi-pros, or a mix. 2. Travel is often held up as a barrier but I'd point people to NPLQ where we have two teams that have to fly at weekends to play, Cairns and Towsville, so it can be done, and of course the 12 other teams have to fly in. 3. That said I think your numbers for travel are on the low side (maybe $450-$550k?). 4. The new competition would also attract new sources of revenue including sponsorship and even its own tv revenue. As I said earlier, if we detach thd question of p/r from this debate the equation bdvomes similar to make work, as does p/r down to the NPL At the moment the biggest issue I see is just timing, Div 2 should ideally run parallel to the HAL which is of course out of sync with the NPL
Waz
Guest
Mid, A national second division is a dryer are question to p/r. One goes not necessarily mean the other. The bigger NPL clubs and their players deserve a national stage so lets not let p/r cloud that discussion.