On October 7, 2016 the AFL confirmed that it had finalised its purchase of Etihad Stadium for an unspecified amount of money, however a number of reports guess the figure to be at between $150 million to $200 million.
As a result of the purchase the league and clubs expect to be able to offer better stadium deals to long-suffering Docklands based clubs who have often complained of poor returns.
The stadium has consistently returned multimillion dollar operating profits since 2013, 6.1 million in 2015. These have been offset by big debt repayments in the order of 18-24 million a year on a 200+ million debt. The Stadium has also paid 4.6 million annually to AFL clubs since 2009.
Given the AFL is likely to have used some, if not all of the $89 million in its Future Fund for the purchase, its unlikely the league has incurred as much of a debt burden in its purchase.
The Clubs most affected by the purchase are the Etihad based clubs – North, Bulldogs, Saints, Blues and to a lesser extent Essendon. Melbourne Victory also has a deal, due to expire until 2025. Melbourne Renegades signed a five year deal in July 2016.
Currently the Etihad clubs take home about 37 per cent of football related revenue, as opposed to 41 per cent at the MCG. If returns can be lifted to 50 per cent or higher, then the chances of clubs being beholden to the AFL for their survival through handouts becomes much less, and other clubs would view playing at Etihad much more favourably.
For that to happen the league needs to find at least ten million in the Etihad purse every year.
The AFL believes it could make immediate savings at the stadium by taking over back-office functions such as marketing, ticketing, human resources and event management.
The AFL already receives pourage and some signage rights at the stadium – distributed to home clubs along with varying percentages of admission fees and box revenues.
Etihad Stadium is the beneficial owner of several key businesses and assets associated with Telstra Dome, including the Medallion Club, Naming and Advertising Rights. Melbourne Stadiums Ltd is also entitled to the economic benefits associated with the operation of Telstra Dome including car parking, ticketing, event hire, food and beverage, corporate suites, functions and Axcess One football memberships revenue.
Amongst the new revenues the league will have access to –
* General revenue – $79 million in 2015 including;
* Car parking (2,500 spaces, seven days a week, presently stadium exclusive)
* Medallion Club (more than $20 million a year, presently stadium exclusive)
* Naming rights ($5 million a year until 2019 and stadium exclusive)
* Catering rights (presently split between the home club and stadium)
* Admission rights (presently split between the club and stadium)
* Corporate box rights (presently split between the club and stadium)
* Advertising rights (presently split between the league and stadaium)
Another way the league could add income would be by shifting mid range games (30-40,,000 attendance) to Etihad in exchange for some of the lower drawing games. This would also solve the problem of non-Victorian sides not playing enough at the MCG.
The MCG contract requires 46 games, including 14 Collingwood home-and-away matches, and the top 12 drawing matches, as well as ten finals every five years including the grand final. The AFL has an attendance guarantee of 1.5 million. In 2016, attendance was 2.08 million so there’s some room to move.
The AFL would stand to make more from these games at Etihad where it now gets 100 per cent of the revenue, as opposed to the MCG where it only gets 68.9 per cent (and the clubs only 41 per cent).
Paul
Guest
The trouble is with AFL is it's like watching seagulls fight over a chip. It's not as good as NRL/Union/BBL because of some baseless fact I can't be bothered to print. How's this feel Wookie? imagine ten people like this constantly, pointlessly trying to drag your article off track for no other reason than just hating your code. Imagine it for the next 12 months - on and on and on. It's pointless but it occurs regularly on the other tab you visited today.
Mister Football
Roar Guru
Listening to Patrick Smith on SEN - he reckons Etihad will be an absolute financial bonanza for the AFL (this is from a man who rarely hands out bouquets). He puts the purchase of Etihad alongside the $2.5 billion TV deal in importance to the AFL.
Paul D
Roar Guru
I don't see the AFL planning to demolish Etihad at all. Nor should they. It would be supremely wasteful, and a terrible decision.
The_Wookie
Roar Guru
Yeah my error there. Telstra dome was the stadiums second name. Melbourne Stadiums Limited is the current operator of the stadium.
Gyfox
Guest
Very comprehensive article, Wookie. But I am a little confused. You refer to Telstra Dome - wasn't that an earlier name of the stadium, or is it a corporate entity that still owns the stadium? Also confused about Melbourne Stadiums - is that who currently operates the stadium?
me too
Guest
Finally the smaller clubs that have borne an unfair burden for so many years have a chance to build financially. Always unfair that clubs were forced to play there against their wishes and also lumped with the responsibility of paying it off at a loss. Let's hope those clubs now get repaid with their fair share of the spoils in the form of a very healthy new contract, and not lumped with a new burden of redevelopment costs.
Ahmed
Guest
I thought there was a clause in the handover where the stadium will be upgraded if it is not within current standards. I wonder if this clause will still hold now that the rights have transferred early.
Ahmed
Guest
Great news for football. Its not just AFL clubs which can benefit though. Surely there is many benefits for the VFL also. Many functions will be reduced in price. The main issue now is to ensure that the football off-season gets plenty of use. This means concerts, events, and other sports. The stadium could host several Big Bash games, national team cricket, and a-league soccer matches (and other soccer qualifiers). I also see a downside in that financially some of the Victorian clubs which should be relocated will now stay in Melbourne.
Mister Football
Roar Guru
Nice summary wookie. I agree that the intent is now pretty clear, to hold onto a stadium on the edge of the CBD, very well serviced by public transport, being a precinct likely to attract ongoing public and private investment. Good for the AFL as a whole, but especially good for some of the smaller Melbourne clubs.
Perry Bridge
Guest
I do suspect that the way Adelaide Oval rebuild has worked on a precinct level is setting a standard - and so far, all the planners/developers have managed to do with Victoria Harbour stadium is to gradually isolate it (Docklands is a horrible precinct). It may be the last hope for redemption to do something decent while they still can. Otherwise - knock it down and build something great......on land near Macaulay Station and the station to be at Arden.......(okay, a bit of a jest on that front).
The_Wookie
Roar Guru
thats not my read of the AFLs intent at all. Mclachlan is actively pursuing the Government for funds to develop the stadium and its surrounds. Its not something you do when you plan to demolish it.
BrainsTrust
Guest
As I said in another post the AFL will look to Melbourne to bid for the Olympics so that they get the government to build another stadium, and then they will try to demolish Etihad. The mayor has already mentioned a bid for the Olympics, and notice how he mentions how much use any new stadium will be getting. "Cr Doyle said Melbourne had great credentials because of its world-class sports facilities and friendly atmosphere, and could realistically bid for the 2028 or 2032 Olympics. “I don’t think it’s sustainable that nations, particularly those that are not very affluent nations, spend billions upon billions on stadiums and facilities that are then unused after the Olympics,” he said. “We could show a very friendly Games, a very inclusive Games. “We could show how you could purpose-build stadiums so that they are an integral part of the city’s infrastructure.”