Buy-buy old A-League and welcome NewAL

Nemesis Roar Guru

By Nemesis, Nemesis is a Roar Guru

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60 Have your say

    The FFA recently announced plans to develop new ownership and operating models for both the A-League and the W-League.

    After 12 years of owning and operating the A-League, it seems the FFA has reached a stage in the evolution of the business that every private owner faces: the demand for new capital to expand.

    The FFA also apparently realised that the operation of the A-League requires specialist skills and 100 per cent focus, neither of which the FFA can provide from internal resources.

    As such, they have hired corporate advisors to evaluate the possible ownership and operating models to take the A-League successfully into the next stage of expansion.

    In this article I will outline one possible model that could form the new A-League. I will attempt to address a new model for the W-League at a later date.

    The core principles I have used to create my new A-League model are:

    1) Independent structure (in particular, ring-fenced finances)
    2) Fair distribution of funds to clubs
    3) Access to new capital
    4) Specialists who focus 100 per cent of their efforts on promoting and managing the A-League.

    Step 1: Separate the A-League operations
    The FFA will create a new corporate entity, ‘NewAL’.

    NewAL will own all the assets and liabilities associated with the A-League competition (TV rights contracts, sponsorship deals, intellectual property, service contracts and obligations) and all intellectual property for each club.

    NewAL will issue eight shares and, at this point, the FFA will own all eight shares.

    Step 2: Clubs to form a union
    The ten clubs who hold licences to play in the A-League will form a corporate entity, ‘Clubs United’, which will manage the clubs’ interests.

    Each existing A-League club will be issued one share in Clubs United and, when the A-League expands (or when clubs are promoted from the second division), new clubs will each be issued one new share in Clubs United. If an A-League club is relegated, or liquidated, that club’s share will be cancelled.

    Step 3: New capital for NewAL
    The FFA needs significant fresh capital to take the A-League to the next level.

    The competition needs more clubs, better marketing and promotion, better media relationships, and wider corporate relationships (local and abroad). But the FFA does not have the cash reserves to provide this.

    Debt capital (bank loans, or corporate paper) is not recommended for this venture, nor do I recommend a public equity offer.

    Instead, FFA should look to private equity, with potential targets being organisations with deep skills and networks across marketing and multimedia (e.g. Lagardere Sports, SportFive, Octagon, IMG, YouTube, Facebook, Twitter).


    Step 4: Partial sale of NewAL to private equity partner/s (PEP)
    The FFA will sell 40 per cent of NewAL (four shares) to PEP.

    This will be done by FFA selling two of its existing eight shares and NewAL issuing two new shares.

    The value of this 40 per cent can only be determined after a forensic examination of NewAL’s financial records, relationships and market conditions. Obviously, such information is well beyond the scope of this discussion, so I’ll have to make a rough guess about the likely value of NewAL.

    At the time of the sale, NewAL should generate revenue of approximately $80 million per annum. Given the likely surge in revenue upon expansion through new sponsors, additional broadcast money and the like, it’s reasonable to value NewAL at $250 million.

    Therefore, FFA will sell a 40 per cent stake in NewAL to PEP for $100 million.

    The FFA will receive $50 million from the sale of its two shares to PEP and NewAL will receive $50 million capital injection from issuing fresh capital to PEP.

    After the 40 per cent sale of NewAL, the ownership will be:

    FFA: 60 per cent (six shares)
    PEP: 40 per cent (four shares)

    Step 5: Giving A-League Clubs Ownership of NewAL
    The FFA will then transfer five of the NewAL shares to Clubs United.

    Each A-League club has already paid a licence fee to the FFA to compete in the A-League, so the FFA will issue Clubs United with 50 per cent of NewAL shares in consideration for cancelling the existing licences (which will still have significant time value).

    Along with the transfer of 50 per cent of NewAL shares to Clubs United, each club in the A-League will also take full ownership of all the intellectual property linked to it.

    The final ownership of NewAL will be:
    Clubs United: five shares (50%)
    PEP: four shares (40%)
    FFA: one share (10%)

    Step 6: Sharing NewAL revenue
    All revenue generated by NewAL each year will be expensed as follows:

    • 50 per cent to Clubs United, for services provided by competing in the A-League
    • 10 per cent to FFA for services provided as the governing body
    • 40 per cent to PEP to operate and promote the A-League competition

    Referring back to the $250 million valuation, if NewAL generates $100 million revenue in the first year of the new operating model, PEP will receive a $40 million return on a $100 million investment (40% ROI).

    So there you have it.

    This blueprint satisfies the core principles of independence, fresh capital, skilled managers to administer a football competition, and fair financial returns for participating clubs thus eliminating the imbalances of the past 12 years.

    FFA board, there’s no time to waste – let’s do it!

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    The Crowd Says (60)

    • March 4th 2017 @ 3:51am
      ren said | March 4th 2017 @ 3:51am | ! Report

      Surely the answer is to replicate the AFL. The changes made to the ownership/managemetn of the league at the time of transition away from the VFL to the AFL is perhaps the best case study into what ownership/corporate management strategy is most effective.

      • March 4th 2017 @ 6:56am
        Nemesis said | March 4th 2017 @ 6:56am | ! Report


        The AFL model might work for Aussie Rules, but it is not what the A-League clubs want. The AFL model does not fulfil 2 of the fundamental core principles that are required for an independent competition.

        1) The AFL structure is not independent. In particular, the finances of the AFL competition are not ring-fenced
        2) The funds generated by the AFL competition are not fairly distributed to clubs.

        Additionally, the AFL model does not fulfil other demands that the ALeague clubs want

        3) The clubs competing in the AFL competition do not own any of their Intellectual Property, it is all owned by the AFL
        4) The AFL Commission is not focused purely on managing the AFL competition. It also is the body responsible for governing the sport, creating new rules, organizing development programs (AusKick), organizing the AFLW competition, etc. I want (and so do the clubs) the A-League to be administered as an independent entity. The management team for the ALeague will have 1 core mission – to manage the ALeague competition. That’s it.

        • March 4th 2017 @ 11:38pm
          Pauly said | March 4th 2017 @ 11:38pm | ! Report

          And do not assume that the AFL model is universally loved by those involved in that sport.

      • Roar Pro

        March 7th 2017 @ 3:10pm
        Jeff Williamson said | March 7th 2017 @ 3:10pm | ! Report

        AFL model has more benefits than a privately owned A-league.

        Selling shares to private investors is not a direction we should follow.

        • March 7th 2017 @ 3:57pm
          Nemesis said | March 7th 2017 @ 3:57pm | ! Report

          @Jeff Williamson

          Which parts of the AFL AFL model appeals to you?

          If we want an Independent ALeague competition, I’ll repeat the unacceptable aspects of the AFL competition:

          1) The AFL finances are not ring-fenced = UNACCEPTABLE

          2) The AFL Clubs do not own their own intellectual property (name, trademarks, brand, logos, etc.) = UNACCEPTABLE

          3) The Funds generated by the AFL competition are not fairly distributed to the clubs in the AFL competition = UNACCEPTABLE

          4) The AFL Commission is not focused purely on administering the AFL competition. It also deals with AusKick, AFLW, international rules junket, etc = UNACCEPTABLE

          5) The AFL provides unlimited funds to new clubs and has full financial ownership of some clubs= UNACCEPTABLE

          6) The AFL guarantees debt for existing clubs & give assistance to clubs in financial distress = UNACCEPTBALE

          • Roar Pro

            March 7th 2017 @ 4:27pm
            Jeff Williamson said | March 7th 2017 @ 4:27pm | ! Report

            The AFL Commission is a non-profit.

            The commissioners are elected by the AFL clubs, with each club entitled to make nominations.

            As for the other things you don’t like about the AFL model – I can’t treally comment because I do not really follow that. I am a football fan (that is, association football).

            Other models that impress would include the Bundesliga.

            • March 7th 2017 @ 4:50pm
              Nemesis said | March 7th 2017 @ 4:50pm | ! Report

              I’d be happy for the Clubs to elect all the ALeague “commissioners”.

              To do this, Clubs United would have to inject $50m to substitute for the funds PEP would be injecting.

              If the existing clubs are willing to do this – fantastic.

              The NewAL ownership would be

              ClubsUtd = 70%
              FFA = 30%

    • Roar Rookie

      March 4th 2017 @ 7:27am
      Stevo said | March 4th 2017 @ 7:27am | ! Report

      Interesting and one could argue about some of the figures but interesting nonetheless. The Bundesliga model provides an insight that might be relevant to us. Particularly the financial rules applied to club to ensure stability. And ticket prices to ensure fans are at the heart of game.

      • March 4th 2017 @ 8:02am
        Waz said | March 4th 2017 @ 8:02am | ! Report

        There is much to learn from the bundeslige model – not least that clubs do not have to run at a loss or with massive debts

      • March 4th 2017 @ 9:17am
        Nemesis said | March 4th 2017 @ 9:17am | ! Report

        Stevo, that’s a good article & I’ll need to read it a few times to extract all the good insights.

        However, from what I’ve read, that article deals with more detailed principles about the operation of the league & ownership structures of clubs.

        I wanted to focus this discussion only on creating a new ownership & operating model for the A-League that is guided by the 4 Core Principles I identified.

        Once we have this sorted, I definitely would like to explore what principles we would like to have for ALeague (eg. fan ownership, ticketing, scheduling, etc.)

    • March 4th 2017 @ 8:21am
      Jeff dustby said | March 4th 2017 @ 8:21am | ! Report

      As per usual the Fuss speaking the truth
      Word brother !

      • March 4th 2017 @ 8:24am
        punter said | March 4th 2017 @ 8:24am | ! Report

        Thought your brother was Kevin & Pat.

        • March 5th 2017 @ 6:09pm
          Jeff dustby said | March 5th 2017 @ 6:09pm | ! Report

          And yours is caltex, thanks for following me

    • March 4th 2017 @ 8:22am
      Waz said | March 4th 2017 @ 8:22am | ! Report

      Well done Fuss, there’s variations on your figures up or down but that simply becomes a spreadsheet modelling exercise. There are some implications in this which to explore I’m going to use a round-figure of $100m for HAL revenues which is where it’s likely to sit when the dust settles.

      In a model such as this:

      * The ffa would receive only $10m/year compared to the current $50m increasing to maybe $60m with the new tv deal – how the ffa adapt to that change is crucial. The only real source of new revenues is an increase in its sale of Socceroos rights, more domestic friendly internationals and possibly new competitions eg Footsall or a Division 2? This I think is a good thing as it will force the ffa to be leaner cost wise and more creative revenue wise.

      * your model distributes revenues and not profits (which is the only way this model can work) but the clubs will only receive $50m of the revenues their competition raises estimated at $100m. The question therefore is why would they give PEP $40m/year why not just keep all the revenue and give the ffa $10m, $20m or even $25m? The answer must lie in what else PEP brings – which has to be significant growth in revenues (make the pie bigger) and there’s no clarity on if they can do that yet.

      * then there is the timing of all this, how quickly can this be put together – in time for the new season or in time for the next new tv contact in 6 years?

      • March 4th 2017 @ 9:38am
        Nemesis said | March 4th 2017 @ 9:38am | ! Report


        You raise good points.

        1) In particular the loss of revenue for the FFA will be crucial when the lose control of the ALeague cash cow.

        We need to get a better understanding of how much ALeague revenue the FFA actually retains right now, in terms of per cent of Total ALeague revenue it generates (TV money, Finals, sponsorship). Remember the FFA pays out $26m/yr to clubs to cover the Salary Cap.

        But, you’re right, maybe the FFA having access to only 10% of the ALeague revenue in future is too little. Perhaps, it’ll be better to only give PEP 20% share of the ALeague via the new issue of capital (which will inject $50m fresh cash into the ALeague) and the FFA then will have 30% share of the ALeague Revenue?

        The more I think about it, this is not a bad idea at all. I got a bit hasty & wanted the FFA to cash in its chips to raise $50m for itself in addition to the $50m fresh capital injection.

        But I think you’re right. The FFA needs the regular cash flow injections that only the ALeague can provide and this revenue stream is going to explode over the next 10 years with expansion, promotion & relegation.

        2) PEP brings 2 vitally important things:

        a) Fresh capital to kick-start the next Stage of ALeague development (expansion, pro/rel, better marketing, etc.)
        b) Specialist skills for managing, promoting, marketing, broadcasting a sporting competition..

        Neither the Clubs nor the FFA can provide either of the above.

        3) Timing? New FFA structure finalized March 2017. Agree to the new independent model for ALeague by June 2017. Create the new corporate entities to commence life on 1 July 2017. NewAL ready to open its doors for 2018/19 season.

        Although, as I’ve written in a previous article, I’d really like to see the Aleague transition from

        Current: October-May competition to
        Future: Feb-May … Break (Jun, Jul)… Aug-week-end before Christmas; this way our best teams compete in Asia when they’re still the best teams plus the maximum time without ALeague each season is just 8 weeks.

        So, if we make the New Start include a “New Start”, why not get it up and running for Feb 2018. Most of the work is admin: paper shuffling, contracts, etc. The only issues with Feb 2018 start is getting 2 new teams ready for competition and what do we do from October 2017-December 2017 this year?

        • March 4th 2017 @ 9:59am
          Waz said | March 4th 2017 @ 9:59am | ! Report

          If we assume the ffa can apply enough oversight and governance in such a model then I think the FFA should look to this model to replace their revenues for the next 5-6 years. On the assumption they already raise $25m independently then add perhaps another $25m/year through a combination of this model and other revenue streams might just might, balance the books. My initial instinct is that the ffa need this “new model” more than the club owners do, the key is what PEP can do for the clubs that they can’t get under a more devolved arrangement now?

          • March 4th 2017 @ 10:37am
            Nemesis said | March 4th 2017 @ 10:37am | ! Report

            Apart from the cash injection, I’d be really excited by the marketing & promotion know-how of companies like IMG, Octagon, Lagardere Sports, SportFive, etc. and the broadcasting & advertising/analytics know-how of companies like: Twitter, YouTube, Facebook.

            We know there’s a significant – perhaps niche – A-League market out there. They’re young. They’re passionate, they’re knowledgeable about football, they’re not event-watchers & they’re not like other sports fans. We need to connect better with this group & others who are likely to fit with this group.

    • March 4th 2017 @ 9:59am
      Nemesis said | March 4th 2017 @ 9:59am | ! Report

      Was only a matter of time before the Austrian powerhouse brand looked to ALeague.

      AFR Weekend understands Red Bull is investigating … establishing a team in the ALeague.

      Red Bull for now is said to be looking for a new team to start from scratch, rather than buy an established name and risk alienating a fan base.”

      Full story:

      • March 4th 2017 @ 10:01am
        Waz said | March 4th 2017 @ 10:01am | ! Report

        Brisbane mate. They looked at Roar a couple of years back and the city remains a little gold mine for football and event goers alike.

        • March 4th 2017 @ 11:27am
          Caltex & SBS support Australian Football said | March 4th 2017 @ 11:27am | ! Report

          Gold Coast United mkII. Perfect with the Skill Stadium (30k capacity) looking for a football franchise to call home.

          • March 4th 2017 @ 11:40am
            Waz said | March 4th 2017 @ 11:40am | ! Report

            Doubtful. What we’re likely to see going forward is a singular focus on generating cash, romance will die for a while, the next three clubs will go in to Brisbane, Sydney and Melbourne because that’s where the cash is. That’s where tv will want them. That’s where sponsors will want them. That’s where corporate dollars will want them. It’s actually where Red Bull will want them. Why wouldn’t you try and build the football equivalent of the Broncos in Brisbane instead of swimming against the tide on the GC? There’s a very strong push for change going on led by the clubs and now seemingly by the ffa, the only certainty surely is that we’re going to get change it’s just anyone’s guess as to what that change will look like lol

            • March 4th 2017 @ 12:01pm
              Nemesis said | March 4th 2017 @ 12:01pm | ! Report

              Not sure if Red Bull necessarily will only want big cities.

              Remember, Red Bull has a team in Leipzig (who are flying in the Bundesliga this season).

              I’ve been to Leipzig several times. It’s not a big city. Just checked & its population is 550k in a country with a population of 81 million. So, that would be equivalent to a city in Australia with a population of 160k?

              Perhaps, they look for cities that fit their brand? Gold Coast might be ideal.

              • March 4th 2017 @ 1:01pm
                Waz said | March 4th 2017 @ 1:01pm | ! Report

                All speculation right I’m just thinking if we are going down the private equity route everything will become very focussed on returns. There’s no reason why Red Bull wouldn’t go to the coast or another market in Australia, but with Brisbane and Sydney underdone, and possibly Melbourne, I’m struggling to see why they would go anywhere else first

              • March 4th 2017 @ 1:18pm
                Nemesis said | March 4th 2017 @ 1:18pm | ! Report

                I think Sydney & Melbourne expansion (& 2nd Division) clubs will come from existing community clubs independently (Sth Melb, Bentleigh Greens, Oakleigh Cannons, Melb Knights, etc.) or working together (e.g. the Casey/Dandenong bid).

                In Melbourne I can’t see a brand new “franchise” having any traction. I can’t see what can be a point of difference, or value proposition, for a brand new franchise to lure new fans.

                Doesn’t the Gold Coast get heavily involved with motor racing events? Red Bull’s F1 connection might make a good fit? Plus the young & fast lifestyle on the Coast seems to be the ideal demographic for the Red Bull product the morning after the night before.

              • March 4th 2017 @ 8:21pm
                Evan Askew said | March 4th 2017 @ 8:21pm | ! Report

                Also look at Salzburg, admittedly they took over a team with a big history (1995 UEFA cup runner’s up) but if they wanted a big city they would have gone for vienna, not Salzburg.

      • March 4th 2017 @ 11:39pm
        Pauly said | March 4th 2017 @ 11:39pm | ! Report

        Wollongong Red Bull?

    • March 4th 2017 @ 10:00am
      Rodger King said | March 4th 2017 @ 10:00am | ! Report

      @waz – wouldn’t the PEP bring the initial financial input required for this new set up?
      I must say it does sound more than feasible and I wonder if anyone at the FFA have considered such a change. Being sceptical I can’t see the FFA willingly giving up financial control of the A League which appears to be their only source of substantial income.

      • March 4th 2017 @ 11:32am
        Waz said | March 4th 2017 @ 11:32am | ! Report

        @ RK – unless the FFA cuts soending in other areas it still needs $50/$60m a year in cash to fund other activities which at the moment comes from the $80m it raises via the HAL.

        This model will work for PEP, I think the model will also work for club owners but it can only work for the ffa if they get a significant cash injection (by retaining the bulk of the PEP money which may not be acceptable to the private investors) or by increasing revenues elsewhere – the delay in doing a deal like this is likely to be caused by the ffa trying to figure all this out.

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