A new AFL economy? Here's my pitch

In the face of an unprecedented interruption to the game, the AFL is casting the net wide in search of a new competition model to save the league money and take it into the future.

The Age’s Michael Gleeson wrote earlier this month that the league had provided all 18 clubs with a document titled ‘Future AFL Competition’, seeking to canvas their views on a wide range of future initiatives.

Anything and everything appears to be on the table, including often-discussed ideas like cutting list sizes, raising the draft age, and putting an end to the brief experiment of Next Generation Academies.

Regular readers will know that I live for this kind of stuff, and today I’m pulling myself out of coronavirus-induced hiatus to make my pitch for the future of AFL drafting and trading – a simpler system with positives for every party.

(AAP Image/Tracey Nearmy)

Players get a percentage of revenue
One of the major sticking points of the last CBA negotiation was that AFL players wanted the salary cap to be adjusted as per AFL revenue, while the league wanted to stick with a set amount.

They eventually agreed on a deal that saw the salary cap stay as a set amount, but had the potential to increase before a new CBA was negotiated if the AFL enjoyed a significant increase in revenue.

The AFL would be kicking themselves presently over not shaking hands on the proposed percentage of revenue model – it would be saving them a mountain of money right now.

The AFL’s current CBA doesn’t wrap up until the end of 2022, nearly three full seasons from now, and it’s abundantly clear that the league will not be able to afford to keep up a $12-13 million salary cap for that period of time.

Neither the AFL nor the players can project with any certainty just how long the game will be feeling the financial impacts of COVID-19. A set amount salary cap just isn’t flexible enough for these volatile times.

Instead, a percentage of revenue model means the AFL doesn’t have to pay players more than it can afford, while players won’t have to renegotiate to feel the benefits of economic resurgence when it arrives.

This should come with the caveat that the AFL’s minimum player salary can not drop below a certain amount – say something like $80,000 to $100,000 – to ensure that even in times of total shutdown, AFL players still have a living wage.

Club-option draftee contracts
It’s no secret that the percentage-of-revenue model is an idea borrowed from American sport, and here’s another that I like in that vein: club options to extend initial draftee contracts.

The present NBA CBA sees rookie players signed to an initial two-year contract, which the club then has the option to extend through to a third or a fourth year as they like.

A similar model would work well in the AFL, giving clubs the option to automatically re-sign their draftees up until they reach a certain point in their career, rather than risk losing them after as little as two years.

Josh Schache left the Lions for the Dogs after only two seasons. (Photo by Adam Trafford/AFL Media/Getty Images)

Like the NBA, these contracts would contain built-in pay rises so that a draftee’s salary increases as the years go on, and could have performance clauses to ensure that quick developers are appropriately compensated.

For example, a player like Chad Wingard – who was All Australian in just his second season – would receive a significant ongoing boost to his salary, as is appropriate for that level of achievement.

In the AFL it would also probably be appropriate to have more years worth of options available to clubs. Being able to extend a player through until the age of 24, or six years if drafted at 18, is about the right amount.

Gillon McLachlan has said in the past that he wants to ensure AFL clubs have the ability to move back up the ladder as swiftly as possible, but the simple reality is that in a 22-player game, rebuilding a side takes time.

AFL clubs need to have the ability to draft and hold – it’s the only way up when they hit rock bottom. The plight of the Gold Coast Suns shows just how bleak a club’s fortunes can be when they aren’t able to execute this strategy.

Free agency for all
Of course, the criticism of a notion like the one above is that it will restrict a player’s ability to earn the maximum possible salary on the open market.

To that I would say we already do that in the first two years of a player’s career, and extending that out three or four years further is no less arbitrary.

So long as there is an appropriate negotiation of inbuilt pay rises and performance bonuses, then no player should go through that period of time without being well-compensated for their work.

But there still does need to be a point in a player’s career when they can test the open market, and once a player reaches that point they should have free agent status with which to do so.

The introduction of free agency has given the AFL’s best players the ability to extract the maximum value for their services, with players like Dustin Martin able to use free-agent status to extract a far better deal even while staying at their original club.

Dusty was a big winner out of free agency. (Quinn Rooney/Getty Images)

So, once the club options on a draftee contract run out – or once a club elects not to make use of an option – the player in question becomes a free agent, able to accept offers from any rival club and move there without a trade.

This would mean the opportunity still exists for the high volume of player movement the AFL wants to see to keep itself in the headlines come October.

Players would become less likely to move while their careers are still in their infancy, but once they’ve given their club good service, they have an unconstrained ability to test the open market and maximise their potential earnings.

As is the case in current free agency, most of the time this would not lead to players being more likely to switch clubs, but instead having the leverage to get the best possible deal from their current club – and the option to move if that is not forthcoming.

Supplemental list
The idea of cutting AFL lists is being thrown around a lot at the moment and it seems inevitable that it will occur to at least some degree.

This isn’t happening because AFL clubs have too many players – it’s because they can’t afford to pay them all as much as they are doing currently.

Thirty-five players is the mooted figure, but in 63 per cent of cases over the last five years, AFL clubs have used 36 players or more over the course of a season.

And even if they’re not playing at senior level, clubs also need to have warm bodies on hand for various large-scale training drills. For this reason clubs will have some kind of access to cut and sign players from lower tiers of competition to round out their lists.

As Gillon McLachlan has put it, “There are not less jobs – there is just a different configuration to put your list together.”

These supplemental players are likely to find their deals modelled on the NBA’s two-way contracts – but the difference between the AFL and the NBA is that in the latter, there’s a lot more money going around.

A second-tier basketballer in the US already makes a living wage even before getting called up to the next level. That simply is not the case for state-league footballers in Australia.

If they do get that call-up, they make a minimum of US$75,000 (A$110,000) if they don’t spend any time with their NBA club, and a whopping US$385,000 (A$589,000) if they spend the maximum 45 days there.

That’s earnings enough to justify putting other career options on hold for an opportunity that may be over as quickly as it began, but the AFL isn’t going to be able to offer anything like that kind of remuneration to supplemental AFL players.

For that reason, we can’t cut as deeply into AFL lists as some are suggesting. But the success of last year’s mid-season draft shows that allowing clubs more agility to tap into state-league playing resources could help uncover some real gems.

Marlion Pickett benefited from the first mid-season draft last year. (Photo by Quinn Rooney/Getty Images)

A good model would be to cut AFL lists to 40 players and axe the rookie list entirely, instead allowing clubs a five-player supplemental list where they can cut and sign at will during the AFL season. But any player cut from the supplemental list after less than 12 months of service gets a $20,000 payout, as per the current rules for the mid-season draft.

Auction draft
Finally, one last pitch for an old favourite of mine – replacing the AFL draft with a player auction. I’ve talked about this one once or twice before, so won’t go into extraneous detail here.

The reason to move to an auction draft is that it results in a better allocation of draftees to clubs where a draftee is more likely to wind up with the club that values them the most.

For example, let’s imagine a hypothetical 2019 draft auction. Gold Coast used pick one, worth 3000 DVI points, on Matt Rowell, but Fremantle had three top-ten picks, worth a total of about 4500 points.

Let’s say the Suns felt like 3000 was an appropriate price for a player of Rowell’s talent, but Fremantle rated him higher, feeling that he is worth 3500 points.

In the current system, it wouldn’t matter – Rowell would still end up at Gold Coast at pick one, where he is valued less, unless Fremantle could make a deal for pick one, which is virtually impossible.

Matt Rowell is presented with his Gold Coast strip during the 2019 AFL draft. (AAP Image/Michael Dodge)

In an auction system, Fremantle could use their resources to outbid Gold Coast, and Rowell finds himself at the club that values him more.

This also means AFL clubs have a far more liquid asset with which to trade and draft – gone are the days of haggling over complex pick swaps.

When swapping players, clubs could simply agree to a fair value of points to exchange, and at the draft they can choose whether to spend all their currency on one top-tier player or spread their resources out across many.

An auction draft would also mean the AFL could eliminate the need for the academies and the father-son rule, saving clubs a lot of money.

In an auction, every club has the opportunity to bid for every player – if you want the player from your state or who has family ties to your club, you simply need to pay the price. If the price is more than you can afford, you don’t get them – that’s the way the system should work.

The benefits
Everybody has something to gain from the new measures I’m suggesting here.

An auction draft gives clubs far greater flexibility in executing their list management strategies, while club-option contracts enable them to draft with confidence, know they can hold new players for at least the first six years of their careers.

Players have greater freedom with which to pursue maximum compensation once their careers mature – and their mental health will benefit from not having to consider opposition contract offers too early in their careers also. Plus, the percentage of revenue model means as soon as the AFL is back in the black, so are they.

The AFL itself benefits through finding ways to save money. Percentage of revenue means they only have to pay players according to what they’re getting in, and an auction draft will mean clubs can cut the cost of academies out of their spending.

Fans benefit too. Players leaving clubs early in their careers becomes less common, trade period becomes less of a slog, and the draft becomes fast-paced, unpredictable and compelling viewing – something that can’t be said of the current iteration.

Yes, there are more details that would need to be nutted out – like is restricted free agency still a thing, how are state clubs compensated for supplemental signings, should we have a national reserves or national youth league, and what kind of gavell will Gillon use to auction players off.

But the ideas described above could form the bases of a new, simpler, better AFL economy. What do you think?