One of the criticisms levelled at expansion clubs Western United and Macarthur Bulls was they bought their way into the A-League. The phrase ‘franchise clubs’ has been bandied about.
While both clubs did pay licence fees to FA to get in, the amounts were not as much as people think. The figures released publicly were said to create an ‘optical illusion’ to make FA’s books look better than they were at the time.
Western United paid $18 million up front to get into the A-League in 2019-20, while the Bulls were set to pay $12 million for their entrance in 2020-21. However, United were apparently due to receive back $14.5 million of their $18 million fee, in instalments between 2018 and 2022, while the Bulls were to get back $9.75 million.
The net amount received by FA was therefore said to be only $3.5 million and $2.25 million, respectively.
For Western United, the remaining $14.5 million paid in advance was in effect a security deposit, to ensure the club could survive without receiving broadcast money from the previous Foxtel deal that existed prior to COVID.
The ten existing clubs were assured that any two expansion clubs that came in would not receive any of the $346 million six-year broadcast deal signed in 2016 by the FA with Foxtel.
With the Bulls, according to a club insider, their $12 million fee to FA was broken up into a $2 million initial payment plus two annual payments of $3.5 million, and a final payment of $3 million. The Bulls in turn were apparently then going to receive $9.75m back from the FFA by 2022, broken up into three payments of $3.25m.
The $9.75m flashback was again framed as a form of financial security, similar to Western United’s deal. The only difference is, the annual payments from the Bulls were then received back throughout the year they paid, allowing FA to have short-term working capital.
A close look at FA’s balance sheets in 2019 and 2020 shows the Western United amounts sitting in contract liabilities.
The Macarthur FC amounts won’t feature prominently in the financials, partly due to the terms of their arrangement and also because ultimately they didn’t pay all their licence fees after COVID struck, with the Bulls attempting to renegotiate the terms of their deal to reflect the economic climate at the time.
With the unbundling of the A-Leagues from FA in 2021, the financial landscape has now changed. There is no indication from the APL, who now govern the A-Leagues, as to how much they would charge a new club for entering into the APL arrangement.
The APL was valued at $425 million based on the recent equity deal with Silver Lake. Silver Lake have a $140 million stake, while Viacom and FA have their own minor stakes. It is unclear if FA’s is an equity stake, since the terms of the independence deal were kept in commercial confidence.
A rough ballpark figure is that each of the 12 clubs have around a $20 million stake if looking at it from a simplified point of view.
Time will tell how expansion of the A-Leagues will work and how lucrative it actually will be for the APL. But with Silver Lake and Viacom buying in, things look different to when FA was in charge.