Does the APL’s corporate structure help or hinder Australian football?

At the time that the A-League was unbundled from Football Australia’s control, much was made about the freedom it would give clubs to control their own destiny.

It was believed that by giving control of league operations to those best place to understand the league’s needs they would make smarter decisions that would drive interest in the competition. Western Sydney Wanderers Chairman Paul Lederer gleefully stated that “The handbrake on the game is off; owners can finally invest in what they own and create value for the entire footballing ecosystem.”

But things have not played out like that. In fact, I will argue that the A-Leagues clubs are now in a worse position than before they were “unbundled” from Football Australia’s control in 2021. Immediately after the unbundling a new corporate entity was created to run the league, the Australian Professional Leagues. Initial ownership was split evenly among the constituent clubs, but they quickly found a novel way to raise capital. They sold off a significant stake in the APL to a venture capital firm.

Now the A-Leagues Clubs hold 64.7% of the APL, the venture capitalists having a 33.3% equity share, and Channel 10’s parent, Viacom CBS, holds the remaining 2% of APL equity. Football Australia, maintains a non-financial minority equity interest in APL for the ‘Good of the Game’.

When looking at how power is exercised in this competition we need to be clear that the clubs individually make some decisions and gain some revenue off their own bat, but the APL corporation makes most other decisions and derives its own revenue, to be distributed to its own investors.

Even though clubs each retain a little over 5% in the APL, with the addition of the venture capitalists, the balance of power in how the competition is run has shifted. The clubs are limited in their ability to look after their best interests with the local knowledge of what their fans need and want, and are instead being dominated by a corporate overlord looking to maximise its own revenue.

Broadcast revenue is the most obvious example of how interests between the clubs and the APL. In a competition without dysfunctional structures the clubs would be empowered to maximise their attendances by scheduling games to their fan bases’ preferred times of days, and days of the week. Further, the TV broadcast scheduling would be tailored to give their fans easy availability to watch interstate away games, helping to grow interest in the league. But we don’t have an attendee-centric approach to scheduling. We have games in the hottest parts of summer, and inconsistent, rather than habit-forming timings.

The APL corporation’s need to gather revenue for its own investors have also created two prime examples of significant decisions that come at the expense of some clubs and most fans. The most obvious is the much discussed Grand Final decision. Because of the revenue structures in place, the APL and its investors collect the income from finals crowds, broadcasting and the NSW government. But the blowback from the GF announcement was felt by the clubs outside NSW, and they have lost the prestige of hosting future Grand Finals as well.

 (Photo by Dave Hewison/Speed Media/Icon Sportswire via Getty Images)

The need to direct earnings to the outside investors is also felt in the expansion process. The APL has chosen to go down the route of selling new licences for $25m for each new club, rather than by promoting existing clubs on sporting merit, as is the international norm.

Not to bang the drum for the promotion/relegation paradigm, but there’s a good reason why it is world’s best practice: it ensures that clubs brought up a level are the most capable of those available in their nation. And if you’ve followed the A-League for long enough you know full well that the league has a terrible track record in bringing in competent n

ew clubs. For the successes in Wellington Phoenix and Western Sydney Wanderers, we have the catastrophes of Gold Coast United, North Queensland Fury, Western United and Macarthur. That’s a ratio of 1 success for 2 failures for the franchise model. Just one of those would harm a league, but these four disasters combined have done more to disillusion the football community as the Grand Final decision has.

So why would such an unreliable process by favoured by league bosses? Because they are willing to risk even more embarrassment in order to get the licence fee revenue up front and into the pockets of the APL’s corporate investors.

The second problem with the licence fees is that not much of that money will end up making football stronger. The APL investors will extract more than one third of the revenue straight off the bat. The rest will go to propping up league operations and potentially giving distributions to the existing clubs. It goes without saying that the two new clubs would be better off if their combined $50m was spent on building facilities, scouting networks, hiring the best available coaches, marketing themselves and just building deep roots in their communities. They shouldn’t be forced to enter the league in such a financially weakened situation.

All up, I would argue that the A-Leagues clubs have swapped an indifferent parent company in Football Australia to a new one that is determined to squeeze them hard to extract as much revenue out of the league as possible.

I don’t want to paint a picture that the A-League clubs are helpless small businesses being dominated by a corporate behemoth, because they designed this situation themselves. But what’s more they don’t actually appear to have much interest in improving the quality of football on offer. From the perspective of club owners with little pride in the local game, it stands to reason that they would prefer to be paid by new franchisees, instead of being challenged by the best clubs promoted up the domestic pyramid.

I’ve previously argued that most of the clubs have some kind of problematic ownership creating incompetence and undermining fan confidence. A likely contributing factor that I didn’t touch on was that collectively, the clubs themselves are not majority Australian-owned.

In 2018, Bonita Mersiades calculated that across the various stakes held by multiple entities, Australians only hold ownership stakes worth about 40% across all of the clubs. In theory this shouldn’t be a problem but the troubles caused by foreign absentee landlords are well known to fans, especially in Queensland. In the sunshine state the connection between the monopoly club and the footballing community has badly eroded, as has confidence in the A-Leagues.

So it has to be asked, do any foreign owners even care about their role in the Australian game? You could mount a good defence of the owners of Adelaide United. They bring through young talent at an impressive rate and have made sure that the club is well respected in the state. But they are an exception, unfortunately, not the rule. Foreign owners at the Jets and Roar have been disastrous for the sport in their regions. City Football Group’s benefit to Victorian football is very debatable too.

With these risks in mind, we should also note that Danny Townsend has strongly hinted that the APL corporation would love to see foreign investors having stakes in the new Canberra and Auckland franchises. It’s hard to see what the footballing benefit might be for even more foreign involvement in the A-Leagues, but such is the predicament that the APL has put itself in that they can’t say no to anyone offering the right price. Perhaps we could even see the return of Clive Palmer?

Danny Townsend (Photo by Mark Evans/Getty Images)

Dark humour aside, whether they are involved in clubs or the league itself, too many investors simply don’t care about the ambitions of Australian football fans or the broader health of the game. The future risk to football in this country is that the APL’s bosses are forced by financial pain and corporate imperatives to sell out to high risk investors.

And I think it goes without saying that the biggest losers of all in this corporate tomfoolery are Australian football fans. We deserve better than this.