Building Australia's Football Community—review into the sustainability of football
Importance of National LeaguesThe nature of Australian sport is that there will always be a national men’s domestic league for football in one guise or another. Ultimately, in all sport, the best athletes want to compete against the best athletes and there will always be a market to support that desire. A national domestic competition is therefore critical for any sport in terms of profile, marketing and national team performance.
It is widely accepted that good quality domestic competition is an important feature of a well developed high performance program. It is reasonable to believe that the improved performance of the national football teams, both male and female is partly due to the high quality of the A-League and the W-League. This is particularly the case for the Matildas, where the W-League represents a much greater step up in terms of a national competition than previously existed.
The W-LeagueThe review notes the disproportionate level of investment in the W-League compared to the A-League. This is primarily a result of the substantially higher levels of public support and commercial revenue for the A-League. However, in an environment where government invests heavily in football there should be maintenance of effort in relation to women’s football.
The A-LeagueThe review focused significant attention on the mens’ A-League. The A-League represents both a major achievement and major challenge. It is a high quality competition. The final of the 2010–11 season was outstanding and the 2011–12 season has started with great promise. As noted previously, revenues do not match costs. Clubs are losing $20-25 million per year (in aggregate) and FFA is required to divert resources to support struggling clubs.
History and performanceIn November 2004, FFA announced the establishment of a new national league, called the A-League, which commenced in August 2005, replacing the defunct National Soccer League (NSL). The A-League was originally established with eight teams and expanded to ten in 2009–10 (including the addition of North Queensland Fury and Gold Coast United). There were 11 teams in 2010–11 with the addition of a second Melbourne side (Melbourne Heart). Owing to financial pressures, North Queensland Fury is no longer in the A-League.
The A-League has achieved several milestones in excess of the former NSL including a long-term naming rights sponsor (Hyundai) and a major broadcast deal. Even the lowest average annual A-League attendance figures (8,811 in 2010–11) are more than twice the old NSL average crowd numbers of 4,119 in its final season.
While crowds have been much stronger than was the case in the past, overall match day attendances and television audiences for the A-League have decreased in recent seasons, with attendances averaging 8,750 per game in 2010 versus 12,000 per game in 2008 (and 10,000 in 2009). Television broadcast audiences fell from 60,000 to around 45,000 per game in the same timeframe.
At the conclusion of the 2010–11 season, FFA, in conjunction with the clubs undertook a strategic review of the competition which led to several initiatives including a new season window, a market-specific approach to fixturing, introduction of a rivalry round, a regional/ community round and reduction in mid-week matches. This structural exercise was supported by a new marketing and fan engagement campaign, ’We are Football’, with an extensive social media component as well as traditional marketing elements.
The new 2011–12 A-League season has started with promise, with average crowds, club memberships and television viewer numbers above comparable rates for the previous season. After the first five rounds, average crowds were up 42% on the same point last season and 53% on the season average; television viewing was up 74% on the same point last season and 66% on the season average; and memberships are up 17% on last season’s numbers. Major marquee signings have also generated significant and positive media coverage.
In seasons five and six, the A-League has also seen ten current or recent Socceroos playing in the competition and there is evidence of increasing numbers of transfers of Australian players from the A-League to overseas leagues, which is indicative of the improving quality of Australian players.
The A-League is also widely commended for its broader mainstream reach and appeal, particularly with younger Australians. However, there is a disconnect between the A-League clubs and football’s large participation base. The proportion of grassroots participants that attend A-League matches is relatively low and suggests that a number of clubs have much work to do in building their links with local football players and converting participation to regular attendance at A-League matches.
The quality of the football in the A-League is high and regarded by some as the best it has ever been. Commentators point to the technical and tactical performance of the 2011 champions, Brisbane Roar, as an indicator of this improvement.
Several factors could be contributing to the increase in the quality of the competition including improved coaching and professional daily training regimes, enhanced player pathways, including the implementation of the National Youth League, and attracting better players with higher salaries. A conundrum for the A-League is the extent to which it can afford these improvements, particularly in regards to the player salaries which represent the largest direct costs to the competition.
Operating modelThe Crawford Review recommended that the national men’s competition operated separately from FFA under the control of its own board. However in establishing the A-League the FFA Board felt that with the right internal controls in place, it was necessary for the A-League to be both owned and controlled by FFA. This approach enables close alignment to the sport’s player pathways; coordinated football services in areas such as media, marketing and promotion; common back office systems; and leverage to gaining corporate support for other FFA programs. It also gives FFA greater flexibility to assist clubs to address short-term issues that might otherwise threaten a club’s future viability or existence.
This reasoning is sound and the model has provided for a level of support, allowing the fledgling competition to achieve a quality, which would not have been possible under other models.
A particular point of interest throughout the review has been whether the specific operating model for the A-League should now change. Consultations revealed wide ranging views, with some strongly advocating for a full separation. This has been carefully examined and is not an option that would be appropriate to pursue at this time. The A-League continues to rely on a stream of funding from FFA and shares critical services. The competition is still in its relative infancy and has not matured to the point that it could survive if separated from FFA. Further, integration of the A-League recognises the continuing interdependence of the League and the other fundamental pillars of football in Australia – elite player development and community football. A theme of this report is the importance of forging stronger and deeper ties between the A-League and these other areas. An integrated model best serves that objective at this time.
... integration of the A-League [with FFA] recognises the continuing interdependence of the League and the other fundamental pillars of football in Australia - elite player development and community football.
The future of football is linked to the success of the A-LeagueWhile the review is not recommending a change to the operating model, getting the A-League and its clubs on track financially is fundamental to broader sustainability. It is in both FFA’s and owners’ interests to see the A-League flourish. A-League club owners are significant investors in the game, between them absorbing annual losses in the order of $20–25 million (noting that around half of this is discretionary spend), and warrant being provided with a real opportunity to contribute to the strategic direction of the competition. A-League owners have a vested interest in reducing costs and maximising revenues.
Regular forums and opportunities are provided for club input into the competition’s strategic direction, in particular the establishment in 2010 of the ALC with a charter to provide a forum for club owner direct engagement with FFA. Consultation and the opportunity to make formal submissions are also provided for specific projects and reviews such as reviews of player contract regulations, disciplinary regulations and the recent A-League strategic review discussed above.
However, there is scope for more to be done to achieve a greater alignment of interests between FFA and A-League clubs. It is recommended that FFA explore ways of further enhancing the existing ALC structure having regard to the following key principles:
- providing the A-League club owners with a formal structured opportunity to contribute to the strategic decision-making affecting the A-League
- developing an annual operating plan for the A-League in collaboration and consultation with owners and a regular process for reporting against the objectives of the plan
- ensuring that ultimately decisions are made in the overall interests of the A-League
- ensuring and recognising that given the interdependence of the A-League and other strategic pillars of the game as a whole, particularly the important role that talented player development policy plays in the future success of the A-League, decisions regarding the strategic direction of the A-League recognise and factor in this interdependence
Clubs in some of the larger markets perceive this condition as a restriction on their capacity to drive individual club sponsorship revenue. Consideration should be given in the future to relaxation of central sponsorship categories but only where it can be demonstrated that this will benefit, in aggregate and individually, all clubs across the league, while not compromising the revenue base of clubs in smaller markets. The ALC may wish to investigative this issue and establish parameters.
Player salary frameworkAs noted previously, growth in player salaries has exceeded the rate of growth in club revenues and there is concern that the flexibility of the salary cap enables clubs to spend considerably more than the designated salary cap. If the A-League clubs in season 2010–11 had spent no more than the designated minimum for player payments, combined club financial losses would have been halved.
The review also notes that compared to other football codes, A-League players are receiving a significantly higher proportion of the revenue that their competition generates. A report by Braham Dabscheck and the Australian Athletes Alliance (of which the Professional Footballers Association is a member), released in December 2010, showed that AFL, NRL and Super Rugby players receive approximately 20% of the income generated by their respective leagues, compared to over 40% that A-League players receive.
The Australian Athletes Alliance report also states, “[F]ocusing on the A-League, and noting that the following is only based on one observation, the (players’) share (of revenue) is somewhere between 30% and 48%. This is the highest in Australia, but below the 58% share in American sports. The report also points out that in the A-League, between 2005–06 and 2009–10,“total player payments have approximately doubled in five years”. It is noted that in the last couple of years of this period, crowd attendances and television ratings for the A-League have been dropping while player payments and the salary cap have continued to climb.
With expenditure of up to $2.4 million on the salary cap plus discretionary player payments to marquee players outside the cap, from average base revenue of around $7 million, insufficient money is left to pay other costs. Funding for management and administrative salaries and marketing and promotion costs is limited and clubs have very little capacity to fund other match day and community related activities that could raise interest and drive support and attendances to increase the sustainability of individual clubs and the A-League overall.
It is noteworthy that the 2011 champions, Brisbane Roar, did not have a foreign marquee player, did not have an Australian marquee player and had one of the lowest total player wage bills of any club in the A-League.
The salary cap must be revisited. At a minimum it should be frozen but there is a case for exploring a salary cap reduction. The salary floor, which artificially inflates salaries, should also be examined. It is, however, a complex matter. A collective bargaining agreement exists with the PFA until the end of season 2012–13 and international competition for talent is strong, with the A-League quality linked to the quality of its players. If the A-League is ultimately not sustainable in the long term, then neither are the salaries its players receive.
It is also important that arrangements for the recruitment of marquee players do not lead to a contingent risk for FFA. Clubs should not be recruiting players outside the salary cap unless FFA’s existing ‘capacity to afford’ regulations have been strictly applied.
International comparisonsThere are clear similarities between the J-League in Japan, Major League Soccer (MLS) in the United States, and the A-League. All three competitions share the following characteristics: highly competitive sport entertainment markets operate in democratic free market, western economies relatively recently established depend on increasing consumer interest and subsequent behaviour without relying on the high levels of fan loyalty enjoyed by established sporting competitions contribute to each of the three countries experiencing improved on-field success at the highest level and becoming more influential within FIFA These overseas competitions provide insight into the possible evolution of the A-League that may benefit the Australian competition. Both the MLS and J-League experienced declines and went through periods of consolidation after showing strong growth and support in their initial seasons. With the A-League reducing in size for the first time this season through the loss of North Queensland Fury, it is noted that this is occurring in the A-League’s seventh season and that both MLS and J-League contracted for the first time in their seventh season. Both foreign leagues consolidated for a period before experiencing slow but steady growth thereafter. It has also been reported that the MLS lost approximately $350 million in its first nine years. So the experience of falling crowds and a period of consolidation appears to be a natural phase in the development of national leagues. In both these leagues the number of teams was reduced and in one case so too the salary cap before renewed growth occurred. The success of these competitions is partly due to ‘cutting their cloth’ according to their resources, and in the case of the MLS, stadium deals were in better shape and more centrally controlled. [
StadiaIt is noteworthy that the MLS has had a strong focus on the development of soccer-only facilities for each team. Having stadia arrangements that maximise opportunities for financial growth has been a strategic pillar for the competition. In the A-League, a number of clubs have been hindered by restrictive stadium hiring arrangements.
Stadia deals are strategically critical for any sports competition. In a fledgling national competition that is building its fan base they can be potentially crippling if not structured to take into account the commercial maturation of a sporting franchise. Approximately eight of the A-League clubs are facing stadia costs that do not reflect the ‘off season’ value, or the ‘incubation’ nature of the competition, seriously impinging on the clubs’ ability to build themselves. The costs to host the same number of home games vary from approximately $0.6 million for one club to in excess of $1.6 million for another club, and yet crowds for these two clubs are not materially different to explain such huge variances.
Annually, $5 million is spent on stadia costs across the A-League, contributing 25% of the total annual loss of $20 million. It is not suggested that stadium authorities should offer their facilities for free; however stadium authorities should consider the fledgling nature of the competition and the impact of hiring arrangements that do not reflect the revenues of its tenants. The Commonwealth Government provides special assistance funding to FFA, which in turn indirectly helps underwrite A-League losses which for some clubs are partly due to State-owned stadia hire arrangements.
Connecting with grassroots, linking with communityIn the previous section the large participation base, and continued growth in that base, was discussed in detail. The question that arises is why is there a level of disconnect between participation in the game, and support for A-League teams. This is an issue that must be addressed if the A-League is to achieve sustainability.
A common theme that emerged during the consultation process was that A-League clubs have, generally, not been able to establish a strong connection with grassroots. Club football is played within geographical regions and the pathway leads to top tier State competitions. A-League clubs sit outside this structure. The A-League scouts talent from the State and Territory leagues, but the pathways are not always formalised or clear. The child running onto the pitch on a Saturday feels a much stronger connection to affiliated State and Territory league teams, than to an A-League team. More than 10,000 people attended the final of the 2011 New South Wales Premier League, an impressive figure and one which points to the capacity to generate community support.
Establishing a connection with grassroots is more than a marketing exercise. There is a strong case for A-League clubs to integrate with the community, with connections and pathways from the elite competition right down to grassroots. The concept of A-League Community Clubs was raised during the consultation process. FFA already requires A-League clubs and State member federations to establish Cooperation Agreements covering a range of matters to the benefit of both parties as well as participants and the game more broadly. FFA, working with club administrators and owners and member federations, should identify an optimal base model for this Cooperation Agreement which can then be tailored for individual markets. The model Agreement should allow A-League clubs to connect with grassroots down through the State and Territory leagues to juniors and FFA must support clubs and member federations to implement these Agreements.
FFA should report to government in coming months discussing options and proposing a way forward, with a tangible deliverable being the development of a model Cooperation Agreement for roll-out by each A-League club and member federation.