AFL FIGHTS TO SAVE BILLIONS
THE AFL is fighting to safeguard a billion-dollar football economy against coronavirus.
The game’s monster economy was laid bare in modelling used by the league’s 850 players in recent pay negotiations.
Footy’s TV rights deal with Seven West Media, Telstra and Foxtel accounts for $418 million of the competition’s annual cash flow, while gate takings across 198 home-and-away matches and four-week finals series would have topped $150 million.
Collingwood president Eddie McGuire laid bare the financial crisis when he said yesterday the AFL industry was “in massive, massive, massive problems” if the season does not proceed.
It is unclear how much of the broadcast money — or dozens of lucrative club and AFL sponsorship arrangements — will be forfeited in a shortened season.
Almost every cent made by most AFL clubs depends upon games being played or the league handing them annual distributions.
Combined industry revenues of $6.574 billion were forecast between 2017-2022, excluding government grants, poker machine losses, bequests and donations.
Power club West Coast turned over almost $87 million in revenue last year, of which only $12.3 million came from sources other than games.
West Coast’s huge $8.02 million profit last year came off massive crowd figures and corporate hospitality.
All of that would be at risk without crowds or if the season was cancelled, including match ticketing revenue of $9.419 million, membership revenue of $26 million, sponsorship revenue of $8.17 million and corporate hospitality revenue of $14.2 million. The Eagles also made $5.9 million from merchandise and $5.6 million from functions and special events.
This year’s salary cap is set at $13.02 million per club, plus player marketing payments of $1.1 million per club.
The average player wage was set to hit $389,000.
Players are likely to be asked to take a 10 per cent pay cut in the event of a disrupted season, but the terms of the collective bargaining agreement struck between the AFL and AFL Players’ Association stipulates that players are to be paid according to “forecast” revenues, not actual revenues.
The bumper six-year $1.84 billion player deal guaranteed the game’s stars a fixed 28 per cent cut of the competition’s revenues, as well as 11.2 per cent of nonforecast revenues.
Much of that revenue would be under threat if the season was decimated, with clubs also examining force majeure clauses in sponsorship deals.
That clause is widely known as an “act of God” provision and allows parties to get out of contracts due to an incident beyond its reasonable control.
The Tigers did not declare their ticket sales in the 2019 annual report, stating only that they had made $30,628,045 from “stadium contributions and consumer products”.
Richmond has cash reserves of $24.4 million, much of which would have gone to the redevelopment of Punt Road in coming years.