Wall St was down 94 overnight, its biggest fall in a month, while the local market is down 66.
AFL in League heartland makes no sense
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Last Friday Crikey observed the fundamentally flawed logic behind the AFL’s Gold Coast push. However, while a 17th AFL side on the Gold Coast raises serious financial questions, the logic to create a team in Western Sydney side is completely non-existent. The AFL’s motivation for entering Sydney appears two fold. First, the AFL is desperate to create a Gold Coast team but does not want an uneven number of clubs (which would give rise to a dreaded “bye”). Second, the AFL appears to want a foothold in every part of Australia, perhaps fearing that Victorian kids might take up Rugby League or Soccer should AFL not become popular in Western Sydney. The problem with a team in Western Sydney is that it is Rugby League heartland. Simply putting a team in Bankstown won’t make rusted on League supporters suddenly become AFL fans. Not only that, a second Sydney team may alienate current supporters of the Swans, who follow the team because it is Sydney’s representation in the AFL. (Rugby League commentator, Roy Masters, also noted that AFL in Sydney isn’t as lucrative as some would suggest – the highest TV ratings achieved in 2007 for a regular match was 175,774 for the Sydney v Essendon game – the same level as the flop, The X-Factor). The AFL’s bizarre logic in pursing a new team deep in non-AFL territory contradicts the expansion strategy adopted by arguably the most successful sporting competition on earth – the NFL. There are currently no NFL teams in America’s second most populous city – Los Angeles (the Raiders returned to Oakland while the Rams moved to St.Louis in 1995). There is however one franchise in isolated Green Bay, Wisconsin. The NFL knows that it is preferable to stick to its areas of strength, rather than operate unprofitable franchises simply for geographic reasons (this may also be because NFL teams (except Green Bay) are privately owned with their owners often electing for the most profitable location). The AFL does not appear to be aware of this, gleefully entering a market which it may find impossible to penetrate. There is also the massive start up costs for a Western Sydney team, including developing a Bankstown base and huge operating losses for the first decade of the team’s existence. The question for the sixteen current teams will be asking is how will two new clubs benefit current members of existing clubs? When answering this question, existing clubs need to consider issues like increased interstate travel and associated travel expense, loss of draft picks for several years, lower ladder position as the new clubs receive priority salary cap treatment and significant start-up costs (upwards of $200 million) associated with the new clubs. Current struggling clubs like Melbourne or Essendon may find themselves at the foot of the ladder for a decade courtesy of the new clubs pilfering top draft picks and un-contracted players, preventing struggling clubs from undertaking a rebuilding cycle. The significant start-up costs effectively mean that each existing club is spending more than $12 million for the expansion teams. Some AFL insiders have told Crikey that an eighteen-team competition would simply spread AFL talent too thinly and if anything, the AFL should be reducing the number of teams, rather than increasing the number. While the costs appear clear, the benefits far more amorphous. Unless of course, you count Demetriou and Fitzpatrick’s legacy. |
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10 Comments
BM - The old ‘population growth” argument is hardly novel. Gold Coast is a growing area (Western Sydney less so), but that is hardly reason plonk two sports teams there. What the AFL hasn’t publicly stated is the exact cost of the new teams to the existing clubs - probably because the cost is so exorbitant, and so unlikely to ever be recouped, the existing clubs would never agree. As for the AFL being “financially prosperous” - why then is has there been so much effort at relocating the struggling North Melbourne Kangaroos or Melbourne or Bulldogs? Instead of burning money on half-baked expansions, the AFL should be reinvesting in the existing clubs - who, while many forget, are the current shareholders of the AFL.
The same could be said for the NRL’s venture in Melbourne which while the team itself has been a success with a number of NRL premierships to its name. However, if you were to judge that venture by Rugby League’s television ratings in Melbourne and crowds attendances at its home games then by any objective analysis then you would call that venture a failure. Lets face it the Melbourne Storm only exist because of News LTD’s generosity as joint shareholder in the NRL.
Both rugby codes in Western Sydney are of course hoping (praying?) that Adam Schwab is right. But let’s face it, hope is all they have left.
Neither has the money or audience support needed to attempt national expansion..again. They don’t even have the funds to compete with the AFL’s current junior development programs in Sydney’s West or the Gold Coast.
They will always be regional sports in Australia, notwithstanding their international pretensions. And before the die-hards rush me with that old chestnut that ’ you can represent Australia playing rugby ‘, let me respond by saying that you can represent Australia playing darts, but that fact doesn’t make darts any more attractive to the sporting public.
Both rugby codes are 19th century contact sports whose respective game designs are showing their age. While saying that, I’ll be watching tonight’s State of Origin simply because it’s the only rugby code competition worth watching as a sporting spectacle.
That fact alone evidences why in 20 or so years when the post Murdoch finance debacle is finished, rugby league will have returned to the vibrant, tribal local game it once was in NSW & Qld, and rugby union will have confirmed its market position of being a regional game in every country it’s played around the world, save for New Zealand & the UK.
Adam, your comparisions of AFL with NFL in are probably not the best comparision to make. The NFL is all about tv rights and revenue - hence why Green Bay as a small town can survive and exist. Its not about grass roots, etc. Please note that there is no Gridiron played in the US in minor competitions like AFL is played in Australia. You play at college and if you don’t make it to the NFL then the career is over - thats right no minor competitions like in the suburbs here in Australia. West Sydney will take 20 years but the AFL is really cashed up, will buy Telstra Stadium to really pressure the NRL clubs. If you look at the crowds in the NRL of both Wests and Penrith then you will see that any crowd over 10000 people for an AFL West Sydney team will be an improvement on the dwindling crowd numbers of NRL.
The AFL can start up as many teams as they like (frankly I’d love to see a Northern Territory team make the comp) but if they don’t sort out the televising of games they may as well not bother. Last weekend In Brisbane there was no game shown on free to air at a decent hour on Friday night (I don’t call 11.30pm decent) and, unbelieveably, no game shown on Saturday afternoon. What’s going on? Our single income family does not stretch to Foxtel. But also all the tea in China wouldn’t make me subscribe to pay TV that now features almost as many ads as free to air. Where is the AFL’s loyaly to its fans?
Why BM, does the AFL need to grow? The AFL is not a company with a responsibility to shareholders to increase earnings-per-share. Rather, the shareholders of the AFL are indirectly members of clubs like Melbourne and North Melbourne. What kind of effective company shafts its own shareholders in the name of growth? There is absolutely no need for AFL to expand into new areas, the responsibility of the AFL Commission is to ensure its CURRENT shareholders, being club members, receive a satisfactory return — that is not achieved by relocating clubs.
Adam Schwab appears to miss the point entirely. The real reason for the AFL’s push into Western Sydney and the Gold Coast has to do with population growth projections for these areas over the few decades. These two regions will experience some of the highest increases in population anywhere in the country during this time. Where will these people be coming from? A significant proportion from existing AFL heartlands and, of course, from immigration. Nothing “rusted on” about these people. The AFL is in the luxurious position of being so financially prosperous at the moment that it will be able to burn money on these teams in the short term for longer term gain.
“Why does the AFL need to grow?” That’s a good question. I’m not sure I have a good answer to it as I am simply trying to explain the behaviour, not endorse it. I think the AFL would say that with a longer term view, everyone WILL be better off with a larger competition covering a greater geographic area and population. I think the AFL would say that growing the game into new territory will (eventually) grow revenue streams, particularly TV rights. I think the AFL would say that bringing the game to new territories will get it a foothold at grassroots level, thereby improving and growing the talent pool from which the clubs can choose. Etc… Again, I’m not saying there won’t be losers from this but I can’t see how their motive can be questioned.
Adam, the AFL has a desire to grow. It has a belief that it is the best administered, best sport in Australia (if not the world!) and it wants to take it to every corner of Australia. The AFL can no longer grow, or at least, faces limited growth prospects in the markets in which it already dominates. It must look to new frontiers to find future growth. Yes the costs will be exorbident but they are affordable when looked at with a long term view. If there are two successful teams in S.E. Qld and in Sydney in 2020 the AFL will look back at this decision knowing they did the right thing. There’s an important distinction in the use of the term prosperous. The AFL is prosperous due to unprecedented TV rights and sponsorship revenue. Certain clubs are finding it harder because of an imbalance in their access to facilities, members and sponsorship dollars. There’s little that can be done about that other than to heavily subsidise poorer clubs (to a greater extent than currently exists) and the richer ones ain’t going to let that happen. So to the AFL, it makes sense to try to relocate a club like North Melbourne (which will probably always struggle due to the factors I mentioned) to a geographic location where there is a decent chance that in 10-15 years time will be able to have enough members and enough sponsorship revenue to sustain itself. There will be winners and losers from all of this, no doubt (the AFL being the winner and the likes of North Melbourne the losers). But to say it makes no sense is myopic.
Couldn’t agree more that AFL will fail in Western Sydney. It is Rugby league and (soccer) football territory. Most Swans fans are those who have migrated from the AFL states; very few are Sydney born and bred. By the way, the AFL was talking Blacktown, not Bankstown. Both would be failures.