The AFL is a unique business, like virtually no other in the country. It has operations in five Australian states, although the majority of profits derive from its Victorian heartland. Unlike a traditional company, the goal of the AFL is not to produce profits for owners or shareholders. In fact, the AFL doesn’t really have shareholders, rather it has members. Its members are the 16 clubs whose own members are season ticket holders (and in a lesser sense, non-paying supporters). It is these people whose interests the AFL Commission should be protecting, by ensuring that costs to attend matches remain affordable, notwithstanding the need to ensure the game is sustainable in the future.
The AFL’s current management structure was effectively created in 1984 when the then VFL’s member clubs (consisting of eleven Victorian clubs and the Sydney Swans) voted to establish an independent commission.
Since its inceptions, the VFL/AFL commission established many fine concepts, including expansion into the football heartlands of South and Western Australia, as well as the draft and salary cap. However, in recent years, the AFL Commission, and more specifically, its executive, appear to have considered their role as empire builders, rather than dour gatekeepers of a century-old game. Not content to act in the interests of existing club members, the AFL’s executive appears intent almost solely on expanding the AFL’s breadth, specifically through the creation of new franchises on the Gold Coast and in Sydney’s west.
Last year, the AFL commenced the process of granting a licence to a new Gold Coast-based side (it is also actively pursing the creation of a team based in Western Sydney). The decision to proceed in the Gold Coast was made after a steering committee (conveniently consisting of local Gold Coast business identities) determined that an AFL team on the Gold Coast would make financial sense. Their reasoning, and the AFL’s feasibility studies (if they exist), have never been made public.
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However, common sense seems to indicate that a team on the Gold Coast is not a prudent idea.
As George Santayana once noted, “those who cannot remember the past are condemned to repeat it” – perhaps the AFL aren’t into history, for the first Brisbane Bears, established in 1987, were originally based in the Gold Coast. The Bears struggled both on the field and off, accumulating millions in debt before being forced to relocate to Brisbane in 1993.
While the Brisbane Lions have been far more successful playing out of Brisbane than the Gold Coast, in many respects, they remain the AFL’s most troubled off-field entity. Despite extraordinary on-field success (culminating in three consecutive premierships), the Brisbane Lions managed to attract only 22,000 members in 2008 (the lowest in the competition). Television ratings in Brisbane have also been low, with only 96,000 viewers tuning in to the high-profile Brisbane v Collingwood clash last year (compared with 326,000 for a competing rugby match).
Meanwhile, Gold Coast residents have shown a remarkable unwillingness to attend recent matches played at Carrara. A few weeks ago, around 6000 fans turned up to watch Brisbane play St Kilda on the Gold Coast (days earlier, around 35,000 spectators attended the Bulldogs v Essendon clash in Melbourne). Last year, only 6,354 fans attended a home and away match on the Gold Coast.
In a further blow, the Fairfax papers revealed yesterday that:
The AFL may have to solely fund the $300 million redevelopment of the Carrara Stadium if it is to commit finally to locating a team on the Gold Coast [with] the global economic crisis has made the likelihood of the Queensland State Government investing in the revamped stadium appear even less likely after the government this week admitted that it was forecasting a $1.6 billion budget deficit and ratings agency Standard and Poors downgraded Queensland’s credit rating from AAA to AA.
The decision to create expansion teams in the Gold Coast and Western Sydney was a dubious proposition even during the economic boom. With the onset of the global financial crisis, the idea of spending hundreds of millions of dollars on marginal franchises in areas traditionally hostile to AFL appears completely untenable.
Further, given the financial state of free-to-air broadcasters (specifically, Ten and PBL Media) and its supporter base, it is likely that the AFL will be facing revenue shortfalls rather than expansions in the coming years (one of the prime motivations of the AFL in pursuing additional teams is due to the forecast increase in potential broadcast revenues).
Much like BHP’s now aborted bid for Rio Tinto, the Gold Coast and Western Sydney sides were a boom time concept, completely inappropriate in today’s environment. The only question that remains is whether AFL Chairman (and Rio Tinto director) Mike Fitzpatrick and his CEO, Andrew Demetriou, realise that their empire building dreams are actually a financial nightmare, before millions of member dollars are wasted on a needless folly.