A-League deadlock calls for government help

In 2003, as Frank Lowy contemplated what life might be like running his beloved game, he looked at the finances of the organisation he inherited. What he saw was not a pretty sight, a few hundred thousand dollars rattling around inside the piggy bank.


Football Federation Australia Chairman, Steven Lowy (R), and CEO David Gallop Source: AAP

This was September. Earlier Ferrier Hodgson, the entity appointed by the Australian Sports Commission (ASC) to look into the governing body's finances, had predicted that the body would be insolvent by November.

Lowy had no choice, he needed a serious injection of funds and he needed it now. For that he had to go to the those who invited him to take on this job, the federal government.

So Lowy picked up the phone to the prime minister, John Howard. It was Howard who had personally asked Lowy to come back and salvage his beloved game from becoming totally defunct. Now Lowy knew he had one on the PM.

Speaking as the game's potential saviour, so perceived by the prime minister, he told Howard he needed $15 million, not a cent less. Howard instructed the managers of government sports funding, the Sports Commission, to take care of it.

Frank Lowy and Prime Minister John Howard

Lowy, as ever, was a tough negotiator. The ASC wanted to barter and offered Lowy something less than the $15 million. Lowy told the ASC's chief executive, Mark Peters, 'I need $15 million. Either I get $15 million or I'm not taking on this job. You tell the prime minister that.' Lowy got his $15 million, made up of a $9 million grant and $6 million in loans.

Today, 14 years on, it may well be appropriate for football to go to government for financial assistance again. To be sure Football Federation Australia (FFA) is not broke and is not about to be broke.

But the game is experiencing a constitutional crisis which, when distilled, is primarily about money and who gets how much. Like in 2003 the game sees a gun pointing at its head. And it's a threat that can best be alleviated by financial relief.

The crisis, or impasse if you want to sound less brutal, is about many things but at its bottom line it's about how the A-League's revenues are carved up, ie whether the league's member clubs get what they feel they are entitled to or not.

Just how much the clubs are genuinely entitled to is complicated. It is not just a matter of dividing up the broadcasting revenue, $57.6 million per year, ten ways and distributing it to the clubs. There are other A-League driven revenue streams, like club brand merchandising and league sponsorship (Hyundai) which do not flow in their entirety to the clubs.

Conversely large chunks of the clubs' expenses are covered by the FFA, such as the salary cap ($2.9 million per club) and travel (thought to be collectively $8 million per year). The FFA also foots the bills for league marketing (such as the Yoshi campaign) and central administrative costs, and other things besides.

It is difficult to tell, and know, exactly whose revenues and costs in the marriage start and end where and how the fair dividend allocation would work.

Suffice to say the clubs are not happy with the dividend they've been offered and have told the FFA to shove it. The last exchange between the FFA and the Australian Professional Football Clubs Association (APFCA) was on May 2 when the clubs walked out of the meeting having rejected the FFA's new offer of $3.25 million per club per year.

After the meeting Greg Griffin, chairman of the APFCA, told The Australian: "They are nowhere near what we want. We told them to go away and think again." The vote to reject the offer was unanimous.

The FFA offer of $3.25 million represents an increase of 24 per cent on the dividend of previous years. What is not lost on the clubs is that the new TV deal with Foxtel, worth $346 million over six years (and not all of that is cash), is 40 per cent up on the last deal.

In response to the walkout, the FFA issued a statement arguing that it cannot afford to go any higher with the dividends.

"It was hardly surprising that the owners of the clubs want more money,” said FFA Chief Executive David Gallop, “and we are providing them with more money after reducing FFA’s own costs significantly.

"But the FFA Board also has a responsibility to the 1.1 million participants in community football and our national teams program. The only way we can provide the clubs with more money is to cut more funding to the grassroots and junior and senior national teams and we do not believe that is in the interests of football in this country."

There you have it. The essential impasse with no circuit break in sight. Just as it was in 2003 when, without financial relief, the game faced oblivion. Time to go back to government.

Far be it from me to advise the FFA on how to strategise such a request but I suspect weight should be placed on grassroots development and the maintenance of national teams, male and female, junior and senior, as issues of national importance to justify public funding.

It may not work but it's worth a try. The alternatives on offer don't make a pretty sight.

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5 min read
Published 2 June 2017 at 5:43pm
By Les Murray