FWF-181018

This article in The Australian, entitled 'Steven Lowy offside as FFA coup shifts goalposts' floated across the Twitter feed this morning and, at first glance, it was something to put aside for later. But you know what it's like ... you see a sentence or two, something sticks in your mind, and you think 'That's just not right' and you just have to check it out.

The section in question comes under the heading 'Sponsor exodus', which we copy and paste for the convenience of those who don't have access behind the paywall. 

"The apparent impending FFA board exodus is likely to trigger a reciprocal exodus of sponsorship from the sport.

Westfield and the Lowy family’s local spin-off Scentre are currently a major sponsor. So is Healy’s former employer NAB and Hepworth’s current one Caltex.

All up, Margin Call understands those three sponsorship agreements are worth $10 million a year — almost 10 per cent of the $105m the FFA made last year.

The future of that stream of cash now looks imperilled.

No doubt the revolutionaries have other rivers of corporate gold in mind."

The material we checked this against is the FFA's annual financial statement lodged with the Australian Securities and Investments Commission (ASIC) for the financial year ended 30 June 2017. (The report for FY2018 should be available next month). The report shows the following in respect of 'related party transactions'.

  1. Scentre provided $2.5 million in sponsorship in 2017-18.
  2. Caltex provided $1.8 million in sponsorship in 2017-18. 
  3. No sponsorship is listed as coming from NAB as FFA Board member, Joseph Healy, is a former employee of NAB and its sponsorship is not required to be listed. However, in the most recent year in which Healy was still a NAB employee (FY2015) their sponsorship was worth $1.35 million and FFA had an overdraft facility of $0.5 million. If we assume sponsorship contribution kept pace with inflation between 2015 and 2017, the sponsorship would now be $1.4 million. (And, by the way, the 2017 financial statement shows that the FFA Board approved an overdraft facility of $3 million.)

The only other related party transaction listed for 2017-18 was a payment to former longstanding Board member, Moya Dodd, of $113,636 for 'consultancy services'. This took the total received by Dodd over the four financial years from 2014 to 2017 to $565,908. 

Fact check

In other words, the total of the three sponsorships is likely to be around $5.7 million against the claims that the sponsorships from Scentre, Caltex and NAB "are worth $10 million a year - almost 10 per cent" of FFA's total revenue of $105 million last year. The only way the three sponsorships could be worth $10 million is if NAB increased their sponsorship from $1.35 million in 2015 to $5.7 million in 2017. Possible? Yes. Likely? No.

Scentre withdraws from FFA Cup

Scentre/Westfield has already withdrawn their sponsorship of the FFA Cup, leaving the competition without a naming rights sponsor in 2018. 

Considering the decision on this was made when FFA Chairman, Steven Lowy, and his Board were in full battle on FFA Congress issues, and they assumed they would 'win', it is fair to assume that the decision to withdraw from the FFA Cup was nothing to do with who is in charge at FFA and everything to do with their business interests. They still maintain their naming rights coverage of the Matildas and the W-League.

'Rivers of gold'

The article's statement that the "No doubt the revolutionaries have other rivers of corporate gold in mind" suggests they need to take a class on Sponsorship 101. 

It may well be the case that one of the Lowy's picked up the telephone phone to their friends in Caltex and NAB (also the Scentre/Westfield bank), but it is highly doubtful that the sponsorship deal was made on the basis of friendship alone. What the capacity 'to pick up the phone' does is open the door to a discussion. 

Even more to the point, IF ASX-listed companies did make their sponsorship decisions on the basis of being 'mates', then that is surely something their shareholders should be asking questions about; or, conversely, if they withdraw their sponsorship because their mate is no longer in charge, that is also worthy of shareholder questions especially when the three companies have naming rights sponsorship and/or partner status to high profile 'properties' such as the Socceroos, Matildas, W-League and, previously, FFA Cup. 

The scare mongering that sponsors will leave football because a Lowy isn't in charge, and their hand-picked Board is no longer in place, also suggests that corporate Australia (or international companies operating in Australia) do not have an understanding of the actual and potential football market.

If that is the case, then it simply underscores why we needed the change that was agreed to yesterday.

An FFA Board unable to set a narrative for the code - promote it, champion it, defend it and help it grow - is a Board that needs replacement. 

FFA's other sponsors

For the record, FFA's other partners can be found at the base of this page.


Categories: Analysis | Football Business

ffa board, #sportsbiz, sponsorship

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