Football finances: the state of the nation (and why we need an $80m TV deal)
State federations have reserves but they are dependent on the 'great big tax' on participants07 December 2016 | Bonita Mersiades
On the face of it, Australian football is in rude health based on the financial statements of the seven biggest state federations.
The good news
In 2015, the top seven state federations achieved a combined revenue of $56.7 million with a combined surplus of $5.1 million.
They finished the 2015 financial with cash reserves of a combined $15.3 million, of which one-third is in the bank accounts of the NSW federation. Contributing to a further rosy outlook is the combined members’ equity of $56.1 million of which almost half ($27.5 million) belongs to NSW.
Chart 1: State Federations: Cash Reserve and Revenue, 2015 (2014 for NSW)
If the cash reserve and members’ equity indicated in FFA’s 2016 financial statements are included, the game’s stakeholders hold equity of almost $69 million and have cash-on-hand of $17.2 million, approximately 11.3% of total revenue.
The NSW state federation has long been the ‘rich uncle’ of Australian football thanks to a gift of land and astute financial management from a former treasurer of the federation, Brooklyn USA born chicken farmer, Charlie Valentine, after whom the federation’s headquarters are named.
However, even without the NSW federation, the other six state federations have a combined members’ equity of $28.6 million.
Staffing costs range from 24.2% of total revenue in Queensland through to more than one-third (37.5%) in Victoria.
Dependency on participant tax and fees
However, while the state of the finances sounds like something to cheer about, the concern for those who run the game nationally and in each state should be their dependence on the fees generated by community football.
While the federations are not consistent in the presentation of their revenue, registration, capitation and competition fees account for between 55% and 70% of states’ revenues.
Queensland derives a further 21% of its revenue from participation fees for talented players selected for championships or elite development. The second highest federation (Western Australia) is 15%. The lowest is Victoria at 5.6%.
The scope for sponsorship appears relatively modest, ranging from 3.5% for NSW to 8.8% for Western Australia.
This excludes a significant outlier: Queensland, which managed only $83,000 (1.2%) of its revenue from sponsorship in 2015.
This suggests that either the state federations need targeted support to help them attract more sponsorship and commercial deals, or that the sponsorship market for football is saturated from the top at the elite level (Socceroos, Matildas, A-League and W-League) as well as grassroots junior football.
For example, perhaps if Queensland had the capacity to attract more sponsorship to the game, they may not require some clubs to wholly meet the costs of their own participation in elite competition.
It all gets back to the next broadcast deal
The lack of breadth and depth in the states’ revenue sources also underscores the importance of the next broadcast deal for which tenders close this week.
The minimum required is $80 million – a doubling of the current deal that has been spoken about publicly by David Gallop. This would be enough:
- To cover the salary cap for the A-League clubs - $32.4 million with 12 clubs;
- To finance expansion through underwriting the establishment of two new clubs in 2018 for a period of two years - $10 million;
- To contribute to the costs of Socceroos and Matildas players and competition – say $10 million, bearing in mind that they also generate other revenue; and
- To stop the ‘great big tax’ on grassroots players by meeting the revenue of the state federations generated from community football – approximately $28.8 million.
Together with the promised $5 million each year from FIFA during the term of Gianni Infantino, and assuming FFA at least maintain but more likely improve their other revenues, this would put FFA on track also:
- To boost the FFA Cup;
- To introduce promotion and relegation within a 3-5 year framework; and
- To meet more of the costs borne by the ‘football family’, for example: those for talented player development as well as grassroots coach and referee education.
 Tasmania and the NT are excluded as their financial reports are not available. The most recent financial report available for NSW is 2014.
 The ACT is not included as they have combined a number of cost centres.
 Data is not available for NSW, SA and the ACT.
ffa, ffa finances, state federations, australian football