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Football

Local footy's fight for survival

Football

AFL football was staring at a $600 million hole if the game was stopped by COVID-19. But what about the cost to the leagues underpinning the elite – and the future of local footy? Michelangelo Rucci looks at football’s fight for survival.

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John Olsen knows the danger of debt. As Premier from 1996 to 2001, he watched his home state of South Australia lose a generation of hope from the collapse of the State Bank.

As SANFL president from 2010 to 2020, Olsen dealt with the fear of forfeiting 140 years of independence to the AFL, following other state leagues in adopting the big-league brand by becoming AFL-SA in return for funding. Traditional clubs such as Glenelg and West Adelaide were at risk, while the red ink in South Australian football reached $55 million in 2014.

As Premier, Olsen was compelled to privatise state assets, most notably the Electricity Trust of SA. As SANFL president, Olsen sold the Football Park precinct at West Lakes to rid the game of potentially crippling debt and significant interest payments.

Olsen is not short of critics on both fronts. In football politics, the SANFL clubs have flexed their muscle in the past two years to take issue with too much money going back to bankers rather than being invested in the game.

“When our bankers for 40 years, Westpac, called in the SANFL loan, those debt repayments put us in an impossible position,” Olsen said. The league transferred its business to the Bendigo Bank in June 2014.

At club level, Olsen’s prudent strategy in clearing debt is still in question – even with all the pain from the COVID-induced battle for survival.

“I’d still argue we’ve been too aggressive in reducing debt,” says West Adelaide Football Club president Murray Forbes. “If the money dries up, where will we find the funds to promote the game to get the crowds back?”

Olsen, who has left football politics to return to party politics as the federal Liberal Party president, has greater pride in his legacy of reducing SANFL debt from $37 million in 2014 to $2.8 million at the end of the 2019 football financial year (that closes on October 31). At the same time, combined club debt fell from $18 million to $8 million by the benefit of a seven-year liquidation plan with the sale of Football Park.

Former SANFL president John Olsen. Photo: Tony Lewis/InDaily

“South Australian football is in a lot better position from that debt reduction – and that was the case before COVID,” Olsen told InDaily. “Now, amid COVID, that strategy has been a real saviour for the SANFL and its clubs. It gives them breathing space.”

It has allowed the SANFL to return to the Bendigo Bank to tap into as much as $8 million to keep the game afloat amid its greatest challenge since the league was formed as Australian football’s first major governing body in April 1877.

“The clubs have been spared going into deep survival mode,” Olsen adds. “But to move forward, the clubs will need to grant some significant compromises with the league executive. They will need to be more understanding…”

Olsen’s plea is a call for a truce in a bitter power struggle between league headquarters and the clubs that has notably claimed some big scalps at the SANFL, particularly on the SA Football Commission in the past 18 months.

In the next fortnight, the league executive will meet with its eight non-AFL-aligned clubs to explain the business model SA football will work to underpin the game from 2021 – and detail just how new debt is being taken up from the Bendigo Bank. The lucrative “future fund” from the sale of Football Park – that was to generate cash for the SANFL – is to take a major hit to secure the present-day needs of local football.

At the elite level, the AFL was staring at a $600 million hole if the national league was stopped by the COVID pandemic. In the SANFL it might have cost a club or two. At community and country-level…

Before the shutdown

Read the SANFL annual report for season 2019 and there could not have been a more encouraging picture for local football – even though the cash intake was down $2.21 million, primarily from a six per cent fall in AFL crowds and 39 per cent dip at cricket Big Bash matches at Adelaide Oval (managed by the SANFL in a 50-50 partnership with the SA Cricket Association).

The league forecast “an improved financial result for 2021 and a cash earnings surplus in 2022”.

This money would have flown to the game – rather than bankers collecting interest on big loans – to deal with football’s growing pains, particularly women’s football (up 24 per cent in participation numbers last season). In total, SA football had 222,407 participants last season (up 8.7 per cent) with 54,449 registered at clubs.

The COVID pandemic changed everything.

“And if there was still $37 million debt on the league’s books, the SANFL would not have been able to underpin the game and clubs,” said Olsen, who handed the presidency to another former state premier, Rob Kerin, in February.

The SANFL had to stand down 50 staff members during the three-month COVID lockdown while clubs and community leagues, such as the Adelaide Footy League, also cleared their offices.

“(With heavy debt) there would have been a massive further reduction in staff – and doubt on how to deliver funding to the clubs on an annual basis,” Olsen said.

“The game would be in a bad place,” adds Olsen, emphasising his point by suggesting SA football would have found itself in a dark “creek” searching for the proverbial paddle.

During COVID

Murray Forbes reached the first anniversary of his rise to the presidency of the West Adelaide Football Club with the Bloods facing the biggest crisis in their 128-year history.

The internal bickering after World War I and from the sacking of coach and club hero Neil Kerley at the end of 1962 threatened to tear West Adelaide apart. But COVID could have shut down the inner western suburbs club.

“It was touch and go if we did not have any game,” Forbes told InDaily. “We are in a much better place today. On June 30, the West Adelaide Football Club was able to pay any debt that fell due.

“We have done that with the support of the SANFL, our members not seeking refunds on their packages, and sound business practices. COVID has made us look harder at the bottom line.”

Forbes last year took charge of a new board that he proudly acknowledges was refitted with business-focused directors. West Adelaide last year reported a self-described “modest” profit of $118,004, but did not significantly reduce debt that stayed at $2.7 million at the end of the 2019 football financial year (October 31).

West Adelaide’s safety net this season has come from the SANFL securing support from state government agencies.

“You don’t make money playing football games – they cost you money,” Forbes said. “That is why SANFL clubs have had to develop other income streams, more so when we have been dealing with diminishing crowds.

“One of those revenue streams is our club venue (at Richmond). On March 23 that shut down. The whole club shut down. As a board, we sat down to understand where we were losing money – and to rationalise our business. We reviewed every cost. We looked at where we could increase profits. We cut staff.

“And we needed the game to come back. We were at great risk if we did not play this year. Being out of sight in the market would have put us at risk of losing sponsorship profile and dollars.”

Back to play

Packed stands watching Norwood and North Adelaide in 2018.

SANFL football started – with eight rather than 10 teams – on June 27. The Port Adelaide and Crows reserves teams were banned by the AFL –  a decision that restored a true SANFL competition.

The SANFL, unlike its Victorian counterparts, ensured all grades – league, reserves, juniors and women’s – started or resumed (the SANFLW had played four rounds before the COVID shutdown).

The women’s season also resumed on June 27 with another six home-and-away games for each of the eight teams and then a top-four final series.

The SANFL, unlike the WAFL in Perth, set up a true home-and-away series with each club playing its seven rivals twice; the WA league has just one head-to-head clash this season. South Australia has the only major competition with two full rounds.

Sturt general manager Sue Dewing noted during the shutdown that the league needed to resume with cost-neutral games to avert a financial crisis in clubland. The SANFL is the only major league not paying its players.

But Forbes notes: “Putting on games has new costs – you need to manage the COVID protocols at your home ground. The players have been amazing – they are playing for no income or with Jobkeeper.

“But it is still a day-to-day watch on the bottom line.”

The critical gain for the SANFL was a new deal on the television coverage with Channel Seven through production company McGuire Media. Originally priced at $1 million a season (long gone are the days of television paying the SANFL any rights fee),  the production costs to keep the league on free-to-air television have been cut to deal with today’s COVID-strained budgets.

The SANFL’s revenue streams – which included 27 cents in every dollar collected at an AFL game at Adelaide Oval – are seriously hit by the limit on crowds at the city venue. With the limit at 10,000 fans, it is a marginal call on whether the SANFL – through its partnership with the SACA in the Adelaide Oval Stadium Management Authority – can cover the cost of opening the gates for AFL matches. Food and beverage sales from restricted crowds will not deliver profits that have bankrolled local football in the past. And during COVID there is no major event or concert to draw to the venue to clear the financial pain.

The women’s game

Women’s football is the biggest growth area in Australian football. In South Australia, the game’s rise – to 7594 players in 2019 , up 24 per cent – is testing the sport’s infrastructure, with the need for new changerooms, and support with umpires, coaches, trainers and volunteers.

One in seven players at a club is female.

Those who thought the COVID pandemic would force cuts to women’s football at all levels have been left to think again. And leading SANFLW coach Krissie Steen pays tribute to the SANFL for remaining fully committed to women’s football.

“I am really proud to be part of the SANFL,” said Steen who on Sunday at Thebarton Oval coached North Adelaide to a seven-point win in the SANFLW grand final against her former charges at South Adelaide.

“Most people thought the SANFL would get rid of the girls and only keep the men’s league and reserves this year. But they stood by us with 10 rounds and finals – they did what they said they would do. That comes down to having good sponsors.

“And the women’s game has become stronger and stronger even with the COVID issues. Next year, it will be even better.”

A record AFLW crowd of more than 53,000 attended the 2019 grand final at Adelaide Oval.

Grassroots

It was the “amateurs” and is now the Adelaide Footy League. It is where people are involved for the love of their club, more so than the game. It is true community football,  kept afloat and vibrant by volunteers at 69 clubs, more than 200 teams and 23,000 registered players and officials.

In April, when many football leaders were expecting to write off season 2020, it was not the need for money that was stopping the amateurs from taking the field. If any league could absorb a heavy hit on the football economy, it was the Adelaide Footy League with its people rolling up their sleeves for the love of a club, their mates and their community.

Adelaide Footy League chief executive John Kernahan underlines this point saying: “Community footy has other considerations (when compared with professional and semi-professional leagues such as the AFL and SANFL).

“If there is no footy, there is no cost.

“Councils have been very magnanimous in relieving clubs of their financial liabilities (in ground use).

“Player payments before COVID19 had reached a level built on rivers of gold. In conjunction with SANFL, there are no player payments in 2020 – and we are currently surveying our own clubs as to what is sustainable for 2021.

“We need to get as many clubs through this as possible and a socialist-type approach to keep everyone on an even keel should allow a managed resurgence.

Where is the revenue? Will there be 50,000 crowds at Adelaide Oval next year for AFL games? If not, the Oval revenue falls and that flows to the SANFL and to us.

“The most significant cost is going to be socially. The strain on our communities with no outlet for community sport is going to prove a challenge to all. The game will look after itself, but the strain on volunteers to have their clubs in a functional state is palpable.

“It could also be worse. In Melbourne, with no footy, there are community leagues and clubs that face the new challenge re-engaging with players, supporters and volunteers. Some have either moved on to life without footy – or moved to other clubs and forged new friendships, and they won’t be going back.

“It would be naïve to think footy at community level in 2021 is going to be like it was in 2019. We need to be very cautious in allowing ourselves to believe we’re over the worst of it. Even if we are, a conservative approach is the responsible pathway going forward.

“We accept or indeed hope it won’t be like 2020, but it would be prudent to predict a long walk back to where the game once was.”

Kernahan’s themes are just as relevant in county football – where some leagues were cancelled this year and the absence of football games at the weekend has left major holes in the community lifestyle of small townships.

Beyond COVID

Norwood is the strongest of the eight SANFL clubs for combining revenue from football and non-football activities. COVID restrictions allowing, the latter should improve next year with the Redlegs hoping to host events and functions at the new multimillion-dollar Wolf Blass centre at The Parade.

Norwood president Paul Di Iulio believes the SANFL and its club should not “waste a crisis”.

“Our club takes the view this is the opportunity to reinforce our position as the best football league outside the AFL – not doom and gloom,” Di Iulio told InDaily.

“We need to be innovative. We need to invest in what we do – football.”

Forbes highlights the critical need for SANFL football to return to the “old normal” next season.

“Our members have been superb with their support this year,” Forbes said. “We are so lucky so many did not ask for refunds on their membership.

“But what happens in 2021? I am concerned if we can’t offer a normal season next year.”

Di Iulio expects the next month to be the critical time cycle for planning the SANFL’s future.

“Even if there are so many unknowns…,” Di Iulio said. “Where is the revenue? Will there be 50,000 crowds at Adelaide Oval next year for AFL games? If not, the Oval revenue falls and that flows to the SANFL and to us.

“Can we put on functions in our new Wolf Blass centre? Will we be able to operate our gaming venues? There are big questions. And many of them are behind our control, particularly the level of funding from the AFL.

“So we work with what we can control. One certainty is the passion of our fans. And the strength of our game that has survived and thrived after economic depressions, world wars and other big challenges.”

Also certain is the need to find a new day-to-day leader at SANFL headquarters with chief executive Jake Parkinson leaving the league in October after a six-year tenure. Parkinson will return to the terraces of Woodville Oval watching “my Eagles” with his 16-year-old son while a new executive team at SANFL headquarters starts a new, challenging era.

Parkinson’s successor will need to deliver a plan that moves SANFL and community football through one key question: How should football look after the COVID crisis? And there is the subsidiary question: how does the game pay its way?

The much-debated presence of the Crows reserves and Port Adelaide (as the Magpies and as one of the league’s founding clubs) in the SANFL appears to await a decision from the AFL and AFL Players Association on player list sizes next season – currently 44 and tipped in some quarters to be cut to 35. While SANFL traditionalists want their competition free of AFL players, the league needs to remain the prime state league in Australia – and not fall in the shadow of an AFL national reserves competition claiming television exposure and offering an alternative to sponsors.

Port Adelaide certainly will push to keep its presence in the SANFL. The Crows will need to for the development of the large crew of draftees being called to West Lakes for the rebuild.

There is no certainty the AFL, with all its debt, will be eager to restore funding levels to the SANFL. More so when the AFL will take the post-COVID era as an opportunity to align every subsidiary league to its agenda. The SANFL’s independence will be tested.

There will be new debt on the SANFL’s books, but – remarkably after all the damage the COVID pandemic has done this season – the red ink will not be as limiting as the $55 million John Olsen was staring at in 2014 when Football Park was decommissioned as an AFL venue. This is a critical legacy.

For the rest of the AFL season, you can read news and insights from Michelangelo Rucci – SA’s most experienced and credible football writer – every Friday in InDaily.

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