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SANFL kicking back from the COVID brink

Football

Despite the pandemic blowing a hole in SANFL finances and fixtures last year, all clubs have not only survived but regrouped for the start of a new men’s season this weekend. Michelangelo Rucci talks to the game’s leaders about lessons learned.

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West Adelaide Football Club president Murray Forbes walked into his clubhouse at Richmond Oval a year ago to stand down staff, as the COVID pandemic put Australia into a lockdown.

At the time, Forbes could have been forgiven for fearing he was turning out the lights forever on the 129-year-old SANFL club.

West Adelaide was on the edge well before COVID tested any club’s chances of survival.

“Yeah, I did (fear the end) … it had the feel of doomsday,” recalls Forbes of the day SA football at all levels was shut down with no certainty of deciding any premierships in Season 2020.

On Good Friday, the start of a religious festival based on a resurrection, Forbes will sit at the Glenelg Oval for the start of the new SANFL season, the centenary year for the Glenelg Football Club.

His presidential counterpart, SA football legend Peter Carey, also questioned during the COVID shutdown if his Tigers were to face extinction again, five years after fighting so hard for survival against major debt.

We would not have survived without support from the federal government; JobKeeper kept us afloat, says Carey.

“Were we at risk? Absolutely.”

Football clubs are renowned for repeatedly dodging financial bullets. In SA football history, only one league club – West Torrens in 1990 – has collapsed in the past century, while even the well-supported and successful Sturt, Norwood and Port Adelaide (both at SANFL and AFL level) have rattled the tins to stay afloat with donations from wealthy fans such as the late Guy Lloyd at the Double Blues and Wolf Blass with the Redlegs.

And as soon as the books are square, the wild spending resumes in the chase of a money-spinning premiership. COVID might have changed this, says Forbes.

“Oh yeah, oh yeah … in good times, we might have developed some bad habits,” Forbes told InDaily. “But in bad times, we have found good habits. We have become a stronger football club through the challenges posed by COVID.”

How much did COVID, with the 12-week lockdown, the reduced capacity at football grounds and the loss of a major revenue driver at Adelaide Oval, cost South Australian league football in 2020?

ADELAIDE FC – revenue down $20 million

PORT ADELAIDE FC – down $18 million

SANFL – down $9.9 million

SANFL clubs (eight) – down $8.2 million (average $1 million each club)

In total, there was $56.1 million million less in SA league football’s coffers last season – $38 million missing at the two AFL clubs and $18.1 million gone from the SANFL system.

The two SA-based clubs and the SANFL have all needed to enter bridging talks with their banks about new loans or, in Port Adelaide’s case, seek assistance from AFL House in Melbourne.

The Adelaide Football Club reported its first financial loss since 2014 and, after starting 2020 debt free, closed the books with $4.5 million of debt. New chairman John Olsen, who took issue with debt when serving as State Premier and then in a decade as SANFL president, says it is critical to clear this red ink from the books “in the next 12-18 months … and we have a plan”.

The Port Adelaide Football Club finished the football accounting year (on October 31) with $12 million of debt. A new strategic plan – dubbed “Chasing Greatness” – demands these borrowings be cleared in the next five year,s while Port Adelaide seeks to double to membership to 100,000 and win three of five AFL premierships.

The SANFL – denied its major cash flows from Adelaide Oval events that put an $8 million hole in the league’s budgets – had its aggressive debt-reduction plan stalled by COVID. The State league’s debt profile that at the end of 2019 was at its lowest level since 1992, grew from $2.8 million to $3.74 million.

The SANFL also recorded a statutory loss of $1.37 million after a profit of $3.39 million in 2019 – and the league cheered the result. It had feared much worse.

“You would never celebrate taking such a hit, but considering the circumstances. Early on, we were very much looking at doomsday and wondering how we were going to survive,” SANFL chief executive Darren Chandler told InDaily. “We have come out of this with all our clubs on their feet. We are a lot better than first anticipated.”

The SANFL men’s league season starts at The Parade on Maundy Thursday night with the 10-team league competition restored. All eight non-AFL clubs survived COVID in 2020 and the AFL reserves from Port Adelaide (playing as the Magpies) and Crows return to the State league after being sidelined last season by AFL protocols related to setting up COVID-safe bubbles at the national league clubs.

“And I’m pleased we have Port Adelaide and the Crows back,” says Glenelg president Peter Carey. “The AFL teams lift the standard of the SANFL competition. Our players love meeting that challenge of playing against AFL quality.”

SA league football dodged a bullet last year, but there is still a minefield while – as the AFL learned on Friday night with the new COVID cases in Brisbane – the pandemic dictates the script and the fixture.

“We’re not rolling in money,” said Carey. “But we’re more positive about 2021 than we were with 2020. We’re budgeting for a small profit.”

How did SANFL clubs make it through 2020?

“JobKeeper,” says Forbes. “And getting back to hosting events at a club so we could generate some revenue to pay for the footy we played.”

JobKeeper pumped $952,000 into the West Adelaide Football Club’s books, that finished 2020 showing $45,547 was in the club’s bank account after it finished Season 2019 with an overdraft stretched to $43,380. Club equity doubled last year, from $831,000 to $1.6 million, effectively taking West Adelaide off external observers’ death watch with SANFL clubs.

“We are much surer of our future,” said Forbes. “We have spent a lot of time looking at our revenue, cutting our costs and making sure we came out of this crisis better off to deal with our future.

“We are a lot stronger for sorting through our challenges. It has brought us closer together as a club; we have a strong sense of purpose. Culturally, we are better (after reading the doomsday script with COVID).”

SANFL players last season voted to play for no pay, easing the financial burden on the league clubs. Then JobKeeper from the federal government, to quote Chandler, “propped up” the clubs, as did cuts in payroll tax demands.

JobKeeper is now gone. This adds to the challenge of balancing the books in each of the next two seasons.

“COVID is not going away,” said Chandler. “So everyone has to manage their costs.”

SANFL players are being paid by their clubs again, albeit with the salary cap cut in half to $220,000 this season, in recognition of the need to keep costs down while revenue is at risk to COVID.

But league football clubs have a habit of breaking the bank to chase a premiership in the belief a flag generates cash with fans celebrating at the clubhouse, increased memberships, new sponsors and merchandise sales.

“Everyone will want to win the premiership,” said Chandler. “But COVID has delivered a reality check about costs. Everyone is looking at how costs affect the bottom line.

“West Adelaide is a good example. A year ago everyone was concerned about West Adelaide, but they have managed their situation and COVID responsibly, to now be in a position where they have a sustainable business model.”

Carey dismisses any impression SANFL clubs were loaded with cash to start with, and were living beyond their means before the COVID scare.

“In 2014-2015, we almost closed the doors and did a helluva lot of work to run a tight ship,” Carey said. “We’ve looked closely at every line on our budgets. We’re still looking at opportunities to trim our expenses.

“No JobKeeper any more, but we do have loyal sponsors and membership is holding up well (even with reduced capacity at SANFL venues and fans showing concern at being among mass gatherings).”

Forbes adds there is no choice but to tighten budgets with more cost-cutting while the pandemic is limiting football’s revenue streams – and could shut down the game again.

“We are relying heavily on Adelaide Oval,” said Forbes. “We are a victim of money lost without decent events at the Oval. We need overseas travel to resume to get international acts performing at Adelaide Oval.”

SANFL club dividends – that were cut last year by $2.7 million; $337,000 less for each club – are reliant on the league’s return as a 50 percent partner with the SA Cricket Association in the Adelaide Oval Stadium Management Authority.

The question of where the SANFL competition ranks in Australian football’s pecking order also will increase the risk of clubs discarding their new-found fiscal responsibility.

“The salary cap (at $220,000) is too low,” Carey said. “It is right under the current circumstances. And we might not get back to the $430,000 salary cap of 2019. But the cap will have to increase eventually so that we can keep attracting players from interstate and to stop our players from going to country clubs. We will need a bigger salary cap.

“We are dealing with a new East Coast VFL competition; it will be interesting to see how that goes. Right now, the SANFL is the second-best football competition behind the AFL.”

Chandler responds: “Even with a reduced salary cap, our payments compare more favourably with other State league’s and community football across the nation. So does our league for its standard, having the best structure, history and for being – even after COVID – in a very strong position. We remain a very attractive league for players who are serious about finding a pathway to the AFL.”

There also is the human cost of football’s realignment to deal with COVID. At the Adelaide Football Club, the Crows have reduced staff by 40 per cent, cutting 85 jobs.

The SANFL stood down or dismissed 80 per cent of its staff during the lockdown. It was not until January 18 that recently appointed chief executive Chandler had his new-look administration in place with six chairs left empty at headquarters.

Carey, a former SA Football Commission member, cannot compare COVID with any other crisis SA football has endured – even that divisive storm of 1990 when Port Adelaide broke ranks to seek entry to the expanding VFL that was being rebadged as the Australian Football League.

“It has been a huge learning curve,” Carey said. “We have learned to be more flexible. You needed to be last year, when we were making new budgets every few weeks while the rules kept changing on our licensed club venues and with crowd numbers at games. Those COVID marshalls do come at a cost.

“I am really happy that all the SANFL clubs came out of this; we all got through it. And we will be better when we do get back to what we remember as ‘normal’.”

SA football’s $56 million black hole from COVID is difficult to compare with the financial hits taken nationally because clubs worked to differing scripts, particularly with costs and revenue from playing games.

In Victoria, the total lockout of fans and shutdown of the VFL competition, there was a 28 per cent ($126 million) fall in revenue across that State’s 10 AFL clubs that banked $44 million in JobKeeper payments. Powerhouse club Collingwood had a $38 million fall in revenue and reported a $1.8 million loss.

Richmond’s third AFL flag in four years should have allowed the Tigers to fill their safe at Punt Road with cash. Their profit was “just” $212,272.

In Perth, where the two AFL clubs had to work around Premier Mark McGowan’s tough stand on border controls, the record-breaking West Coast last season had $44 million slashed from its league-best revenue count of $102 million in 2019. Fremantle’s revenue took a 30 percent hit (about $18.5 million). The Dockers reported an operating loss of $1.065 million and had its cash reserves cut to just less than $4 million.

Sydney cut its operating expenses by 38 percent but the Swans still recorded a $6 million loss – and took a $1.5 million loan from the AFL.

In writing his book on the season like no other, “AFL 2020”, experienced football columnist Ashley Browne described the financial pain across the AFL,  estimated by the league a $600 million in missing revenue, as not a “pretty picture … there was carnage everywhere”.

But no SANFL club hit the wall.

“They were tough times across the board,” Carey says. “But we made it – all of us. We play on.”

The opening round of the SANFL begins with Norwood hosting Port Adelaide at The Parade tonight, followed by four Good Friday matches.

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