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December 13, 2012

Gallop’s ‘blue skies’ forecast means it’s time to cut ‘great big tax’ on grassroots players

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Football followers around Australia should vote for the Gillard Labor Government and give thanks to the Brisbane Roar’s Bakrie Group.

That’s the take-out from FFA’s 2011-12 financial statement.

Without the sale of Brisbane Roar – for what appears to be $7 million – and the waiver of the $4 million loan made to FFA when Frank Lowy ascended to power as Chairman in 2003, the FFA’s $1.5 million surplus (or profit) in 2012 would have been a $9.5 million deficit (or loss).

The financial statement also shows that while the Government’s Smith Report in December 2011 commented on the need for cost containment within FFA, expenditure increased by 9.2% from the 2011 financial year to 2012 (when expenditure for the World Cup Bid is excluded).

Rather than ‘razor gang’ like cost-cutting, expenditure on:

  • travel and marketing and media expenses each increased by around 4%
  • employee and team expenses increased by 17%
  • administration expenses increased by 18%
  • payments to executive employees increased by 34%, and
  • broadcasting expenses increased by 86%.

All of this expenditure may be appropriate but the financial statement only shows the ‘bottom line’.

Revenue in 2012 was $84.6 million, an increase of $4.6million on 2011 (when revenue for the World Cup Bid is excluded) or 5.7%.

However, $7 million of the 2012 revenue is “profit on disposal of assets” – Brisbane Roar – and the $4 million gift from the Gillard Government is included in the one line of $76.9 million total operating revenue.

The high value placed by the market on Brisbane Roar is potentially good news for FFA who will also be looking to sell Western Sydney Wanderers sooner rather than later.

That show of market confidence in the A-League, together with the ‘blue skies’ forecast by CEO David Gallop  because of Manchester United’s visit next year and the new broadcast deal, should have FFA in a position to stop the ‘tax’ on players – particularly junior players and their mums and dads.

The last time player registration fees were presented as a separate revenue item in the annual financial statement, they totalled around $6.4 million. They are set to increase by CPI again this year under a policy introduced by former CEO Ben Buckley in 2007, although many junior associations are hopeful that Gallop will either eliminate or reduce the ‘great big tax’ on junior and amateur participation in light of the “blue skies” financial position.

However, FFA insiders say this is highly unlikely. They say there is little more than $5 million per annum left for FFA out of the broadcast deal once the commission and others costs are taken out, the ‘in-kind’ contribution excluded and the A-League clubs receive their payments, and they are unlikely to share the windfall from the Manchester United visit.

Other matters to note in the 2012 financial statement include a loan of just over $900,000 to an undisclosed entity and the writing-off of FFA’s longstanding $500,000 investment in the Central Coast Mariners – the latter in the same year as Brisbane Roar was sold for $7 million.

The Westfield sponsorship is disclosed as $1.25 million and NAB as $847,000 due to Directors’ interests declarations relevant to  Lowy, Brian Schwarz and Joseph Healy. Lowy and Philip Wolanski continue to hold a financial interest in Sydney FC as of 30 June 2012.

The Federal Government, as part of their objective to make their Budget surplus in 2012-13 more attainable, also advanced grants of $11.1 million prior to the end of the financial year for Western Sydney Wanderers and the 2015 Asian Cup Organising Committee. This advance does not impact on revenue or expenditure on the year in question but on cash flow at 30 June.

 


3 Comments


  1. Mark Combe

    More evidence of Buckley’s utter failure as CEO. Even when he’s told to cut costs by government he is incapable of doing so. I do hope the failed man is going back to AFL to ^*%# them up.

    Good on you Bonita for writing this. Shame on the major papers for not doing so.


  2. Matthew Cowling

    Interesting Bonita and thanks. Capitation forms a key part of the revenue of many sporting organisations. Everyone complains about it, few really understand it and very few organisations really reveal their take.

    If the numbers are correct then Football has something like 500,000 registered participants in Australia. In the most simplistic analysis, if this figure is as low as 400,000, then each participant is paying a “tax” of around $16.00 to FFA based on the $6.4m quoted above. Now, in Australian sport that is probably on the high side (when compared to other team sports), but it is not outrageous by any means.

    I’d like to see it broken down. In some sports this figure includes insurance, and often that insurance extends to public liability and directors and officers coverage for all clubs, leagues and other volunteer bodies. In basketball for example there is an outstanding and broad insurance scheme, all covered by this capitation fee – which you rightly refer to as a tax.

    The biggest issue is that it is viewed as a negative tax, rather than a positive tax. Instead of clubs and associations seeing capitation as a GST-like activity, levied widely and collected on behalf of their government to help administer the sport; they see it as their money, and NSO’s generally do a poor job explaining how this tax is used to benefit all. Lower tiered organisations however generally do a brilliant job of blaming those above them for the “tax” that gets imposed!

    Football is an expensive participant sport, by team sports standards, I think there are many organisations adding a “tax”, not just the FFA.



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