The state of football’s finances One of the big issues for the new Board will be the state of football finances, especially with the push for a separate A-League entity 16 November 2018 |

Writer, Author, Publisher, Activist, Whistleblower 16 November 2018 | Bonita Mersiades

Despite an increase of $26.9 million in revenue in the 2017-2018 financial year, FFA only improved its position by $200,000 compared with the previous financial year.

FFA revenue

In 2017-18 financial year, FFA revenue increased by 25.5% on the previous financial year to $132.5 million with a small loss of $126,000. This compares with revenue of $105.6m in 2016-17 with a loss of $335,000.

In the period from 2006 to 2018 with predominantly business people around the FFA Board table, revenue increased by 135%, while costs also increased by 147%. In 2006, FFA made a $2.6m surplus, while this year (and the past three financial years), there has been a small loss.

The increase in revenue in 2018 is principally because of the increase in the TV broadcast deal with FOX Sports and the contribution from FIFA for participation in the 2018 World Cup.

The broadcast deal is worth an average of $57.6m a year over six years (up from approximately $40m a year), and the FIFA contribution for the World Cup was approximately $13.1m (USD$9.5m) in 2017-18. Along with all FIFA member associations, FFA is also the beneficiary of FIFA President Gianni Infantino’s generosity of now gifting each member association USD$5m a year as a base grant.

It is not possible to breakdown FFA revenue further, as they do not provide it. The three items of brodcast deal, World Cup participation and FIFA grant are publicly known.

However, once those three known items totaling almost $36m in 2017-18 are excluded, revenue has, at best, remained static and, at worst, gone backwards. According to the outgoing FFA President, Steven Lowy, the financial position will deteriorate further now that a Lowy is no longer at the helm as sponsors will walk away from FFA.

That is certainly the case with the SCentre Group, formerly majority owned by the Lowy family. SCentre's sponsorship declined from $2.5m in 2017 to $1.7m in 2018, due to dropping sponsorship of the FFA Cup.

On the other hand, this was offset by an increase from $1.8m to $2.3m from former Board member, Simon Hepworth’s Caltex, presumably due to contracted bonuses arising from the Socceroos World Cup participation.

One of the first things the new Board should do is obtain independent advice on the value of the sponsorship deals held by FFA. Considering more than 730 teams around Australia took part in the FFA Cup in 2018, it is curious that no other sponsorship could be found for the popular competition; and a $0.5m bonus for World Cup participation seems modest.

We also know that Seven Consulting came on board as a sponsor of the Matildas, not because of proactive searching from FFA HQ, but because the company came to FFA offering to be a sponsor.

FFA expenses

FFA’s biggest expenses are ‘grant distributions’ to the A-League clubs and state federations ($43.9m) followed by ‘employee and team benefits’ ($32.7m). The latter is actually $2m less than it was in the 2014 financial year (the previous World Cup).

The biggest increase in expenditure was in ‘travel’, up 49.6% from the previous year to $16.2m and ‘marketing’, up almost 20% from the previous year. The jump in travel expenditure can only partly be explained by World Cup preparations or the Women’s Asian Cup participation: the corresponding travel increase from 2013 to 2014 was less than half the 2017 to 2018 rate at 20.3%.

Perhaps one area the new FFA Board could look at is how many FFA staff travel to events and meetings around the world. For example, at least nine non-team staff travelled to the Women's Asian Cup for the duration of the tournament in Jordan earlier this year. The numbers attending the World Cup in Russia were said to be north of 60, though this has not been confirmed.

With the loss of at least two senior executives during the year, costs for ‘key management personnel’ have come down from $4.7m in 2017 to $4.4m in 2018 (3.3% of revenue), but the loss of people has also been offset by reported increases in salaries to other existing executives.

During the year, the FFA Board successfully renewed its access to a $3m overdraft facility with NAB. FFA's retained earnings are $6.9m, marginally down on the previous year.

State federations in the money

Moving to the state federations, total revenue across eight of the state federations in 2017 (2016 for Tasmania), and excluding Northern Territory where financial reports are not published, was $66.5m with a combined surplus of $3.7m.

The reports show the state federations' reliance on player registration fees - which we have referred to previously as the 'great big tax' on players - for revenue.

With 'sponsorship' as a proportion of revenue ranging from 2.1% in NSW to 9.1% in Western Australia, the reports also suggest state federations need support to achieve better value from their significant number of “assets” - a term and concept that Board nominee Joseph Carrozzi made reference to at the AAFC Community Forum last Monday.

The table below shows the total revenue and surplus, as well as the revenue from 'registration fees' and 'sponsorship' as a proportion of total revenue, and the cost of 'key management personnel' as a proportion of revenue.

Revenue Surplus Registration fees Sponsorship KMP NSW $15.1m $839k 66% 2.1% 6.1% Northern NSW $8.7m $426k 40% 5.6% 8.9% Victoria $10.6m $948k 48% 4.1% 13.2%** Queensland $7.4m $376k 54% 2.3% 6.0% SA *** $11.0m $585k 10% 2.5% 5.0% WA $6.3m $152k 46% 9.1% - ACT $5.0m $300k - - - Tasmania $2.4m $40k - - - NT - - - - -

The reliance on player registration fees might also explain the apparent enthusiasm by at least some state federations for working closely with the A-League clubs in respect of Board nominees. Whether accurate or not, the strong suggestion circulating within the football community is that the clubs have 'cut a deal' with the federations that will result in more funds flowing directly to the federations.

Six of the nine state federations hold a further $70m in retained surpluses, with three states holding 82% of the total: NSW with $36.2m, Northern NSW with $13.3m and Victoria with $7.9m.

National snapshot

Taking the 'whole of football' at the national and state level (FFA and state member federations for which information is available) :

Revenue is just under $200 million.

The net combined surplus is $3.6 million.

Executives working in football receive at least $8.5 million.

The combined retained surpluses is $77 million.

* NSW's 'Key Management Personnel' is comprised of $876k for staff and $60k in Directors' fees.

* Victoria's 'Key Management Personnel' is higher than usual due to a number of personnel changes in the year. In the previous financial year, it was 9% (which also included personnel departures).

*** South Australia received a government grant accounting for more than half of their total revenue in 2018, which affects their comparative data.

Categories: Analysis | Football Business

ffa board, ffa governance, football finances

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