Footy Finances Exposed

Getting a handle on the complex financial dealings of the AFL is challenging. Footy is now a huge business involving massive salaries, mind-boggling media deals and alarming commercial transactions. Drawing on a number of public sources, this week we attempt to distill the financial essence of the game in a format even footy fans can understand.

After our research team spent hours poring over various AFL financial reports, individual club statements and a wealth of independent media analyses, we concluded that AFL's business is extremely complex. Money flows in from:

• media businesses ($200M p.a.) for the right to broadcast games,
• government subsidies ($55M p.a.) for being real Aussies, Update: Real figure is closer to $33M for 06/07 financial year. It may vary from year to year.
  
• gambling businesses ($10M p.a.) for, well, we can't figure it out,
• sponsorships,
• ticket sales,
• club memberships,
• catering.

This last one is particularly controversial, after Telstra Dome's boss Ian Collins conceded that the half-time pass-out ban was, in part, about protecting caterers' revenue (and hence licensing revenue for the game) on the extraordinarily expensive food on offer.

Rather than try to provide a detailed breakdown of this knotted ball of entwined dealings, we've prepared a chart that picks two ends of the thread and pulls:


So, meat pies cost something like $7 at the footy venues. Cocaine costs around $250 per gram on the street (according to the Australian Institute of Criminology). No one is suggesting that the bulk of the cocaine and other illicit drugs consumed by footballers comes from pie sales. Despite the large number of pies sold each year - plus the gobsmacking mark-ups - most of the AFL revenue comes from media and sponsorship deals. This illustrates just how important it is to the AFL that we sit on our couches and watch ads interspersed with footy.

On the other side of the equation, how much of the AFL's outgoings end up being spent on drugs? As expected the AFL Annual Report (2006) didn't include a breakout for this item. It did indicate that some $133M was spent last year on around 640 players, and average salaries were around $220K. Player income is more than 60% of the AFL's expenses.

It is, of course, extremely difficult to get a robust estimate of the proportion of income the average footballer spends on illicit drugs. As it happens, our researchers could only dig up one data point published by an organisation shielded by defamation lawyers:

It is said that [Ben] Cousins was spending about $3000 a week on drugs from his annual salary of $800,000. (Herald-Sun, 25/3/2007)

In before-tax terms, if the Murdoch press is to be believed, this particular player is allegedly spending $156K per year, out of $800K, yielding a soft estimate of around 20%. Is this likely to be high or low?

On the one hand, this is likely to be too high. Cousins, after all, is in continuing rehabilitation, apparently for his raging ice addiction. As such, he may be spending a disproportionately large amount of his income on drugs.

On the other hand, it may be an underestimate. Cousins is a highly paid AFL footballer - probably in the top 5% of earners - so as a percentage his habit is probably small. Also, his preferred drug is allegedly crystal methamphetamine, typically half the price of cocaine. And let's not forget that while dozens of other players have tested positive for using drugs, Cousins escaped detection. Can we presume, therefore, that Cousins wasn't using drugs at the highest rate? (There are other - more sinister - reasons why some players avoid detection and others don't.) So considering these countervailing arguments, maybe 20% isn't too far off the mark.

Naturally, not all footballers are regular users. It's hard to get a feel for the proportion that are - certainly the AFL drug testing regime is thoroughly discredited and of no help at all. Dale Lewis famously suggested that it was about 75% (before being dismissed and attacked by AFL officials). Lawrence Angwin suggested "five out of the nine in the leadership group" were out on pills the night before he got canned. John Worsfold claimed that eight Eagles admitted to drug use (out of 40 in the squad, that's 20%). Let's split the difference and call it 50%.

If the 20% of income guesstimate is applied across the 50% of user-players, then in ball-park terms, we're talking about 10% of $133M. This is something like $10M per year flowing into the coffers of drug dealers from AFL footballers.

That's a disturbingly large figure. If anyone's got a better estimate for either the proportion of income spent on drugs or the proportion of footballers who regularly use drugs, please run it past a defamation lawyer, get it published and then send us the link. We'll be glad to update this estimate in light of new information.

Ten million bucks a year on drugs? That's a lot of overpriced pies.

*** UPDATE ***
More insight into how the AFL makes its rivers of cash came to light in the past week. It's not all selling overpriced pies - there's many lines of business to exploit, and once again, the AFL isn't shy about taking people to court when it feels its million-dollar interests are threatened.

The AFL is claiming that discount clothing retailer Dimmeys and Forges (famous for its use of tax-dodging former footballer Dipper) is violating the AFL's "intellectual property" (groan) by selling "knock-off" (their words, not mine) shirts in club colours:


A $20 shirt from Dimmeys.
Source: The Age


The equivalent, properly licensed shirt costs around $75. So, want to support your club? Pay a $50 premium to the retailer, who then kicks some back to the AFL, who dole a bit out the club, which then trickles down to the players' salaries, so a portion of that can end up with purveyors of Australia's finest imported cocaine.

Dimmeys, champion of the underdog and the Western suburbs in general, has vowed to fight the case. As Dimmey's Ken Hampson said "The AFL owns trademarks but it doesn't own every bird that exists in Australia. It doesn't own every magpie." Oh Ken. So naive. How much you have to learn about how the AFL does business.

Remember when grannies used to knit scarves in their team colours? Or kids would show up with their faces painted? Once, that was a symbol of belonging. Now it's just forgone revenue and someone has to pay. Do you think the AFL is happy seeing adjacent red, white and black stripes on a little kid's shirt without the $50 AFL imprimatur on it? That's one less player on a seven figure contract. Someone call Amnesty International!

Once the greedy AFL licensing behemoth gets up a head of steam, you can forget about getting within 100m of the 'G in unsanctioned face paint, yet alone wearing an illegal backyard scarf that literally sucks the lifeforce from our struggling clubs. This is the message they will be getting out: "Club spirit? No thanks, we'll just take the cash!"

Does anyone else sometimes wonder if the long-term interests of the game aren't being jeopardised by the short-term needs of administrators forced to justify their own million-dollar salaries?

Citations: Herald-Sun, 25/3/2007

Word Count: 844

Tags: footy, drugs, swindle