This time last year, the ten football federations were in a good financial position but with structural challenges apparent even before the impact of Covid-19.
As much as 2020 was a tough year for many in football – not to mention elsewhere in the economy and around the world – this time last year Australia's ten football organisations entered 2020 in fairly rude financial health.
An analysis of the most recently published annual reports* of the ten federations show total revenue to be $187.4 million with a combined deficit of just under $2 million.
While the deficits, from Football Australia (-$1.8 million), Victoria (-$814k), Western Australia (-$440k), Tasmania (-$178k) and the NT (-$3.5k), may be disappointing as a year-on-year result, the overall financial position of the ten organisations also shows total retained equity of $87.7 million with cash in hand of $56.3 million.
If the ten federations were to combine their resources and strategic direction, the retained equity would be a handy war chest for significant investments in the game for the long-term benefit of those who play, coach and referee, and those who give signifcant hours of volunteer time to make the sport happen at community level.
Major revenue sources
The deeper structural issue for football that is evident in the financial statements is the sources of revenue for the ten football federations, particularly the nine state-based member federations.
In every case except South Australia (and excluding Northern NSW and Victoria as the information is not provided), the single biggest contributor to revenue in state member federations is participants' fees paid for one reason or another – eg. club participation fees, individual player registrations, referees' fees, coach education.
A total of $32.8 million pours into member federation coffers from participants' fees, which is 41.4% of total revenue. A recent study by AAFC estimates that around one-quarter of this is generated from NPL clubs alone.
South Australia is an outlier, as it is in receipt of a significant grant from the South Australia government which is, in part, skewing revenue sources. If we were to exclude SA from the calculation, the proportion of revenue from participants' fees for the remaining eight state member federations is an average of 44.6%.
The second largest contributor overall to revenue is grants which accounts for 17% of revenue for member federations. These grants come from both Football Australia to the member federations – as outlined in the XI Principles – and other sources, such as state governments.
For the sake of consistency, if we again exclude South Australia, the revenue from grants is, on average, 10.2% of member federations' total revenue.
When the two major sources of participants' fees and grants are combined, the proportion of revenue that they provide ranges from 77.4% in South Australia to 92.2% in Queensland.
To emphasise the lack of diversity in revenue, the amount received in sponsorship from state-based member federations is minimal: the highest reported is $830,000 in Western Australia from a national total of $2.4 million (3% of revenue). With more than 250,000 registered players, NSW reported only $558,000 in sponsorship in 2019.
The revenue breakdown was not provided in the reports of Northern NSW or Victoria.
Amongst other things, the reliance on participants' fees and grants as sources of revenue raises the issue of whether ten organisations with ten Boards and ten management teams is the most efficient and effective structure for the organisation of football in Australia.
Administration cost per player
From a financial perspective alone, there is prima facie evidence of significant potential for economies of scale in operations.The chart below shows the cost of administration per registered player (2018 CRWG data) based on revenue less expenses.
The cost per player ranges from $65.47 in the largest federation (NSW = 253,308) to $407.36 in the smallest (NT = 4,628). (South Australia is higher than the NT but it is again skewed by the South Australian Government grant).
The average cost of administration per registered player is $139.32 with only NSW, Northern NSW and Queensland performing below the average – in the case of the latter two, only just.
It is expected that smaller member federations by way of participation, and more remote states, would have higher relative administrative costs.
Nonetheless, if all states currently costing above the average were to improve their productivity to the average, it would be the equivalent of pumping another $19 million into the football economy – or, to put it in other ways, for example:
reduce the cost of playing by $33 per participant, or
when combined with the retained equity of the ten federations, increase the pool of funds available to invest in the good of the game to more than $100 million.
Salaries
Staff costs in the member federations are $26.9 million, which is more than one-third (34.2%) of total revenue.
As a proportion of revenue, Capital Football has the highest overall wages at 46.2%, while South Australia has the lowest overall at 17.4% of revenues. In the case of Capital Football ($2.3 million), the wages bill includes team costs for Canberra United.
If Football Australia is included, the combined wages bill of the ten federations is $52.1 million. In the case of Football Australia ($25.2 million), the wages bill includes four matches played by the Socceroos in 2019, and the regular salary provided to Matildas' players who played seven matches in 2019-20. Contracted Matildas players also continued to be paid in full throughout the 'shutdown' period from Covid in the first half of this year.
Key management personnel
At least $7.4 million was spent on 'key management personnel' – generally defined as the CEO and executive management teams. However, this excludes Victoria, Western Australia, Tasmania and the NT which did not provide this information.
The member federations with the highest executive salary bill as a proportion of the total salary bill are Northern NSW and South Australia with key management personnel receiving 27% of the total employee salaries and benefits. Across Australia, executive salaries account for an average of 14.1% of total salaries.
The remuneration of key management personnel ranged from a modest $160,793 at Capital Football through to $4.1 million at Football Australia. The cost of key mangement personnel at Football Australia was an increase of 12% on the previous financial year, principally because of separation and recruitment costs associated with the departures of senior executive staff including the former CEO.
Board payments
Financial statements are required to report on payments made to individual Board members or entities associated with Board members. (We have previously reported on these matters in respect of the FFA Board and Football Queensland.) The financial statements set out payments made to:
entities of which Board members are employees in respect of Football Australia ($55k), Northern NSW ($21k) and Tasmania ($44k);
one individual Board member at Football Queensland ($44k); and
$54,461 in payments to Football NSW Board members for unspecified purposes.
2020 impact
The full financial impact of the Covid-19 pandemic on operations will not be known until financial statements are made available for 2020, from February through to May. Some states – notably Victoria – are predicted to have fared much worse, as they did not have a season, compared with most other states which enjoyed partial or full seasons.
Football Australia's next financial report (for 2020-21) is not due for publication until November 2021, but it will include the first six months of 'unbundling' from the A-League. The financial report on which this article is based would have included one-quarter of the Federal and State government relief packages for organisations and employees arising from the pandemic (eg. Job Keeper).
* The financial years of Northern NSW, Victoria, Queensland, South Australia, ACT and the NT end on 31 December each year; NSW, Western Australia and Tasmania end on 31 October. The reports examined ended on those dates in 2019. The Football Australia report was for the financial year ending 30 June 2020. In some cases, the most up-to-date report is not yet published on the website (eg. Queensland); in others, summary reports only are provided via the website (eg. Victoria). In Victoria's case, a full financial statement is not available, as they are an incorporated Association and are not required to file their financial statements with ASIC.