AFL clubs urged to cut costs in preparation for losses caused by coronavirus
AFL clubs have been told to brace for a financial hit due to coronavirus, with one club boss declaring it was “inevitable” fans would be locked out of games.
AFL News
Don't miss out on the headlines from AFL News. Followed categories will be added to My News.
The AFL has warned clubs to immediately start cutting costs to ward off insolvency as Sydney conceded clubs had few cash reserves to weather financial effects of coronavirus.
Sydney chief executive Tom Harley told the Herald Sun clubs were already conducting detailed financial modelling, aware the worst-case scenario could strip millions from the bottom lines of every AFL club.
Club chief executives were told by the AFL on Tuesday that they should consider their budgets given the certain loss of revenue, with each of Sydney’s home games producing a windfall of over $400,000.
The league’s $60 million future fund will clearly have to bail out clubs even before worst-case scenarios like the league shutting down the season if whole teams catch coronavirus.
Harley said the league’s clubs and administration would band together to work through the issues.
But he conceded clubs would immediately be hit hard financially as membership and ticket sales grind to a sudden halt.
“We are starting to work through financial modelling and now we have a bit more information. There is an inevitability at some stage we will play in front of empty stadiums,” Harley said.
“From a financial sense we are drilling into the business and identifying things that can go from a spending point of view and making sure we have as much cash as possible. At this stage we are looking into it. I guess we have been urged as clubs to interrogate your business.
“Prevent yourself from becoming insolvent if it becomes that bad and so those conversations with the AFL will be ongoing.
“They are the governing body. Clubs are massive stakeholders in the game and the clubs work very collaboratively with the AFL on a raft of issues and this will be another one.
“There is an inevitable period where fans won’t be allowed as part of mass gatherings so what does that look like for clubs? And when you look at the worst-case scenario how long does it last for? The other eventuality is if your squad or the opposition square are crook and can’t field a team. Is there a forfeit, do we share points, do we end up playing two games in a week?”
Harley said the small profit margins from not-for-profit clubs meant there were financial pressures from games without crowds.
“From a match gate return without membership it’s north of $400,000 (at the SCG),” he said.
“So we are a business that turns over 57 million dollars. There is absolutely no margin in that. We budget for a $50,000 to $150,000 profit. So you lose one of those, there is your profit gone straight away.
“That shows you how small margin we are as a business but the overarching picture is that everyone is in the same boat. It will be interesting times but we have no choice but to plough through them.”
Watch every match of every round of the 2020 Toyota AFL Premiership Season LIVE & On-Demand with KAYO. New to Kayo? Get your 14-day free trial & start streaming instantly >
MORE CORONAVIRUS NEWS:
AFL sets new guidelines for media to ensure coverage continues
How coronavirus will restrict how you watch 2020 AFL season as clubs brace for fan lockouts
AFL clubs forced to overhaul season launch events due to coronavirus threat
HOW TIGERS HAVE PLANNED FOR CORONAVIRUS DISRUPTIONS
Cashed-up Richmond says it has the financial strength to absorb a period of home matches played in front of an empty MCG.
But like all clubs, the Tigers are unsure how damaging the looming COVID-19 crisis will be for a league entering lockdown.
Richmond chief executive Brendon Gale told the Herald Sun the Tigers’ coronavirus working party was meeting daily as the situation rapidly evolves.
Reducing the players’ risk of exposure to the infection, rather than worrying about the loss of income, is the clear priority.
“This is going to sound counterintuitive, but the bottom-line perspective is probably the distant one at this stage,” Gale said.
“If we reach a situation where we can’t have crowds or (play in front of) empty stadiums, well in terms of any financial impact we’ll cross that bridge when we come to it.
“But one of the good things about our code, and particularly our club, is over the last few years we’ve really strengthened our finances and our balance sheet to give us some protection for these contingencies that you really can’t predict.”
Clubs rake in hundreds of thousands of dollars from home games while the timing of the pandemic is also set to dry up membership sales.
The Tigers are due to host Carlton in next Thursday’s season-opener.
That traditional Round 1 blockbuster has averaged a monster crowd of 81,500 across the past five seasons.
Western Bulldogs are set to host Collingwood at Marvel Stadium next Friday night in the club’s biggest fixture for the year.
Bulldogs chief executive Ameet Bains said at Wednesday night’s season launch the club was hoping to attract 50,000 to Marvel Stadium.
While the Dogs would be able to absorb the loss of gate takings from a couple of home games, particularly if they were smaller fixtures, the loss of an entire season would significantly affect their profitability.
The Tigers have relocated several meeting off-site from Punt Rd as Gale said they had taken “significant but appropriate” measures to reduce the risk of infection.
Asked what would happen if multiple Tigers were placed in quarantine for 14 days, Gale said: “There’s a whole lot of scenario planning”.
“That’s one of the reasons why we are putting so much time and effort into containing and reducing the risk of exposure to our football department,” he said.
“But as to what would happen if one or two or three (players were quarantined) it depends how we would manage it from an individual from a collective point of view.
“We’ve got a working group that at the moment is meeting daily to consider our guidelines and to consider the application of those guidelines as the situation evolves and to consider more stringent measures need to be taken.
“But it’s just evolving so quickly. At the end of the day we’re not panicking, it’s business as usual, but we’re taking all possible measures to reduce exposure.”
FOOTY TIPS! Join Australia’s best footy tipping competition for your chance to win big. Add our experts to your league and join now at TIPS.COM.AU.
MORE AFL NEWS:
KFC SuperCoach: Expert verdict on best bargain picks for 17-round season
Andrew Gaff to stay at West Coast and activate four-year contract extension
Whitten Oval redevelopment will allow AFL fans to be married at Western Bulldogs’ home ground
St Kilda forward Paddy McCartin wants to play again after repeated head knocks
Champion Data’s KFC SuperCoach expert Fantasy Freako reveals his 2020 team
Originally published as AFL clubs urged to cut costs in preparation for losses caused by coronavirus