Hawthorn president Jeff Kennett backs AFL’s need to take unprecedented control over clubs

The AFL has told clubs it will need extraordinary access to their books and will hand them tough borrowing conditions after gaining a $600 million credit to save the game amid the coronavirus crisis.

AFL CEO Gillon McLachlan.

Hawthorn president Jeff Kennett says AFL clubs are prepared to accept an unprecedented level of AFL intervention in their books as part of the league's bailout package to ensure 18 clubs survive.

The league made clear to clubs in a Thursday night telephone hook-up the league would have unprecedented control over club finances as it doles out money from its $600 million line of credit.

Only the league’s power clubs have enough cash reserves to survive a season without footy, with Richmond, Collingwood, Hawthorn and West Coast having significant war chests.

Clubs will have to start repaying the millions they borrow at an interest rate of 3.3 per cent after October, with some including St Kilda already carrying more than $10 million of debt.

The AFL might introduce a hard cap on football department spending as clubs await the final details of their requirements to borrow AFL cash.

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Hawthorn president Jeff Kennett.

The league said it was taking “all steps necessary” to put in place measures to recoup the flow of hundreds of millions of dollars out of the industry.

But while some clubs are unhappy with the conditions Kennett told the Herald Sun the league’s heavy-handed approach was necessary.

The “coronavirus cabinet” member said given many costs are due early in the year before revenue from ticket sales it was no surprise clubs had significant cash flow issues that needed addressing within weeks.

“If this thing goes on for too long no club will survive. If you lend money, whether it’s the bank lending to the AFL or the AFL lending to the clubs, the lender is always going to put very strict guidelines around those that borrow, and that is what is going to happen,” Kennett said.

“The banks have put very strict performance requirements and obligations on this money and the AFL have to make sure they lend it out with the same restrictions.

“We are going to be very transparent and we are going to provide the AFL with what we do on a monthly basis as is every club and I hope the AFL will be doing that back to us as well. We are all in this together. It’s a new era and it’s a very new environment we find ourselves in.”

AFL CEO Gillon McLachlan.

North Melbourne on Friday hit out at a report that it would run out of cash within weeks without an AFL bailout as baseless and incorrect.

The league told the Herald Sun in a statement: “Like every business in Australia, the AFL will need to rely on its balance sheet during this period.

“We have secured lines of credit with our bankers NAB and ANZ to provide urgent funds to support the AFL and our 18 clubs to get through the crisis caused by the COVID-19 pandemic.

“Like every sector across Australia, the Football community has suffered a massive loss of revenue – stretching to many hundreds of millions of dollars across out industry – and that impacts every single AFL club and every level of football.

“The AFL will continue to work with all our 18 clubs to take all steps necessary to get all our 18 clubs through this together while also doing everything that needs to be done to help slow the spread of this virus and to keep people healthy.”

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Originally published as Hawthorn president Jeff Kennett backs AFL’s need to take unprecedented control over clubs