AFL clubs count COVID cost as debts spiral and revenue falls, with job cuts to come
The AFL spent $60m on its Queensland hub to get its season finished. COVID will cost the league and its clubs a lot more
A $400m revenue hole and clubs saddled with debts of more than $150m. A governing body likely to lose tens of millions of dollars this year, and up to one in three staff already shown the door or about to be cut loose in the off-season starting next week for many teams. An estimated $300m drawn down on a line of credit.
Those numbers make the $60m the AFL revealed this week it is spending on its Queensland hub in an effort to get its 2020 season finished seem relatively small, and lay bare the cost of COVID-19 on what has been Australia’s most financially successful sport for 20 years.
The show goes on and the AFL will reap some significant rewards from its upcoming finals series and the economic impact of much of the industry being based in Queensland will surge past the $515m it achieved in the sunshine state last year.
But the effects of COVID-19 will reverberate for the AFL’s 18 clubs for some time, as they cut at least 30 per cent out of their existing cost base, and the league itself – which this year will likely exceed the $21m it lost in 2011 and the $15m loss of 2016, maybe even combined.
If there is one club that can encapsulate just how savage coronavirus has been on AFL balance sheets and the financial swing it has caused, it is the West Coast Eagles.
Last year, the Eagles posted the biggest profit in Australian sport when they recorded a net surplus of $8.8m from $88m revenue. Merchandise sales after the club’s 2018 grand final win boomed and membership surged. West Coast made $35m revenue in 2019 from membership and its gate takings, and $14m in corporate hospitality. But this year, with at best a reduced capacity and with most fans missing at games, it will make a “substantial loss” for 2020, according to one source. That likely means a negative financial swing of $10-15m.
It is a situation likely to be replicated across the board. The biggest clubs who make the most money therefore have more to lose, the smaller ones will have even more debt.
There have been bright spots. Port Adelaide chairman David Koch says the club’s throwback “prison bar” guernsey has been the top selling AFL jumper in the country this year, providing a revenue boost.
The season has also not been as big an economic wipe-out as clubs feared in March. One club president told The Weekend Australian the first re-cut of its books had it looking at a $14m loss with memberships refunded and no crowds or corporate hospitality. It has managed to get that figure back to a $3m shortfall.
The Brisbane Lions were budgeting on a profit this season as they sought to reduce debt. Then COVID-19 hit and, similarly to the rest of the competition, the impact looked dire.
But with the health outlook in Queensland strong following the initial lockdown, the club has been able to open up its facility at Springwood.
The fact games have been played in Queensland, combined with the Lions’ form, saw Brisbane record their second-highest membership of 29,277, which is the highest of any sporting team in the state.
Brisbane chairman Andrew Wellington said while the economic situation was not as anticipated prior to COVID-19, the past few months had been more positive.
“The support of our members and the fact we have been able to play games has meant we are significantly better off in the tune of a few million.
“We are still going to be down on what we had budgeted for before the season, but we are nowhere near what we feared when COVID hit. We are better off than we thought we might have been but we certainly have not got back to where we hoped we would be.”
Collingwood president Eddie McGuire, who was a member of the league’s coronavirus crisis cabinet earlier in the season, praised the leadership the AFL has shown through the pandemic, describing their efforts to get to this point of the season as magnificent and vital in terms of lessening the financial blow.
“Our biggest issue has been that crowds have been non-existent for our games. That has been difficult. It has blown a big hole out of the bottom line,” he said.
“We have lost a lot of good people and staffing levels are going to come down.”
The Collingwood president said the response of members to the crisis had been critical in what has been a challenging time.
The AFL said 992,584 memberships were retained through 2020, which is only 6.1 per cent fewer than the record membership of 1.057 million set last season.
“It is the difference between us being in a position to plan to go on and suddenly not having to turn things upside down,” McGuire said.
“People have shown football really matters to them. That it means something and it is important to them. That it is not just some silly pursuit of the pigskin.”
Then there is next year. AFL chief executive Gillon McLachlan said on Thursday in Southport he was hopeful crowds would return to Victoria next year. McGuire said Collingwood was planning for contingencies from having 100,000 at the MCG in Round 1 to having no crowds at all in a worst-case scenario.
He said a glance at what was happening in London, through Europe and in the US demonstrated the need to remain vigilant and cautious, though he thinks Victoria will come out of lockdown – and hopefully the footy with it.
“I am not an epidemiologist but I am a historian and I have studied a little bit of our national history and also the present when pulling together speeches (for Collingwood functions),” he said.
“One of the things that really resonated with me from many years ago was that we lost as many people after the First World War as we did in it, largely through the Spanish flu, but also through mental health reasons. It had a second sting in its tail.
“I am not forecasting at all but I am certainly mindful that there might be a little bit left in this (in terms of COVID-19).”