Value of A-League falling, say clubs

The relationship between the A-League clubs and Football Federation Australia has reached almost toxic levels.

Wanderers Chairman Paul Lederer has questioned the FFA’s abilities to lead.

The relationship between Football Federation Australia and the A-League clubs has reached almost toxic levels in a fight centred around millions in broadcast money and fears the competition has become dramatically less attractive to television networks.

In a strongly worded letter sent to FFA chairman Chris Nikou last week, which has been seen by The Australian, Australian Professional Football Clubs Association chairman Paul Lederer made it clear that the organisation, which represents all 10 A-League clubs, is tired of the stalling tactics.

“Everything that has been put to date by FFA as part of their contribution to the New Leagues Working Group is contrary to the position that you have put to us of being supportive of an independent A-League,” Lederer told Nikou.

The letter came to light on the same day the NLWG, which was formed to devise a path towards an independent national competition by the end of this month with an aim to kick off the new season in October, gathered for a two-day meeting in Sydney yesterday. In his letter, Lederer, who is a part-owner and chairman of Western Sydney Wanderers, raised a number of concerns and warned of serious consequences around FFA’s role in the process.

They include:
• Disagreement over the figure FFA should receive from the Fox Sports broadcast rights;
• Rebuttal of a report delivered by sports management consultants the Gemba Group, commissioned by FFA, which APFCA claims is out of date;
• Suggestion that a subsequent Gemba report, commissioned by the clubs, forecast the commercial value of the A-League in 2018-2019 had declined by 36 per cent;
• Laid the blame squarely at the feet of the FFA for “the failure of the administration to operate the League at best practice levels”.

The core of the issue appears to be a conflict regarding each organisation’s share of the broadcast rights when the A-League becomes a separate entity.

It is understood the FFA believes the clubs should receive 82.5 per cent of the rights but the clubs are demanding 90 per cent.

As it stands, the broadcast rights, which came into effect in 2017 and end in 2023, are worth $346 million over six years. The 10 clubs each receive $3,063,000 per season to cover the salary cap after initially demanding $6m each.

Angered by the failure to get what they deemed a fair deal, the clubs led the way last year in the seismic reforms that saw the calls for an independent A-League, a new constitution, a fairer voting structure and a new FFA board put in place.

Lederer, a vocal critic of the FFA, provided financials which he said “show the commercial reality of the attribution rate which is 90 per cent of the revenues from the Broadcast Agreement”.

“You will see that APFCA has proceeded on the basis that the proposed 82.5 per cent revenue share of the broadcast agreement revenues as are proposed by FFA is simply too low and without a proper factual basis. The enclosed financials attached adopt what we say is the commercial reality of the attribution rate which is 90 per cent,” Lederer wrote.

Lederer warned Nikou of the “parlous state of the game in Australia”.

“I provide these financial documents to you well in advance so as to enable the (FFA) board to carefully examine and consider not only the current parlous state of the game in Australia but the reality that unless an independent A-League is created without delay the financial position of the FFA will only worsen,” he said.

“By the time the current broadcast agreement expires in four years time there will be no product that the owner of the League will be able to convince either Fox Sports or anyone else to invest in.”

Lederer’s concerns come off the back of the A-League’s terrible ratings, which have declined dramatically this season, leading to speculation Fox could be reconsidering how much they are willing to pay when the next deal comes up for negotiation.

In terms of the Gemba report commissioned by FFA, Lederer said it was done on the 2015-16 A-League season and that the clubs had “obtained an up to date report from Gemba as to whether the opinion and data that it provided to the FFA Board, in 2016 had remained constant, had improved or had worsened”.

“It is my singularly unpleasant duty to tell you that since you commissioned the modelling of the A-League report by Gemba, it has now provided its opinion that the forecast commercial value of the A-League in 2018-2019 has declined by 36 per cent.

“That is a catastrophic outcome for the game in Australia. The opinion of Gemba is that since the delivery of its report to FFA, reach figures have declined at an accelerated rate that has deviated significantly from what was previously projected. Furthermore since that report, Gemba has determined that the A-League has lost significant ground to benchmark leagues in Australia. Gemba has therefore adjusted IP to reflect more realistic benchmark rates.”