The TV rights thread part II

[Poupou Escobar]

Have you guys seen this article: AFL chief Andrew Demetriou reveals debt of all 18 clubs is the worst in competition's history

If they're not using the TV money to make the clubs stronger, what are they using it for?

And likewise, surely the NRL would use the new TV deal to strengthen the clubs first and foremost? Is there any reason they wouldn't?

Firstly players' salaries need to improve to stop them being poached, which comes down to a much bigger grant to the clubs, but after that shouldn't it be all about boosting marketing and facilities for the clubs that need it? A club like the Sharks should have a massive fan base but are hampered by a public perception of mediocrity - this is solveable by a bigger media presence and improved trappings of wealth (i.e. facilities).

Besides grants to NRL clubs and junior leagues, where does the money go? The ARLC isn't going to become an expensive self-licking ice-cream is it?

 

[VictoryFC]

^Its a problem for both AFL and NRL. When you have a strong competitor striving for the same market space, the only choice is to be aggressive. Can't really be passive, which justifies expansion over ensuring the security of existing clubs. Their desire to be number 1 nationwide stretches their resources at the expense of their clubs. They are hoping their investment works out long term, otherwise its a fruitless exercise.

 

[docbrown]

^Its a problem for both AFL and NRL. When you have a strong competitor striving for the same market space, the only choice is to be aggressive. Can't really be passive, which justifies expansion over ensuring the security of existing clubs. Their desire to be number 1 nationwide stretches their resources at the expense of their clubs. They are hoping their investment works out long term, otherwise its a fruitless exercise.

Yet at the same time we keep getting told they already are number one.

Fact is 4 AFL teams in NSW & QLD are never going to overtake the 14 NRL teams in NSW, QLD & ACT.

Think about their self proclaimed Bargearse line and the populations on either side.

They claim they own Darwin yet the NRL on TV was getting scheduled first. They claim Canberra but they don't even have a full time there. They claim vast swathes of NSW and QLD desert - are they counting grains of sand?

There's only 4 cities with AFL teams on their side of the imaginary line - Perth, Adelaide, Melbourne and Geelong.

There's 7 cities with NRL teams on the other - Townsville, Brisbane, Gold Coast, Newcastle, Sydney, Wollongong and Canberra.

The other areas looking for NRL teams - Central Queensland, Gosford, Ipswich, Wellington, Christchurch, PNG - none have an AFL presence and quite likely never will.

The fact is eventually placing two teams - one in Perth and eventually Adelaide - is going to be easier for the NRL than the AFL setting up in any one of Canberra, Darwin, Tasmania or North Queensland. In fact one team in Perth represents the same media market size as those other 4 combined. And whilst Canberra and North Queensland will double their populations in 50 years, Darwin and Tasmania are expected to remain relatively static. Meanwhile Perth is expect to grow to 4,000,000.

 

[Poupou Escobar]

^Its a problem for both AFL and NRL. When you have a strong competitor striving for the same market space, the only choice is to be aggressive. Can't really be passive, which justifies expansion over ensuring the security of existing clubs. Their desire to be number 1 nationwide stretches their resources at the expense of their clubs. They are hoping their investment works out long term, otherwise its a fruitless exercise.

So my question is, are the ARLC likely to follow this model? Is this a no-brainer strategic vision or can it be done without stressing the clubs?

 

[Perth Red]

Have you guys seen this article: AFL chief Andrew Demetriou reveals debt of all 18 clubs is the worst in competition's history

If they're not using the TV money to make the clubs stronger, what are they using it for?

They are, whilst clubs are losing the money the AFL continues to bail them out, both from extra grant funding to struggling clubs and a ticket levy that takes money from the profitable clubs and gives it to the weaker ones.

They have also invested massivey in expansion which has more than paid dividends in the last two TV deals they have signed. Having said all that just like over stauration in our markets they face the same problem in Melbourne and no doubt at some point in the future will have to deal with that.

Interesting to read that AFL have invested over $50mill in GWS already!

According to this AFL had an income of $343mill last year, more than double the NRL's. TV deals aside the ARLC needs to find ways of matching the AFL's other income streams.
http://news.smh.com.au/breaking-news-sport/league-demetriou-lose-money-20120217-1td58.html

 

[Cheesie-the-Pirate]

Have you guys seen this article: AFL chief Andrew Demetriou reveals debt of all 18 clubs is the worst in competition's history

If they're not using the TV money to make the clubs stronger, what are they using it for?

And likewise, surely the NRL would use the new TV deal to strengthen the clubs first and foremost? Is there any reason they wouldn't?

The article implies that these clubs are not doing well, but there's not a lot of fact in the article. Gross debt is a completely meaningless figure. With professional sports clubs (of all codes) always growing in size and normal inflation it would be damned surprising if the overall trend in gross debt of football clubs wasn't up with new records set regularly. Meaningful figures would be net assets, debt to equity, interest coverage ratios, etc. Gross debt just means they owe a certain amount of money - but says nothing about the organisation's ability to actually service these debts.

 

[VictoryFC]

So my question is, are the ARLC likely to follow this model? Is this a no-brainer strategic vision or can it be done without stressing the clubs?

Doc Yeah can't argue with that, agreed.

We'll have to see what the commission indicates.

The extra money that is going to come has to be shared among all different interests. The biggest stress will come from the players, when the salary cap inevitably increases.

But consider that a market NRL are looking at is Perth. AFL have no such market of the sort. Their last two expansion efforts were GC and GWS. Not even close to the potential of Perth.

Expansion would absolutely put a strain on any comp, as resources are diluted, but I think the one of the keys for the commission is that they have the Perth card to play. The other expansion, assuming it goes to 18, will be more of a burden.

 

[VictoryFC]

The article implies that these clubs are not doing well, but there's not a lot of fact in the article. Gross debt is a completely meaningless figure. With professional sports clubs (of all codes) always growing in size and normal inflation it would be damned surprising if the overall trend in gross debt of football clubs wasn't up with new records set regularly. Meaningful figures would be net assets, debt to equity, interest coverage ratios, etc. Gross debt just means they owe a certain amount of money - but says nothing about the organisation's ability to actually service these debts.

Fair point. There is an unnatural fascination in Australia and the US with profitable and debt free clubs. A lot of the time its serviceable, and not really an issue. But in regards to Auskick, Port are definitely a trouble club for the league.

 

[docbrown]

According to this AFL had an income of $343mill last year, more than double the NRL's. TV deals aside the ARLC needs to find ways of matching the AFL's other income streams.
http://news.smh.com.au/breaking-news-sport/league-demetriou-lose-money-20120217-1td58.html

The new TV deal, increased memberships and increased marketing exposure will bring the NRL close to parity.

 

[Perth Red]

The new TV deal, increased memberships and increased marketing exposure will bring the NRL close to parity.

Let us hope so, that figure doesn;t include the increase from their $1,25 bill deal which will take their income up to $450mill a year by next year. Nrl's is under $200mill currently so we have a lot of ground to make up.

 

[docbrown]

Expansion would absolutely put a strain on any comp, as resources are diluted, but I think the one of the keys for the commission is that they have the Perth card to play. The other expansion, assuming it goes to 18, will be more of a burden.

Well think of this way, by 2050 in the populations that teams could service -

Cowboys - 600,000+ plus hopefully another 350,000 in NT
Central Qld - 500,000+
Sunshine Coast - 600,000+
Brisbane - 4,000,000+
Gold Coast - 1,000,000+
Newcastle - 1,000,000+
Central Coast - 600,000+ plus another 1,500,000 in Sydney
Sydney - 7,000,000+
Wollongong - 500,000+
Canberra - 500,000+
Melbourne - 7,000,000+
Adelaide - 1,800,000+
Perth - 4,000,000+

In NSW, QLD AFL would have 4 teams directly servicing 12,000,000 people but would be neglecting 8,000,000 more.

Meanwhile the NRL would have 14 teams covering their home states (or up to 18 after expansion) with a population of 20,000,000 - more than 1,000,000 per club.

Sure you might get big crowds with a ratio of 3,000,000 per team - but you'd still get equally as big crowds with 1,000,000 per team plus the fact that the 14-18 teams means there's more overall general interest.

Not to mention that Melbourne storm plus 3 teams in Adelaide, Perth and a second Melbourne side would likewise be split to 3,000,000 per team.

The advantage therefore remains to the NRL. Hence why I maintain a long term goal of 24 teams across Australia and New Zealand with minimum population supports of 1,000,000 per team.

 

[VictoryFC]

Yeah agree. That 1m+ population base in particular is key. One of the reasons I wouldn't be keen on SC or CQ. There growth is limited at best

 

[docbrown]

Well I think in heartland states you can give it a bit more leeway because the support is stronger overall.

 

[Lockyer4President!]

Let us hope so, that figure doesn;t include the increase from their $1,25 bill deal which will take their income up to $450mill a year by next year. Nrl's is under $200mill currently so we have a lot of ground to make up.

We don't have the $$$ from memberships that they do (yet! ) but RL clubs have fewer players and can run on a smaller budget. We don't necessarily need the same yearly income to gain the same benefits.

 

[Poupou Escobar]

The article implies that these clubs are not doing well, but there's not a lot of fact in the article. Gross debt is a completely meaningless figure. With professional sports clubs (of all codes) always growing in size and normal inflation it would be damned surprising if the overall trend in gross debt of football clubs wasn't up with new records set regularly. Meaningful figures would be net assets, debt to equity, interest coverage ratios, etc. Gross debt just means they owe a certain amount of money - but says nothing about the organisation's ability to actually service these debts.

I understand all that - I have investment debt of my own that I'm not too interested in paying down right now. My question is more why Demetriou is making such an issue of reducing this debt. Surely this means the clubs are overgeared?

 

[Brutus]

http://www.abc.net.au/sport/offsiders/

Some interesting debate about the Commision and TV rights here.

I fully agree with Gerard Wheatley's comments at the back-end of this chat regarding people being able to view every game live.

 

[Perth Red]

We don't have the $$$ from memberships that they do (yet! ) but RL clubs have fewer players and can run on a smaller budget. We don't necessarily need the same yearly income to gain the same benefits.

That is the AFL's income, not club income. I don't think the AFL get a cut of club membership income?

Agree running costs are lower than AFL but the AFL doesn't fund most grass roots football like the ARLC will have to do.

 

[ElectricEelMan]

But consider that a market NRL are looking at is Perth. AFL have no such market of the sort. Their last two expansion efforts were GC and GWS. Not even close to the potential of Perth.

Expansion would absolutely put a strain on any comp, as resources are diluted, but I think the one of the keys for the commission is that they have the Perth card to play. The other expansion, assuming it goes to 18, will be more of a burden.

Expansion doesn't necessarily have to put a 'strain' on a comp. If done right, it can do the opposite and bring even more value. I think Perth and another Brisbane team would do this.

Just as long as the NRL doesn't go down the AFL path and put expansion teams in already saturated markets and into areas that don't really need or want a team.

AFL expansion into the GC and western Sydney will go down in history as one of the most misguided ventures in Australian sporting history.

 

[kurt faulk]

http://www.abc.net.au/sport/offsiders/

Some interesting debate about the Commision and TV rights here.

I fully agree with Gerard Wheatley's comments at the back-end of this chat regarding people being able to view every game live.

how do people expect fta channels to pay big bucks for the rights if they can't jam in the commercials during telecasts?

rugby league is a game with few stoppages that allow commercials to be run. unless people want stoppages artificially inserted into the game to allow the fta station to play commercials during the game i think people better come to the realisation that a couple of games have to be delayed so the fta channel can make it's money back and more.

.

 

[Poupou Escobar]

The old guard will kick and scream about 'Americanisation', but rugby league needs to be played in quarters. For the extra TV revenue if nothing else.