Mister Football

Canterbury has Collingwood in its sights

2011-02-15T03:52:00.000-08:00

Last week the Sydney Morning Herald reported that Canterbury Bulldogs legend, Steve Mortimer, had declared that in the very near future the " Bulldogs will overtake Collingwood ".

Obviously such a bold declaration is intended specifically for a Sydney audience. Nevertheless, the claim is there and it does warrant some further investigation.

Firstly, let me begin by stating unequivocally that all Australian sporting clubs and competitions have every right to aim high, and for professional clubs in particular, we would expect no less.

On this occasion, one can rightfully wonder whether it's just an off the cuff remark, to be taken with a grain of salt, or whether someone like Mortimer, no stranger to the broader Australian sports market, truly believes Canterbury can catch Collingwood, within three to five years no less.

Collingwood is the best known club in Australia's premier football competition. No other club has achieved as many wins in the past 114 seasons, made the most finals or the most grand finals (unfortunately for them, they have lost more than they have won, giving rise to the now iconic Colliewobbles).

Some clubs will lay claim to higher numbers in certain metrics. Essendon and Carlton have achieved one more premiership than Collingwood. For a short while, Hawthorn achieved more memberships. There have been seasons when the Eagles and Crows have posted larger profits.

It was recently reported that the Swans have the highest level of sponsorship of any sporting club in Australia.

But no one else has the cachet of Collingwood, garnered over a period of 120 years, built on making it their business to get up everyone else's collective nose.

That's in the AFL.

Looking more broadly across the football codes, the annual sports surveys reveal a higher level of popularity for teams such as the Broncos and Swans, one town teams in their respective leagues.

Even the Storm challenges on this count, surprisingly.

But when we start looking carefully at the metrics that matter, those that have dollar signs attached to them, Collingwood leaves everyone behind.

Some Australians might be surprised to hear that Collingwood sits right up there amongst the most famous clubs in the world in terms of average attendances, 63,256 in 2010: marginally below a famous club such as Bayern Munchen but above even more famous clubs such as Arsenal, AC Milan, Internazionale, Celtic, Manchester City and Benfica.

This season, Collingwood is on track to sell well above 60,000 memberships, maybe even breaching 65,000, easily the highest of any club in the land (in fact, some leagues in aggregate struggle to reach this mark).

It's not surprising to discover that Collingwood has one of the largest revenue bases of any sporting club in Australia, with 2010 revenue reaching $75 million.

The highest NRL revenue figure was the Broncos with $22 million. Don't worry about any of the A-League clubs, they're a few tiers below that again.

In the meantime, with Collingwood seriously staring at a 65,000 membership figure in 2011 (50k+ already sold), Canterbury have sold about 9,000, and will be lucky to make 14,000 for the season.

Average attendaces last season for Canterbury were around the 20,000 mark, very good for the NRL, but in all honesty, Collingwood is in an altogether different league.

In the next three to five years, or even in the next 10 years, it's impossible to imagine any team outside of the AFL getting anywhere near these numbers. If it were to happen, I doubt it would be Canterbury.

If Collingwood win a consecutive premiership this year, you can probably forget about it for at least the next 25 years.

Stifling World Cup Debate

2010-11-07T01:48:00.001-07:00

There has been much vigorous debate across a range of sporting forums about the merit or otherwise of Australia's bid to host the World Cup in 2022.

It would be an understatement to declare that it has been quite a divisive issue, with the majority of soccer fans (and others keen on hosting the World Cup) demanding that the AFL give in to every request from the FFA, regardless of the practicalities of such requests, while a significant proportion of AFL fans are quite supportive of the AFL's priority in looking after its competition and its stakeholders first and foremost.

So passionate have many soccer fans become about the issue, in a range of forums that I have frequented, that anyone daring to defend the AFL's approach has been subject to charges of treason and much worse, including no end of personal vilification.

On top of that, the logic from the soccer side is completely lacking, especially the widespread view that a commercial organisation should give up its assets, with zero compensation, to a rival business.
Some of this irrationality can be excused by the lack of understanding from our Northern friends about the very long-term leases the AFL has entered into in relation to its two primary stadiums in Melbourne; arrangements, it has to be said, that are to the mutual benefit of the AFL, the Victorian Government, the MCG Trust, the MCC and the sporting public generally.

But I have to say, the vindictiveness with which many soccer fans have responded to being advised of this state of play suggests that many do not really want to know the reality, but would rather dream the impossible dream (hoping that a military junta might take over all levels of Government and forcibly appropriate the said stadiums).

Another peculiar pattern I've come across is the ease with which those supporting the AFL (who have the law and commercial reality on their side) are cast as the bad guys amongst both soccer fans and the moderators of forums who are ostensibly are arbitrating as neutrals.

For instance, the Roar sports opinion site has effectively barred all five or six regular AFL posters from its site, when a casual inspection would indicate that it is generally they who are the subject of personal abuse, and there is no end of denigration of our national game to be found either.

I keep in touch with few and we honestly can't fathom it, giving each other virtual looks of puzzlement over the web.

Now I half expect that from a Sydney-centric site, whose business model probably allows for followers of the other three sports to come on board and express their collective envy at the success of our national game, but what of Big Footy?

Shouldn't an AFL fan on Big Footy expect to be able to put forward an opinion defending the AFL's stance, and also expect that they would not have to put up with personal abuse in the process?

Not one bit!!

Even on there, I too have been barred from entering the World Cup board. The reason provided was that I was a "disruption" and that since the thread is about soccer, someone with alternative views is not welcome.

There are a few odd aspects about this:
1. I re-entered this thread following Frank Lowy's recent lambasting of the AFL and its tough negotiation on the MCG. Many from both sides would agree that it was odd timing by Lowy, something worthy of debate by anyone with an interest in the subject.
2. Intended or not, once again there was great misunderstanding from soccer fans about the long term leases on both the MCG and Etihad - surely some clarification from someone who knows would be in order?
3. I was quite civil with my comments, and received a good deal of personal abuse in return. Yet it was I who was barred!
4. Eight of the recent threads on the board sounded like PR pieces about how wonderful the bid is, how good the chances are of Australia winning, etc.

Promotion or discussion?
On the last point, if a board exists purely to promote something, and allow only positive, supportive posts at whatever is being promoted, then it ceases to be a true discussion board, and that is the real issue with the decision of the moderator to bar me from that board just because I have an alternative opinion to offer.

Surprisingly, the soccer forum on FourFourTwo has allowed me to offer alternative views, much to the chagrin of all those behind the WC bid (all credit to the moderators who have been quite fair).

Very strange happenings all round.

World Cup Economics

2010-08-11T07:50:00.000-07:00

Dennis Coates, Professor of Economics, University of Maryland Baltimore County, and immediate past President of the North American Association of Sports Economist recently published the following article: World Cup Economics: What Americans Need to Know about a US World Cup Bid (http://www.umbc.edu/economics/wpapers/wp_10_121.pdf).

His argument is straightforward enough, that hosting a World Cup does not result in an economic windfall, rather, “it will likely cost the United States billions of dollars in lost economic impact”.

The only winners in such large events are FIFA, and those sports who benefit from a large amount of taxpayer funds being directed towards them.

The Story always starts the same

As other economists have noted in earlier studies, the hosting of big sporting events follow an eerily similar pattern: a downwards estimate of the likely cost, and an exaggerated forecast of the economic benefits. Invariably, these claims are made by those hired by the organising committees, or those who stand to gain financially or politically – they are never the result of independent, peer reviewed, economic analyses. Furthermore, rarely are the assumptions and details behind the estimates given wide circulation.

Needless to say, the economic benefits never, ever materialise (certainly nowhere near the quantum forecast), and the cost blow outs are always, always, in the order of six-fold or more, i.e. the total costs are ultimately of such an order that any hope of a net economic gain would have disappeared long ago.

As Professor Coates wryly states: Ultimately, the evidence to justify claims of large gains in the economies of host cities or countries does not exist. Few analysts who aren’t in the employ of the event boosters have ever found such events to pay for themselves in a purely dollars and cents view.

Professor Coates makes the important point that in analysing the effects of additional tourism during a sporting event, it’s net new tourists that one needs to identify, taking into account drop offs in tourism before, during and after the event, as well as the additional outward movement of local residents (to avoid the events and/or to take advantage of discounts).

Impacts of recent World Cups

Despite the fact that Germany is in the middle of Europe, with excellent infrastructure, and with 300 million soccer fans less than a day’s train travel away (the perfect storm in terms of hosting a World Cup), there was a lack of a statistically measurable economic impact from hosting the World Cup in 2006.

Similarly, four years earlier, the number of visitors to South Korea was “identical to the number of foreign visitors during the same period in the previous year”.

Without substantial increases in net tourism as a direct result of the event, there is little hope of a net economic gain resulting from the event.

In the German example, retail sales were actually lower during June-July 2006 compared to the same months from the previous year.

The economic impact (or lack thereof ) on the US for the 1994 World Cup is even more stark, despite the fact that it was quite a successful World Cup all round.

Despite an initial estimate of a net $4 billion economic gain for the US, researchers discovered after the event that the average host city had experienced a reduction in income of $712 million relative to prediction. Overall, the initial estimate was $13 billion out.

Tricks of the trade

The unfortunate truth is that Government ends up commissioning economic impact studies to legitimise a political position rather than to search for economic truths. What’s more, even credible accounting firms end up writing reports riddled with qualifications, and offering no critique of the original assumptions handed to them by their clients, regardless of how outrageous they may be.

The more mischievous consultants will utilise two favoured techniques to boost the numbers:
1. Include spending by locals, which boost the numbers way beyond those that should be included in analysing net economic impacts; and
2. Add the costs, often funded by taxpayers, to the total economic benefits.

Unfortunately, as we have seen in the Australian example, such reports are never, ever released in their entirety, and experienced commentators are forced to pass judgement on the very limited information that is revealed.

In analysing the reports commissioned by the US organising committee, Professor Coates reaches the conclusion that the chief goal is for the “citizens of the US to pay for a vast marketing campaign to enhance the profitability of many committee members’ investments in the soccer business.”

And with FIFA clearing billions of dollars in profits, Professor Coates quite rightly asks why host cites “are even required to help fund the event.”

The obvious reason why initial costs estimates are so low is because it’s in the best interests of the event boosters and politicians for that to be the case. Quite clearly, if the true six-fold cost is known, it’s unlikely to get approved.

We all understand that stadium costs are significant, but in fact, many might be surprised to learn that a lot of the cost ends up being in the form of current consumption (i.e. not involving capital investment), on such things as cleaning streets, adding police patrols, security, insurance, decorations, general tarting up and meeting the constant requests from FIFA and the teams.

Professor Coates mentions an unusual expense that is not widely known, that of extortion by foreign soccer teams, demanding payments from towns to host them for training. In 2002, Brazil demanded a total payment of $3.3 million from Hiroshima City to use them as a training site. Another smallish town of only 1,400 spent nearly $700,000 to get Cameroon to train there.

Conclusion

In the context of the very strong evidence of negative economic impacts from other World Cups, the self-interest of event boosters combined with the fact that so little information is disclosed to the public leads Professor Coates to the conclusion that “the US taxpayers are better off saying no to an expensive and secretive World Cup bid.”

All Quiet on the Eastern Front

2010-07-27T23:12:00.000-07:00

As the FFA leads a bunch of FIFA dignatories through their whistle stop tour of Eastern Australia, I am puzzled by some pertinent matters.

Yesterday I read that despite the fact that the FIFA dignatories come equipped with their own mobile media office, the FFA has deemed them off limits to our own press, with all media releases coming through the FFA.

As reported by FourFourTwo:
Media silenced as FIFA arrive.

There will be no nasty questions directed at the FIFA delegates, thank you very much!

Here's another interesting aspect, both the PM and opposition leader met with the FIFA delegates.

No surprise there, except here we are in the middle of an election campaign, and neither of them is making a big song and dance about it.

There's no: I'm 100% behind the bid; this will put Australia on the map and be the making of this country; a zillion tourists will visit us and underpin our economic prosperity for the remainder of the millenium; we will spend billions of dollars on infrastructure, etc.

No, nothing.

If I didn't know any better, it's a case of: don't mention the war.

Allegations of match fixing in SA

2010-07-09T14:49:00.000-07:00

I was listening to BBC radio this morning and heard this story about how FIFA are aware that the Nigerian team may have been involved in match fixing, and is being investigated.

A sports writer, Declan Hill, was interviewed. He has written this highly recommended book, The Fix (http://www.howtofixasoccergame.com/), and runs this blog discussing match fixing:

http://www.howtofixasoccergame.com/blog/.

What Declan had to say on BBC this morning is quite convincing.

FIFA has an early warning system on match fixing that relies on unusual movements in the betting market.

But the problem is that this focuses on the legitimate betting market, which is absolutley dwarfed by the illegitimate betting market.

In fact, this illegitimate betting market (controlled by Asian organised crime syndicates) is so massive that it not only dwarfs the legitimate betting market, it absolutley dwarfs FIFA itself. About $40 billion will be processed through the illegitimate betting market during this WC.

Add to that the following key elements:

1. teams from third world countries where players rarely get paid for NT duties;

2. refs from third world countries

3. the fact that refs control absolutely every aspect of a match, can allow and disallow goals on a whim with zero explanation, can give penalties on a whim, have them retaken, can send players off on a whim, and can end a match whenever they want

4. a game that is traditionally low scoring, especially in the early rounds of the WC where nil-all and 1-0 results are quite prevalent.

It's common knowledge that most of the Asian confederation is absolutley riddled with match fixing (that's the one we're in), and it's only a very small step for such large crime syndicates to get their claws into the WC.

Declan points out that he has corroborated evidence that for the last 20 years, these Asian match fixing syndicates have been at every level of world championships (U17, U20, Olympics, womens, etc).

So next time you ponder a match where neither team appears to have the energy or inclination to attempt to score, or where the only goal of the match has come about in bizarre circumstances, or where the winning goal has been disallowed in bizarre circumstances (e.g. Slovenia vs the US) - spare a thought for these Asian match fixing crime syndicates.

Collingwood footballers more skillfull than Victory soccer players

2010-07-07T21:04:00.000-07:00

Many on this board are familiar with my love affair with soccer, having watched every World Cup on TV since 1978.

But many would equally be aware that I do not take too kindly to my fellow countrymen denigrating the great Australian game, and that icon of Australian manufacturing and innovation, the Sherrin.

I especially object to Australian soccer fans exaggerating the prerequisite skills of soccer vis-a-vis Australian Football, and take great relish in pointing out the deficiencies in their obviously biased appraisals.

We now have some documented evidence that should end this particular discussion once and for all.

A young lad by the name of Adam Santarossa has received plenty of coverage in the Melbourne press, having lived for the whole period of the World Cup in a giant sized replica Jabulani ball on the banks of the Yarra, watching every 2010 World Cup game.

He has received visits from plenty of well known people, including AFL and Victory footballers.

All his guests are required to dribble a soccer ball around some posts positioned around his current temporary home.

Collingwood footballers Harry O’Brien and Dale Thomas scored the more than respectable times of 14.13 and 14.89 respectively.

Very good times when you consider that Victory duo, Adrian Leijer and Leigh Broxham scored the less flattering times of 14.37 and 18.78 respectively.

Let us bear in mind that both Leijer and Broxham are very recent members of the Olyroos, and have both won championships with the Victory (two apiece).

We all know that O’Brien has part-Brazilian heritage, so there is little surprise that he is a whiz with both shaped balls.

With Dale Thomas, well, let us be honest, put him in a ribbon, and he’d look at home out on the soccer pitch in South Africa.

Either way, we now have irrefutable evidence that the overall skill level of your average AFL player surpasses that of your average soccer player.

Source: The Age, 8 July 2010

Canberra Times article: Some dubious and bodgy games

2010-07-02T20:22:00.000-07:00

Jack Waterford is a well known Canberra correspondent who is the Editor-at-Large of The Canberra Times. Very knowledgeable about federal politics, he writes a weekly column in the Saturday Forum lift-out, which is a must read for all Canberra watchers.

Seeing that he is not really a sports nut as such, when he has something to say about dodgy practices, political or otherwise, you can rest assured he does it from a fairly neutral and objective stand point.

Today he has written about a whole lot of current sporting issues that are unified by the theme of political maneuvers of questionable morality.

I can’t find an online link, so I well summarise some of the more salient points, with the odd pearler of a quote thrown in. But if you can track down the article, I highly recommend it because Waterford is a very intelligent writer with a way of cutting through to the heart of the matter.

He begins with the statement that the John Howard rebuff, the World Cup bid and the UN Security Council all have one thing in common – they are part of a search for Australian influence in the world.

Given the propensity for a significant chunk of the Australian population to seek out some sort of greater recognition on the World stage (otherwise known as cultural cringe), the environment is there for a cast of shady characters to push all sorts of “ridiculous ideas”, and invariably these same people stand to gain personally at taxpayer expense.

Waterford says: “Lobbyists and some respectable consultants prostitute their craft to estimate, without any responsibility or accountability, that umpteen millions will flow in from visitors, that a critical mass of expertise will occur, or that the value of having images of Australia or Australians on international TV screens will be worth specified millions” (actually, in the case of this WC bid, the FFA consultants actually estimated billions!)

“The economics is almost invariably bodgy, the spin-offs very dubious.”

The attraction of a false bargain becomes even more exaggerated anytime these very same shysters stand to gain via bribery and corruption, and by “arse-kissing of the most repugnant people imaginable, followed by a range of local corruptions and inefficiencies as government and business are dragged from their proper priorities to playing handmaiden for the event’s success”.

Waterford makes the point that many of us have made over and over, if the World Cup was to guarantee endless economic riches, one would expect that the “spruikers would put up more of their own cash, and that they would devote less time to extracting money from various levels of Australian government.”

As we know, to date, the very same spruikers have not offered up one red cent.

Despite all the evidence to the contrary, “politicians, city fathers and business urgers will do such things over and over again, not for the glory or economic benefit of their state, but because they find that spending our money gets them in the spotlight, for what that’s worth.”

The bigger the event, the more likely that corruption will follow, especially where the bulk of the decision-makers come from third-world countries.

This then leads otherwise decent, ethically inclined Australians to justifying “presents, prostitutes, under-the-lap payments, incentives, consultancies and boarding school fees as the price which must be paid” (witness Les Murray’s outburst questioning the temerity of any news outlet to investigate where the taxpayer dollars are heading).

The bottom line is that Australians end up being every bit as corrupt as “and morally worse than those whose palms they’ve greased”.

Waterford rightly asks: “if it’s wrong for a wheat firm to bribe an official, it’s no les wrong for a soccer official to do it”.

Waterford concludes: “One day, indeed, we might get over our national anxiety and neurosis about our standing in the world, and let things happen on their merits.”

The Basic Tenets of Australian Football

2010-06-20T21:52:00.000-07:00

Having the opportunity to watch the odd soccer game during this World cup, the greatest show on Earth, has allowed me to ponder the game vis-a-vis Australian Football in terms of the philosophies of both games.

It is worthwhile reviewing the philosophical foundations of the great Australian game:

1. Always keep your eye on the footy, come what may;

2. Get your head over that footy, regardless of the consequences;

3. Run straight at the footy, regardless of what's in the way;

4. if you get hit, no matter how much pain you feel, get straight up and look for the footy; and most importantly

5. always, I repeat always, put your team well ahead of your own personal safety.

These central tenets are in stark contrast to those of soccer:

1. It always pays to go to ground first oportunity (and most certainly before your opponent does);

2. stay there till you know what the ref is going to do;

3. stay down anyway;

4. you are far more important than the team; and

5. if in doubt, repeat steps 1 to 3.

In The Black article: Holy Grail or Tainted Chalice

2010-06-03T21:13:00.000-07:00

I've only just received my copy of In The Black, the CPA's very own monthly magazine.

This month it has a lengthy article analysing the pros and cons of hosting a large sports event like the World Cup, mostly from a financial/economic perspective.

One thing about both Chartered Accountants and CPAs, they pride themselves on their independence, and that's a good starting point for this sort of article.

Although I must give a word of caution, whenever we have a situation with Government wanting to throw around billions of dollars of taxpayer money, inevitably even the most independent of operators will find the lure of filthy lucre far too enticing to put their professional principles to one side.

This article appears to do a reasonable job at showing both sides of the argument, so it's instructive to have a bit of a look at it.

It refers to a consultant's report sought directly by South Africa's World Cup bid committee which estimated that the equivalent of $3.1 billion would be pumped into the nation's economy.

However, FIFA's inspection report noted that the underlying prediction of revenue from ticket sales may be hard to achieve.

The article talks up the intangible benefits. The CEO of the International Marketing Council of South Africa, Miller Matola, refers to the World Cup being a "confidence booster".

Even Craig Foster is quoted: "Football globally recognises it can change regions of the world. It changed the German's perception of themselves."

Then we get to the nub of the matter, and I quote the article: "Despite all this ebullience, there are plenty of reasons not to play host to big sporting events, according to an outline for the Global Sport Industry Summit to be held in Paris at the end of September."

We are then told about the massive cost runs that occur routinely across the board with these sorts of events:
• Athens estimated a cost of US$1.6 billion to host the Olympics and it ended up costing a staggering US$16 billion (which has contributed directly to Greece's current economic plight).
• Beijing also estimated a cost of US$1.6 billion, but current estimates of the final cost are a bewildering US$30 to US$40 billion (and counting).
• London was originally budgeting on a cost of less than US$5 billion, but that's already blown out to US$19 billion (and counting).

In relation to hosting World Cups, the economic record is patchy, at best.

The US economist, Dr John Irons, says: "The historic experiences of past hosts show that countries are about as likely to see lower economic growth in the World Cup year as they are to see higher growth."

In 7 of the last 13 World Cups, economic growth in the year of the World cup has been slower than in the two years leading up to it. On average, economic growth is slower in the year of the World Cup than in both the two years before and after the event.

It might well be a large number

2010-05-10T03:10:00.001-07:00

Some sectors of sports fandom within Australia are currently having a chuckle over the fact that the AFL has voluntarily labeled itself as not being a “major event” in the context of Australia’s 2018/2022 World Cup bid.

This follows the recent news that all relevant sports bodies have reached agreement with the Federal Government on the way forward in relation to the bid and the stadiums required should the bid be successful.

In between sharing much mirth, those same fans are probably failing to read between the lines of what has actually been agreed the last 24 hours, so I thought I would do my best to highlight some salient points, helping readers reach some clear cut conclusions.

The first question that everyone should ask is why the largest and most prosperous sporting body in Australia, which runs the most successful sporting competition in the land, would willingly suffer the ignominy of labeling itself as minor?

Our first clue is in the following ABC report that appeared on their website Monday afternoon: http://www.abc.net.au/news/stories/2010/05/10/2895254.htm

When asked about the possibility of compensation, the AFL’s chief operating officer, Gillon McLachlan, responded as follows (also replayed on Fox Sports News):

"We can't forecast that...what we know is the formula's there, not to provide a windfall gain but to provide that we're not any worse off. The number will be the number. Given we're a billion dollar industry now ... and half the games could potentially be impacted, it might well be a large number."

This follows on from an ABC report on the AM show on Monday morning, where the interviewer suggested it will be “tens, if not hundreds of millions of dollars”.

In the same program, it was suggested that the bill for compensation would be met jointly by the taxpayer and the FFA.

All of this reminds me that exactly six months ago I estimated a figure of $300 million to compensate the AFL for a disrupted season (at the time that included both the MCG and Etihad being lost to the AFL for 10 weeks).

That figure might be reduced by about a third now that Etihad is being retained by the AFL.

The other thing I suggested at the time was that the dividend the German FA received back in 2006 would only cover a small fraction of that estimated compensation figure.

Now put yourself in Andrew Demetriou’s shoes, negotiating directly with the Federal Government (with the FFA having been sidelined a few months back).

Now do you see how this story ends?

PM working on the big issue

2010-04-21T00:34:00.000-07:00

It's now almost 8 weeks since the Sport Minister's own deadline to her taskforce that all the stadium details for the World Cup bid be worked out with the various levels of government and the relevant sporting bodies.

It's also 3 weeks since the head of the FFA announced that we were ready to finalise those very same details and that all relevant parties were now in agreement. That the date of that announcement was April 1 may or may not be significant.

It would be incorrect to think that there has been inaction on the government side.

For weeks now, there has been furious negotiating and bargaining over a kitty that is well into the billions of dollars. We've seen claim and counter claim, public misgivings aired, back downs, claw backs, set backs, with federal and state public officials burning the midnight oil in an attempt to resolve a litany of intractable issues.

Yes, the Prime Minister is on the verge of nutting out a deal with the State Governments to put into effect his much vaunted plan for national health reform.

But here is the rub, the taskforce involved in organising the World Cup bid is in the same department as the one that's been in meltdown over the last few weeks on this major issue which is bound to frame the forthcoming election.

Ask any Health official where the World Cup bid sits in relation to the health reform question, and they are bound to give you a quizzical look.

Not because the order of priority is obvious, but because they are unlikely to have any idea that there is such a taskforce lurking in the depths of their department.

This goes back to the obvious question I raised from the moment the taskforce was announced: if the Prime Minister was truly interested in the World Cup bid as a high priority, needing cooperation from all States, Territories and national sporting bodies, why did he not create the taskforce in his own department, which is generally geared towards running with the PM's priorities (and banging heads together when the need arises).

With the May deadline now hurtling towards us, I think we have our answer.

Where is the World Cup Government taskforce at?

2010-02-28T13:36:00.000-08:00

When the Federal Government established a taskforce in early January to take over the running of Australia’s World Cup bid from the FFA, it gave itself a deadline of the end of February to complete all stadium negotiations in readiness for the bid book which is due in May.

I’m not sure if anyone has noticed, but it is now the first day of March.

So what have we heard in the last six weeks or so about how the taskforce is going with this delicate exercise?

We’ve heard nothing.

In recent weeks, the only news we have heard that has anything to do with the World cup bid is that:

1. Etihad Stadium has confirmed that it has no interest in hosting World cup games (its management said as much back in November last year); and

2. The President of the AFC has urged all five member nations who are bidding for 2018/2022 to put forward one nation only (and no prizes for guessing which nation the Pres would think is the appropriate one to put forward).

So the public is left to surmise what to make of this impasse. These are my educated guesses.

State Governments

At least three state/territory governments have no interest in spending any money on anything to do with the World Cup, namely WA, SA and the ACT.

Why? For two reasons:

1. The cost, not only of stadium development, but everything to do with staging the World Cup, far, far surpasses any perceived benefit; and

2. Given that there is no World Cup bid without the participation of all three, there is actually no incentive for any of them to put their hand in their pockets, their view is a simple and proper one: if the Feds want it bad enough, let them pay for it 100%.

Dire Financial Straits

Following on from the last point, none of the State Governments, nor the Federal Government itself, is in any great shakes in relation to their respective budgets.

In fact, with an election round the corner, and a budgetary situation that shows no sign of improvement over the next four or five years, the Commonwealth is hardly in a position to splash the cash.

The various states are in an even worse position.

Administrative niceties

Strip away the emotion, the passion, the willingness to put in the hard yards, the longing for glory from so many quarters, and we’re left with the hard cold reality of putting the deal together.

And while the FFA continues to lobby for a blank cheque, and while the Prime Minister and his senior advisers are happy to promise it, fortunately for the taxpayer, we have learned officials from the Attorney-General’s department, the Finance department and the Treasury, advising their superiors that it’s not that simple.

There are processes to go through, not just to appropriate the necessary money, but to commit the Commonwealth to all those contingent liabilities that may ultimately go out up to fifty years.

What Minister would want to officially sign off on a guarantee that in dollar terms is greater than the annual Commonwealth budget?

Hopefully one day in the future we will recognise those public officials who ultimately saved the Australian taxpayer’s collective bacon.

Australia's bid not competitive

2010-01-21T16:07:00.000-08:00

Doing the rounds in the various sporting forums, one notes a hint of pessimism creeping into the thought patterns of otherwise eager football fans in relation to Australia's bid to host the World Cup in either 2018 or 2022.

There are good reasons for this pessimism. Assuming that our very best chance is 2022, I would summarise the reasons as follows:

1. Host Cities

Australia's eight largest cities include the five mainland capitals plus Gold Coast, Newcastle and Canberra, and these would be your starting position if you were to put forward a list of suggestions.

The ACT Government has already publicly distanced itself from the possibility of fronting up the $200 million price tag (plus other costs and indemnities), and the two cities with the least need for large rectangular stadiums, Adelaide and Perth, are also looking iffy.

While both Adelaide and Perth have ovals that need upgrading, and which might be used for a WC bid at a pinch, both have been big on talk of late, but lacking in political will and decisiveness.

Thus doubts remain on three of our eight largest cities.

2. Stadiums

Following on from the last point, if you're lacking in host cities, there's a real good chance you'll be lacking in stadiums. The accepted wisdom is that we have five stadiums that pass muster, but that would still need money spent on them, and that seven stadiums would virtually need to be built from scratch or at a minimum would require large scale and expensive upgrades.

The Australian Financial Review quoted one state government insider on 9 November 2009: "Australia's chance of actually making a serious bid is somewhere between zip and zero because they want us to spend billions of dollars on stadiums and there just isn't a market for it".

Only today I have discovered that The Asian Football Confederation has extended the deadline for Australia to submit its bid to host the 2015 Asian Cup by four months.

This is so the FFA can "continue discussions with various levels of Australian government and other stakeholders to formalize the relevant guarantees and facility agreements, which are part of the bid submission.
See USA Today article.

3. Finances

I was listening to the Prime Minister only this morning talking about the need to tighten our belts fiscally because the Commonwealth's budget deficit is already in the tens of billions of dollars, and most of the states are no better off (relatively speaking).

The Australian Financial Review quoted one state government insider on 9 November 2009: "The states are furious about the bidder requirements, they are very very unhappy. We would be hard-pressed to find that money and we have got so much else that we have to spend money on. There are not any promises from the commonwealth that they will shovel any money in to build all these stadiums."

Conclusion

Note that I have not even touched on the issue of the AFL withholding Etihad should it become apparent that the FFA needs it for the bid.

Nor have I touched on the US bid which features 18 potential host cities, and 21 magnificent rectangular stadiums, every one of them above 67,000 in capacity.

All in all, it's very difficult to see us putting up a competitive bid.

Censored by the soccer censors

2010-01-19T17:53:00.000-08:00

My last post was about the merry-go-round of money that was reported in both the Herald Sun and The Australian, in which, Government hands over substandial public money to the FFA, the FFA engages a lobbyist that uses an ex-Labor Minister, who is employed to lobby government and the taxpayer, and the same firm then passes some money on to the Labor party as a donation.

Certainly worth a bit of scrutiny I would have thought.

I prepared an almost identical article for The Roar to publish online, which they did, here:
The Roar - Government lobby groups pollute world cup bid

Soccer fans appear to have ignored the fact that this story was published in the Herald Sun and The Australian, and have absolutely launched into me en masse, for, well, I'm not sure really.

They have banded together, in a very concerted and organised manner, and have used a function offered by The Roar to essentially censor every one of my posts - regardless of what the post is about.

This has had the side benefit of making my article one of the Top 5 most read articles on the Roar, and currently has the second highest posts, which has filled me with much mirth.

But more worrying is the fact that a group of soccer fans would go to such lengths to censor posts that are basically about the accountability of public money and the scrutiny of such expenditure and who is benefitting.

It seems to me that that is a worthwhile subject, and the Roar editors certainly agreed, but soccer fans do not wish such a subject to be discussed.

Why?

This is the reason.

The World Cup will ultimately cost billions of billions of taxpayer dollars, and it's an area that if you are a soccer fan, you do not want the spotlight to be focused.

Far better that the bid proceed with zero accountability, zero transparency and zero scrutiny.

The PM will be able to bathe in the glow of victory later this year (if we are successful), and will not need to concern himself with the final cost in 2022.

When the Auditor-General gets round to telling us in 2024 that the final cost was six-fold of the original estimates, Rudd and his cohorts will be long gone.

Politically, no matter how much taxpayer money he commits, he can't lose - that's what makes this all so dangerous.

It's worth noting that the South Africa 2010 Cup has gone up in cost from an initial estimate of $2 billion rand to the current cost of $13 billion rand, a 550% increase.

Just as occurred with the Olympics in 2000, there is one thing we can be 100% confident of, the exact same thing would happen if Australia were to win the rights for the 2022 World Cup.

Taxpayer funds being used to line the pockets of lobbyists

2010-01-15T15:36:00.000-08:00

I have written at length at some aspects of our World Cup bid for 2018/2022 that are of concern to AFL fans.

Today the Herald Sun reports on another aspect of the bid that carries an equally dubious quality: Government lobby group revealed as World Cup bid's heavy hitter .

The lobby group, Hawker Britton, which boasts a former state Labor minister, has been engaged by the FFA to lobby the state governments.

Hawker Britton is a major donor to the Rudd Government, to the tune of $177,000.

So we have the highly unpalatable scenario of a lobbyist being a major donor to Government; the taxpayer funding the FFA up to $100 million for the purposes of the bid (with no strings attached, no accountability, no transparency); millions of dollars of taxpayer money finding its way back to that same lobbyist, who in turn is going to use it to lobby state governments and convince those very same taxpayers of the virtues of the world cup!!

If I didn’t know any better, I’d say that is just one very small step away from being a scam on the taxpayer designed to line the pockets of some entities.

Internal email on the World Cup taskforce

2010-01-12T19:44:00.000-08:00

The Secretary of the Deparment of Health, Jane Halton, has sent this email out to staff in the past 48 hours on the subject of the World Cup taskforce that is being run from her department:

As you would be aware, the Government is supporting the Football Federation of Australia in its bid for the 2018 or 2022 football World Cup. The bidding process is entering a crucial phase and I am pleased to announce the establishment of a high level cross-agency Taskforce within the department to provide the intensive focus that will be required.

From 12 January, Richard Eccles will head up the Taskforce as an acting Deputy Secretary. Richard will be supported by a small team comprising Jaye Smith, on secondment from PM&C, and Nick Titcume from Sport Branch within Population Health. Other staff will be added in due course and as the need arises. The Taskforce will continue to work with Sport Branch and with the states and territories to ensure that Australia has the strongest possible bid to put forward to the Federation de Football Association (FIFA).

Kerry Flanagan will continue to act as Deputy Secretary.

I would like to thank Sport Branch, for their contribution to the bid and I look forward to working with Richard and the Taskforce over the coming months.

Jane Halton

Secretary

A question that has come to me since seeing this email is this: if the PM is so keen on the World Cup, why would he set up an important taskforce in the relatively insignificant Department of Health rather than in his own department?

Any time a taskforce is required to coordinate across portfolios, and across states, if it's a significant enough issue, such taskforces are created within the Dept of the Prime Minister and Cabinet as a matter of course.

Recent examples include the CHOGM and APEC taskforcess.

But on this occasion, the PM has elected to place the taskforce elsewhere.

I can't help thinking this sends a bit of a message.

View on WC bid from the inside

2010-01-05T19:48:00.001-08:00

I've just had lunch with a good mate of mine, who happens to be a senior staffer with one of the Ministers involved in the bid (which spans a number of portfolios).

Needless to say, he is pro-World Cup bid, but he was candid enough to offer the following perspectives from inside the Government camp:

1. It's all Rudd's baby - he is the one driving it.

2. Lowy's got Rudd in his back pocket.

3. The original appropriation for the bid of $46 million, has already blown out to well over $100 million in actual expenditure, and is climbing rapidly.

4. Virtually all of the Ministers involved in the bid, in one capacity or another, are aussie rules supporters, and their main motivation at the moment is to see money directed to the further development of ovals (for footy and cricket). They otherwise have zero interest in soccer and the World Cup, and the whole trade question has not even come into their internal discussions.

5. There is wide acknowledgement amongst Government ranks that building large rectangular stadiums are a waste of public money - spending on the World Cup can only be justified if its directed to stadiums to be used by the AFL (in terms of long term use).

6. It's acknowledged that we don't stand a chance in 2018, but that we have a reasonable chance in 2022, with only the US being our main opposition (although interestingly, my mate was unaware that the US had hosted as recently as 1994).

7. Following on from the last point, none of Rudd, or his Ministers, know anything about soccer, the World Cup, FIFA, or anything related - they are going into this absolutely blind.

8. He also confirmed that all the states know that it's Rudd's baby and that he's waving the blank cheque and that SA, WA and the ACT, in particular, are not really interested in spending a cent on it. Rudd will have to come up with all of the money.

Ellis' taskforce was set up primarily to deal with the last point, but it's hard to imagine how they can except just getting the Federal Government to pay for it.

Fos sinks the boot in again

2009-12-17T21:11:00.000-08:00

Craig Foster, otherwise known as Fos, has made a habit this year of sinking the boot into Australia's domestic premier comps, the AFL in particular.

Only in the last week, Fos wrote his fourth article this year focusing solely on vehemently attacking either or both of the AFL and NRL (http://www.smh.com.au/sport/football/other-codes-need-to-get-real-20091212-kpik.html ).

We Australian football fans can't get too upset over Fos' absurd ramblings, because he lacks credibility even amongst soccer fans (who perhaps have not forgiven him for his feeble efforts in letting Iran back into the contest 12 years ago).

He polarises opinion in the soccer community by being viewed as anti-British, and in recent times when the top four EPL clubs have done well against the giants of La Liga and the Serie A, he has been observed squirming in his SBS special comments chair.

His greatest love is for those players of South American descent, and he is probably the sort of person who would applaud the Argentinean Government taking over the funding of their national league. He has little time for the commercial realities of sport, as we shall soon see.

It's worth noting that his rabid anti-AFL articles are only ever published in the SMH, the soccer loving Age never publish them.

But putting all that aside, I can't help but dissect Fos' latest offering, and have a bit of fun in the process. If there's one thing we can say about Fos, it's that he's never dull and he never fails to entertain.

Fos' anti-AFL article

His opinion piece on 13 December was titled: Other codes need to get real, and was derisory of an insignificant competition like the AFL attempting to stand in the way of the greatest show in the World (which happens to require billions of dollars of Government subsidies, and the compulsory acquisition of AFL grounds).

How dare the AFL protect its commercial interests!

Fos was genuinely concerned that people in Russia, North Korea and Honduras, might be wondering how a tiny, insignificant competition like the AFL could dare stand in the way of the monolithic FIFA juggernaut.

He goes on: … thankfully, … Football Federation Australia chairman Frank Lowy will no doubt be assuring the 24 FIFA executive members of the inconsequential nature of last week's comments emanating from inconsequential sports.

Did you note the use of the word "inconsequential" twice – just in case you missed it the first time!

But that wasn't a sufficient insult for Australia's premier football competition, for our indigenous game, he went on to use expressions such as: myopic, biff and barge mentality and invites the reader to laugh out loud at the AFL being described as the "de facto world governing body".

It's a curious thing that an Australian would try and bathe in the reflected glory of a foreign sporting organisation, in particular, one as utterly corrupt as FIFA, and attack a locally grown sporting body that administers a peculiarly Australian sporting product, and an extremely popular one at that.

It would be a bit like criticising an ANZAC Day march simply because it only happens in Australian and New Zealand.

But Fos' critique includes such breath taking inaccuracies, the word "delusional" quickly comes to mind.

He uses the Copenhagen talks as a segue to invoke similar language, describing soccer as ''clean'' energy - largely free of the massive cultural and behavioural baggage of other sports.

Free of cultural baggage? This must be why the FFA goes out of its way to ensure the former ethnic NSL clubs have zero chance of ever getting an A-League license.

Fos' delusion reaches a climax when he describes soccer as "the national sport".

Could Fos truly be such an idiot?

On every economic measure, the ones with dollar signs in front of them: TV rights, TV ratings, attendance, membership, sponsorship, club turnover, etc – the AFL is so far ahead of the FFA/A-League that honestly, it makes them look like amateur hour.

The ratios in all these measures between the two bodies, are like 7 to1 going up to 10 to 1. I mean, honestly, they are operating on different plains.

Fos clings to participation rates to justify his "national sport" claim. It's true that if you look at 4 to 9 year olds, where most kids are playing soccer and nothing else, the gap is massive. But thereafter, up to the age of 30, certainly in the Southern states, there is no gap, and in some cases, actually favours Australian football.

Fos is so disdainful, and so ignorant of the AFL position in Australia that he declares boldly: If it's money they want, give it to them.

That's actually a funny line on so many fronts.

For starters, who? FIFA? No, their modus operandi is to let Governments and taxpayers cover all the nasty costs, including all contingencies, allowing them to pocket the filthy lucre, much of it ending up in the back accounts of individual members on the executive committee.

FFA? Fos might think they will be able to afford it, but as I will soon explain, that's unlikely.

The taxpayer? Of course – it's all up to the taxpayer! Fos has the noble intentions, encouraging Australia to take its place amongst the League of nations, but like his salary, the taxpayer picks up the bill!

Defending Australian Football

Why would any Australian have nothing but praise for our indigenous game? It's earliest form is even older than soccer, and most of our most famous clubs are much older than the familiar clubs we know from Spain, Italy and Germany.

The AFL and clubs now boast a turnover of $1 billion per annum, and it's average attendance during any given season is actually higher than the EPL (yes, that's right), and is only marginally below that of the Bundesliga. Forget about the Serie A (or indeed, any other soccer comp in the world) – it's miles behind.

Why would any Australian want to attack their own game? Why?

It's true that it has next to zero presence outside of Australia – but it's the Australian game – remember? Australian football.

I could talk about the inroads Australian football is making in places like South Africa and PNG, and the rest of Oceania, or about the 10 or so foreign born players that were recently signed up to clubs, but I won't.

Because it's not actually a critical part of the great Australian game – the premier football code in Australia – and by a good margin.

Conclusion

To conclude, why can't the FFA afford to reimburse the AFL for lost earnings from the World Cup bid?

According to a FIFA report, the German FA pocketed 21 million euros from their World Cup. That's right, a measly 21 million euros.

Folks, that would barely cover 10% of the AFL's likely compensation claim!

Once again, when it comes to the commercial reality of football – Fos has zero idea!

Hosting a World Cup: Net gain or net loss?

2009-12-15T15:26:00.000-08:00

If I were to sum up the FFA World Cup bid for 2018/2022, it would be along the following lines:

1. Struggling to find the necessary eight host cities;

2. Struggling to find 12 appropriate venues;

3. In Australia's second largest city in particular, a reliance on two stadiums to which a rival code has exclusive rights during the period in question (and which, in any event, are the wrong shape);

4. Support from Government at all levels, although big questions at the extent to which some State Government are willing to contribute (we know that the ACT Government is unwilling to contribute);

5. A reliance on up to five ovals: MCG, Etihad (if available), Adelaide Oval, Carrara, and maybe Perth as well; and

6. Both the FFA and Government avoiding the whole issue of financial compensation to the two largest football competitions in the land.

Not the very best foundations for a rock solid bid, although point 4, the willingness of Prime Minister Rudd to basically sign a blank cheque to fund the World Cup at whatever cost, is a very strong position for the bid team (who wouldn't like a blank cheque to fall back on).

Much of the media attention is on whether the AFL should or should not relinquish its exclusive rights to its two stadiums in Melbourne.

The AFL had offered the MCG for up to 8 weeks from day one, but became quite irritated recently when it discovered that the FFA had a secret plan to rectangularise the MCG, at a cost of $130 million, with the full knowledge of the Federal Government. This would have put the MCG out of action for almost a complete season, with the obvious negative financial effect of that.

It's not good news for the AFL to discover that such subterfuge is occurring with the connivance of Government.

The obvious question, from a purely commercial perspective is: why should the AFL relinquish its rights to any stadium, let alone both?

To date there has been no talk of any financial compensation from either the FFA or Government.

In a letter to the FFA, the AFL has mentioned an annual industry turnover of some $3.4 billion, and have intimated that a 10 week break will cause a proportionate loss of turnover in one year.

The main argument that has been used to encourage the AFL to hand over its assets which is counter to its normal commercial instinct, is that they should do it in the national interest.

It should be noted that at this point, the FFA does not appear to be required to do anything in the national interest, but that's another story again.

So the AFL should relinquish its rights to two of the very best stadiums in Australia for a period of 10 weeks, cop a massive financial loss, see FIFA pocket billions of dollars, all in the national interest.

I guess I could be persuaded if I was confident it was in the national interest. But how strong is the national interest argument?

Recent Price Waterhouse Coopers report

Price Waterhouse Coopers did a financial analysis for the Federal Government and concluded that for expenditure of $2.9 billion on new and upgraded stadiums, the economy as a whole make a net gain of $345 million.

So far, so good.

Except the assumptions used are as dodgy as all hell.

For starters, the report only counts money spent on upgraded stadiums. I would put it to everyone that that is just the starting point!

Jeff Kennett's view

Former Victorian Premier, and current Hawthorn President, Jeff Kennett, a strong supporter of a World Cup bid, put the likely cost to the taxpayer at between $4 billion and $8 billion.

Add all the other related infrastructure, the massive public service army that is put together to organise it, the massive security required and the cost of insurance, all those unexpected expenses – all picked up by the taxpayer – and you can see why Kennett is spot on the money.

View from Michael Pascoe, SMH

Michael Pascoe, the well known finance reporter, wrote this commentary in the SMH on 14 December: http://www.smh.com.au/business/beware-the-coming-soccer-circus-20091214-krcb.html .

Pascoe points out:

1. The PWC report actually comes to a $1.3 billion tangible loss. The net gain to the economy is calculated by the inclusion of the intangible of $1.6 billion in publicity. He rightly warns us that as soon as experts start throwing around large numbers for intangibles to help balance the books: run!

2. There was much reliance placed on the German experience in 2006 when they attracted 1.1 million visitors. But anyone can see the problem with relying on that figure – Germany is in the middle of Europe with 200 million soccer fans only a train ride away!

3. There's much confusion as to whether much of this cost will be met at Commonwealth or State level. Upgrading a relatively new stadium like ANZ alone will cost $200 million.

4. Pascoe scoffs at Craig Foster stating that the returns from the world cup will be so large that FIFA and the FFA will easily be able to cover losses incurred by the AFL.

Auditor-General's report of the 2000 Olympics

Also salient is the following quote from the Auditor-General's report on the aftermath of the Olympic games in 2000:

In 2002, the Auditor-General of New South Wales reported that the Sydney Games cost $AUD 6.6 billion, with a net cost to the public between $AUD 1.7 and 2.4 billion

It has been estimated that the economic impact of the 2000 Olympics was that $AUD 2.1 billion has been shaved from public consumption. Economic growth was not stimulated to a net benefit and in the years since 2000, foreign tourism to NSW grew by less than tourism to Australia as a whole. A "multiplier" effect on broader economic development is not realised as a simple "multiplier" analysis fails to capture is that resources have to be redirected from elsewhere: the building of a stadium is at the expense of other public works such as extensions to hospitals. Building sporting venues does not add to the aggregate stock of productive capital in the years following the Games: "Equestrian centres, softball compounds and man-made rapids are not particularly useful beyond their immediate function."

Deutsche Welle report on 2006 World Cup

According to this Deutsche Welle report soon after the 2006 World Cup (http://www.dw-world.de/dw/article/0,,2449448,00.html): "The patriotism and high spirits unleashed by this past summer's World Cup were expected to boost the German economy, but experts say the soccer event had virtually no impact on growth and employment. "

US report on the 1994 World Cup

And here's a comprehensive report into the the U.S. hosting the Cup in 1994:

Quote:

An ex post analysis of the 1994 World Cup held in the United States suggests that the economic impact of the event cannot justify this magnitude of expenditures and that host cities experienced cumulative losses of $5.5 to $9.3 billion as opposed to ex ante estimates of a $4 billion gain touted by event boosters.

Quote:

VI. CONCLUSIONS AND POLICY IMPLICATIONS

Cities vigorously compete to host sports mega-events because they perceive that doing so will enhance their image and stimulate their economies. International sporting events require substantial expenditures on infrastructure and security and critically depend, therefore, on public subsidization. The ability of event promoters to secure public funds often depends on convincing a sometimes-sceptical public that hosting the event generates economic profit. A motive for exaggerating the impact of a mega-event clearly exists, and that explains the purpose for this assessment of the impact of the 1994 World Cup Soccer tournament hosted by the United States. With over 3.5 million fans attending games during the tournament, far and away the most in the event’s history, the 1994 World Cup was clearly an enormous popular success, and it left event organizers with large profits. The economic success of the tournament for host cities, however, is far less clear. The evidence suggests that a $4billion economic impact for the United States projected by Cup boosters probably did not materialize. On the contrary, the evidence indicates a far greater likelihood that the World Cup had an overall negative impact on the average host city and the U.S. economy overall. Theoretically, the World Cup induced reductions in spending that more than offset the gains in spending attributable to the Cup in 1994. Cities would be well advised to more thoroughly evaluate booster promises of a financial windfall from hosting a sports mega-event such as the World Cup before committing substantial public resources to such an event.

Conclusion

The overwhelming message from all of this is that politicians, organisers and various hangers-on always, and I do mean, always, underestimate the cost of hosting such events.

Conversely, the same people always, and I do mean always, overestimate the tangible benefits (never mind the rather ridiculous intangibles that are always included to paint a rosy picture and reinforce a weak business case).

The other common denominator in all these big events is that despite claims of massive net gains to the economy – it's only the taxpayer that forks out big time – no private investors are putting their hand up to invest! The FFA is not risking anything, nor FIFA. The taxpayer carries the risk 100%.

My conclusion: the AFL would be acting in the interest of all Australian taxpayers if it were able to put a stop to this fiscal madness. If the FFA wish to do something in the national interest, they should rely more on their own resources, rather than expecting other sports bodies to carry the risk of massive financial loss on their behalf.

Australian Government supports foreign competition

2009-12-10T01:30:00.000-08:00

It's an unusual situation to find the Australian Government providing financial support to a foreign competitor against the economic interests of a local company.

Even stranger, when not only is the Australian Government providing direct financial support to a foreign competitor, but both the Federal and State Government is pushing the local company to hand over their assets to the foreign competitor, allowing the foreign competitor to pocket billions of dollars, without requiring them to invest one single cent.

Not one.

This is precisely what is happening with the Australian soccer World Cup bid.

The AFL is the largest football competition in Australia, and by a good margin.

It has exclusive rights to the two main stadiums in Australia's second largest city, Melbourne, which also happens to be the home of the AFL.

Australia's soccer governing body, the FFA, cannot put a credible bid to FIFA without access to at least one of these stadiums, preferably both (and has requested both).

The stadiums we are talking about are the MCG with a capacity of 100,000 and Etihad Stadium with a capacity of 56,000.

The Federal and State Governments will spend a minimum of $3 billion upgrading other stadiums and perhaps building one or two new ones to assist the FFA in winning the bid.

The AFL is being asked to give up both its stadiums for about half of its season which runs at the same time as the soccer world cup.

As a result of this significant investment by all levels of Government, and by the AFL giving up its exclusive rights to both of its stadiums in Melbourne, and FIFA pocketing all ticket sales, and pretty much every bit of revenue associated with hosting the World Cup, some billions of dollars will head overseas, much of it at the expense of the local competitor.

So billions of dollars go offshore as a direct result of the generosity of Australian Governments and the AFL, who in turn, having given up its two main assets for half a season, incurs a major hit on revenues via reductions in TV rights, sponsorship, memberships, gate receipts, etc.

Would such a thing happen in any other industry?

Certainly not in a liberal democracy such as Australia.

Indeed, so outlandish is the conduct of Government against the private interests of the AFL (a hit which they will feel on the bottom line for years), one wonders whether some part of the Trade Practices Act isn't being breached in some form? Perhaps trade policy or the national competition policy?

I would be interested in the view of readers who have an understanding of these sorts of anti-competitive provisions.

Here is my estimate of the financial loss the AFL is likely to incur for allowing a foreign competitor free access to its assets when it needs them most.

The AFL industry turns over about $1 billion per annum in current day dollars from conducting a football league (not large on world terms, but decent within the Southern Hemisphere).

60% of all attendances at AFL games are gained via the two Melbourne stadiums in total (ten of sixteen teams reside in Victoria).

Therefore, about $600 million, directly and indirectly, are gained by hosting games in the two Melbourne stadiums.

If both stadiums are unavailable for half a season, that represents a loss of $300 million.

Now some may be able to point to factors why this estimate is exaggerated, but I can negate that quite easily.

This is calculated on the income from one season, but in fact the losses will start up to 5 years earlier (because of long term contracts) and will continue for some time to come as the game recovers from a massive interruption (regaining lost memberships and sponsorship).

Is anyone offering the AFL compensation?

Would you believe that the FFA has budgeted $10 million? Not just for the AFL, but for all three domestic football competitions (including Rugby League and Rugby Union).

You might be wondering what the FFA is bringing to the table? Absolutely nothing.

Does anyone else see something wrong here?