Soccerscene is committed to promoting, enhancing and growing the soccer industry in Australia. We believe soccer news has captured the attention of grassroots soccer clubs, apparel and equipment suppliers – which extends to governing bodies, club administrators and industry decision makers.
Football Victoria’s new strategic plan FootbALLways has been formed to reflect the surge in popularity for the world game in Victoria.
The rise in participation over the last year was recorded at 24% and this strategic plan will help match the needs of the growing figure – the second-highest growth market in Australia for the world game.
It will be officially launched at Football Victoria’s Annual General meeting – including the targets of 50/50 gender participation by 2027 and developing 420 new and full-size pitches across the state to capitalise on the rising numbers.
FV’s plan is centred around five pillars:
Enabling Victorian clubs to thrive while providing great experiences to ALL
Expanding and improving facilities of ALL types and providing infrastructure to increase access, utilisation and sustainability
Provide the best opportunities for ALL to access and enjoy programs, competitions and pathways
Increase engagement and advocacy of football to change perceptions and promote positive outcomes
Provide our people with continued opportunities to develop and be leaders for culture, high performance, social change
Football Victoria CEO Peter Filopoulos spoke about uniting all Australians to play the game.
“It’s clear the game in Victoria is in great shape. This new four-year strategic plan is designed to ensure that we build on this positive momentum and that, as stewards of the game in Victoria, we put in place the key initiatives that will sustain the game’s growth into the future,” he said.
In two revealing conversations with US sports investors Michael Kalt and Brett Johnson, there were some potentially interesting lessons for Australian football to learn.
Kalt, who rose to sporting fame as part of the investment group that helped transform the fortunes of the Tampa Bay Rays in the MLB, now leads consortiums investing in European football clubs with current investments in AS Nancy in France and Oostende in Belgium.
Johnson is co-owner of Ipswich Town and also the owner and director of Phoenix Rising Football Club, which plays in the second tier of US football.
So, what do they like about European football?
Why don’t they invest the same sizeable funds into MLS teams?
What can Australian football learn?
Below we highlight four key lessons.
The majority of clubs that Kalt and his consortiums look at investing in are loss-making businesses.
They don’t make money.
So why, when you have significant investment capital and can invest in a booming domestic sports market, do you choose to take your money to Europe and put it in loss-making clubs?
For Kalt, there are three things a club has to have to prove its investment value.
Asymmetric Upside via promotion or European qualification
Room for commercial improvement
Training profits (EG: Player Transfers)
On the first point, Kalt explains the uniqueness of promotion and relegation and continental competition created pockets of value in Europe that offered much lower costs of entry in Europe.
“Can you buy them when you’re up underlying your downsize risk, meaning you’re not paying full price for a club that is recently promoted or in the top league or coming off European competition and you’re paying full price,” he said.
“If you look at the clubs we bought, we’ve bought clubs like Nancy, historically a club that has been in Ligue 1 and bounced back and forth. It has the infrastructure of a Ligue 1 team. It should be a first division, mid-table club, so there’s headroom there and not a lot of downside risk.
“That’s the sort of situation we look for, where there is an asymmetric upside, either through promotion or European qualification in a smaller club where we think we can compete in the top four or five teams.
On what he termed, “Training Profits”, which most readers would refer to as player transfers, Kalt thinks it’s incredible that a club could generate a sizeable portion of its overall value simply by trading players.
“This is a massive mover in this,” he said.
“When you create that value in American sports, the only way to really monetize it on the player basis is to make like exchanges. To say, I have a player that has demonstrated his worth and the market will pay way more for him. He’s got three or four years left of club control … your only path to monetization is to keep that player and hope the club plays better and people show up and you generate more revenue in the stadium.
“Or you go and try and trade the player for younger, more controllable talent and hope that that talent does the same thing.
“In Europe, you create value, and the market comes to you and says ‘okay, today we’re willing to pay ‘x’ for that player, and, by the way, that ‘x’ might be some significant portion of what you played for the club!’
“That system, combined with analytics to create that value, which is how we started looking at this … is why it’s so intriguing.
“You reinvest some of that back into the club and you can reduce your downside.”
Europe’s football culture and ecosystem are, obviously, significantly more developed than that of Australia or the United States.
But what is interesting to take from the conversation is the factors that make for a worthwhile investment for Kalt and his ilk.
They want to invest in clubs that have room to grow.
None of this is to suggest that the incorporation of promotion and relegation in Australia is going to send a flood of overseas investors ready to throw their money at ‘B-League’ or National Premier Leagues clubs.
But it does inherently create potential upside in investing in the secondary tiers of Australian football, particularly for local investors.
We have already seen in the most recent round of A-League expansions that there was potentially a lot of money left on the table by unsuccessful bidders looking for a way into Australia’s top flight.
The implementation of promotion and relegation could unlock similar pockets of value in Australia.
The addition of a domestic transfer market will also go a long way to increasing the upside of clubs in the A-League and potentially below.
Franchises Limit Upside
When discussing MLS specifically, Kalt believes one of the major obstacles facing the growth of MLS was to be the American attitude of, generally, not being as interested in watching sports that are not “the best”.
But perhaps the most interesting thing Kalt had to say about the investment value of MLS franchises is that their value was largely being grown by the expansion of the competition and the prices being paid for new licenses, dragging the value of the existing licenses up by association.
“Valuations five, six, seven years ago you had a 50 or 60 million cost of entry, which – candidly – still seems a little high given the economics of these clubs,” he said.
“But when you see these club trading at 200, 300, 400-million-dollar valuations, it’s hard for me to get my head around and I know it’s hard for a lot of people in the business to get their head around.
“I think a lot of it, historically, was justified on, ‘well, you buy in now because the next expansion franchise is going to be worth ‘y’’.
“But you’re not going to have a league with 60 clubs, so you’re running out of the ability to do that.”
This sounds alarmingly similar to the A-League, where hopes for the growth of the sport are so consistently pinned on expansion.
They might equate to growth for the value of A-League licenses and the value for the investors who own them, but it’s not enough alone to drive true value in football.
MLS’ One Big Tick
It wasn’t all bad for the MLS. Kalt had to give credit to the MLS for at least one thing.
“The amazing thing that they’ve done is that they’ve created the infrastructure for soccer in the United States that never existed before.
“They’re not just sticking teams in and hiring a bunch of over the hill stars and having them play in football (NFL) stadiums and hoping they can sustain it.
“They’re doing the right thing and the league is sustainable, whether at half-billion-dollar franchise valuations is a more debatable proposition.”
This is a crucial lesson for the A-League.
Over 15 years into this journey and there remains embarrassingly little football-specific infrastructure.
There has been some good ground made in recent years by some clubs, but overall, after 15 years one gets the feeling there is very little to show for all the investment made in the A-League.
We’ve had some great seasons, some great matches and some great players grace the league…but if the league collapsed tomorrow, what proof would there be that the A-League and its clubs actually existed?
This has to be urgently addressed.
Another reason cited as key for both Kalt and Johnson in their investment in European football was the sense of gratification of investment in clubs and their surrounding communities.
Now let’s not get carried away. No one is suggesting for a second that these investors aren’t backing in European football for humanitarian reasons.
They’re in it because they see value in their investment.
But can they make themselves feel good about making money in the process?
Well, that’s a bonus. The benefits for the community, however, can be very real and tangible.
Research from 2019 shows Manchester City’s involvement in the title chase with Liverpool was worth £220 million to Manchester’s economy.
According to the think tank Centre for Economics and Business Research (CEBR), spending on match-day tickets, merchandise, and hospitality can boost a city’s economic growth by 1.1 percentage points.
At the lower level, Ipswich Town co-owner Johnson felt there was a great sense of satisfaction to be taken from investing in the surrounding community.
“It’s critical to be engaged with the community,” he said.
“I view [these clubs] as beacons. In England, these communities live and die by the success of these clubs and it’s been painful for these fans have been watching this beautiful asset punch below its weight class.
“It’s not just enough to win, you have to try and make improvements broadly.”
A big part of Kalt’s model was being able to choose clubs with room for improvement because it would be easier to keep the fans onside as things improved.
“Coming into a club that is perfectly run as the next owner is not a situation I would ever want to be in,” he said.
“You want to come into a situation where there’s headroom … you want to have some goodwill built in.
“We’re going to stabilise this, and you know your club is going to be around in a year.”
The question for Australian football is, how do we create value and the feel-good factor around our clubs that encourage the investment they require?
The COVID-19 pandemic has put an immense strain on football clubs worldwide, and Australia is no exception. From stop-start seasons, stifled player development, and clubs being put under financial stress, National Premier League (NPL) clubs have faced some of their biggest challenges.
Bentleigh Greens are one of many clubs hit by lockdowns and postponements, as they have seen the second NPL Victoria season in a row disrupted by the pandemic. Bentleigh Greens President Trifon Rellos has seen his team heavily affected by this.
“Financially game takings are gone, canteens are gone. Now with the junior programs, we have with the mini roos and NPL kids we don’t know the parents are going to ask for, whether they want their money back,” he said.
“The impact has been massive, but not just financially.”
Not every club and league has been heavily impacted. Edgeworth Eagles Football Director and Treasurer, Warren Mills, explains that the Further Northern New South Wales region has managed to avoid the worst of the pandemic.
“Newcastle has been a lot less impacted than others. Last year was pretty horrendous obviously, we started later but we managed to get in a competition, playing our competition plus finals,” he said.
“This year we’ve got two rounds to go. To be fair we’ve been much luckier than others.”
In contrast with other clubs in New South Wales and Victoria, Warren believes that the amateur status of the Newcastle clubs has helped weather financial strain.
“Financially it hasn’t been a massive drain on us. We are more amateur than Sydney or Melbourne, in terms of wages paid out. Its smashed those clubs a lot more.” he said.
The season will be completed once restrictions in the Hunter region are eased, with one advantage they have over other areas being that they rarely share grounds with summer sports.
“I don’t think there is anybody who doesn’t have their own ground in Newcastle,” he said.
“We have the potential to host the grand final this year, and we’ve just got a new 1.1 million dollar clubhouse. Newcastle is very lucky that way.”
Football Victoria recently agreed to a ground-sharing agreement with Cricket Victoria, in an attempt to alleviate this issue if the season is restarted.
For regional NPL clubs in Victoria, they have been in and out of lockdown more than anywhere in the country. For the Goulburn Valley Suns, their season has been disrupted by not only state-wide lockdowns, but also a major outbreak within the city of Shepparton.
Goulburn Valley head coach Craig Carley believes that players at the club are uniting together through the hardship.
“We don’t know what’s going on at the moment, but we need to try to tick over. Previously we were able to do that as a team because the metropolitan area was in lockdown, the last couple of weeks it’s been individual training,” he said.
“We’ve got players posting times on runs and activities that they are doing. It’s been good from a team point of view with players pushing each other and staying connected, even though everyone is in lockdown. The longer that goes on the hard that is going to get.”
Rellos fears that these disruptions could cause setbacks for some of the most talented players at Bentleigh Greens.
“It’s a sad situation that we are in for our children, and our young senior soccer players. We need to remember that the boys that are playing under 16s and 18s and talented, and they are just about to break into that senior team,” he said.
“I think this year is worse than last year. Those boys and their careers have been cut short by coronavirus. These kids need to break into the senior team, god knows if they will. Some might lose interest and not come back as football players.”
For others, they can only appreciate that their seasons and clubs have only had minor disruptions.
“In Newcastle, we’ve been so blessed. I don’t know how we’ve hardly had a case while we are so close to Sydney. It hasn’t the impact on us that a lot of areas have.” Warren said.
Every state has had different challenges they have faced during the COVID-19 pandemic. For NPL clubs in New South Wales and Victoria, some are facing the biggest in their history. Most are looking forward to next season, hoping for the light at the end of the tunnel following these hard times.