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Transfer fees and salary cap exempt foreigners in the A-League? Be careful what you wish for

Chief executive of Football Federation Australia James Johnson recently cited a need to re-evaluate the transfer fee system in the domestic game. At the same time, the newly independent A-League owners and the PFA appear determined to implement changes to the rules around marquee and foreign players; allowing clubs to sign up to five whose wages would sit outside the salary cap.

Both are long called for and would have instant and immense ramifications for the A-League.

Johnson’s comments around the transfer system stem from a desire to increase revenue streams for clubs currently bound by regulations that allow no internal A-League transfer fees. In 2019, Australian clubs took in a paltry A$1.9 million; well below the fees gathered by other heavy hitters in the Asian Confederation.

The amount ranks Australia 67th internationally, something that Johnson feels is unacceptable considering the men’s national team sits in 42nd place in the international rankings. Johnson wrote the book on transfer fees and regulations in his role at FIFA and as those changes filter through internationally, his view is that Australia does not have the option to change, but must change, should they wish to keep step with the rest of the globe.

Much of the discussion in the area of transfer fees lies in junior development, with many NPL clubs feeling they remain unrewarded for developing talent. Such talent is often poached by A-League clubs with no reward received for the financial and resource commitment made to the player and their youth structures.

Should the payment of transfer fees in such a situation become a reality, clubs that churn out junior talent will be rewarded with financial compensation. Those funds could be re-invested into the next crop of players and clubs that have traditionally been effective in producing young talent, only for others to swoop and pounce as they reach maturity, could develop a substantial and consistent revenue stream.

Clubs with vast nurseries in major capital cities will surely hold an advantage, however, the process of assigning true value to footballers and ensuring that clubs pay and receive the appropriate sum is a no-brainer when it comes to advancing the Australian game.

Potentially more ground breaking are the discussions between the A-League owners and the PFA in regards to marquee and foreign wages. Currently, each club is permitted two marquee men whose wages fall outside the salary cap.

Of the current eleven clubs, only Perth Glory, Melbourne Victory and Western United have two such marquees. Adelaide United, Brisbane Roar and Newcastle Jets have none whatsoever and the remaining five clubs all have one man on the books whose wages do not impinge on the A$3.2 million salary cap.

The argument for an opening of the purse strings that could see the 12 A-League clubs in 2020/2021 bring up to 60 marquee/foreign men from around the globe into the league is all about quality. The lure is a suggestion that clubs with the financial clout to attract better pedigree from overseas would effectively raise the standard of play across the league.

Moreover, the commercial ramifications of the introduction of big name international players has some salivating at the thought. Many will cite Alessandro Del Piero’s time at Sydney FC as the benchmark and the goal; where the domestic league garnered interest from many fans who had rarely, if ever, attended an A-League match.

Whilst the excitement of each and every A-League club acquiring up to five Del Pierro like players to ignite the competition is an attractive thought, the feasibility of such a boom in spending is questionable. With just 11 of the 22 current A-League marquee spots filled, one wonders how the club’s owners could dare engage in a spending spree that would see their wage bill increase exponentially.

Certainly, ticket sales and corporate interest would generate revenue in the medium term. However, with owners making consistent losses across the league, the chances of wholesale spending with little assurance of return appears low.

More important could be the ramifications of a more open market in terms of marquee and foreign wages, where the spending power of smaller clubs could well see them phased out of competitiveness quite briskly. The Central Coast Mariners function in a region of somewhere between 300,000 and 400,000 people. The club spent just A$2.88 million on wages for the 2019/20 season; the salary floor figure mandated by FFA.

Should Sydney FC, Melbourne City, Melbourne Victory and Perth Glory be afforded the license to acquire up to five foreigners outside the salary cap restrictions, one can only imagine the increased chasm between the playing talent in their squads compared to that of the Mariners.

Natural attrition would almost certainly take place; something that exists across the globe in world football as one team is relegated and another promoted. However, without a current and efficient system of promotion/relegation in the domestic game and a host of clubs with the facilities and finances ready to step into the top tier, the A-League could potentially lose now competitive teams well before the games growth permits an expanded competition of at least 16 teams; something we all hope to see.

Whilst Johnson’s desire to change the Australian transfer fee regulations and the proposed freeing up of the current buying power of the clubs when it comes to marquee/foreign wages sound exciting for the domestic game, there will be casualties.

The question that must be asked and considered carefully is whether the game can afford those causalities right now. The salary cap and the restriction on transfer fees were implemented to protect the A-League in its infancy.

Whether the competition is old enough for such measures to be lifted is, in my opinion, up for debate.

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Is Australia ready for a two-year World Cup cycle?

Battle lines are being drawn between FIFA and key stakeholders, as it remains to be seen whether Australia will support the push for a two-year World Cup cycle.

FIFA’s minutes from the 71st Congress, where Saudi Arabia put forward the motion to study the viability of a two-year cycle, doesn’t include what member federations voted for in the motion.

Football Australia hasn’t stated publicly whether they were one of the 166 nations who voted for the motion, or whether they support the plans.

Football Australia is instead adopting a wait-and-see approach, to avoid taking a position before any proposal for changes are put forward after the viability study is completed.

Two-time A-League Coach of the Year Ernie Merrick believes the push from FIFA for a two-year World Cup cycle is because of business and money.

“It’s about profit and loss. It’s not about the people in the sport really, and FIFA are always competing with their confederations, of which there are six, and FIFA only have one event where they make substantial money from revenue and that’s every four years,” Merrick said.

“So in effect FIFA loses money for three years, and then the fourth year and makes massive profits mainly from broadcast, ticket sales, and sponsorship from a World Cup.”

The majority of FIFA’s $8.7 billion in revenue between 2015-2018 came from the 2018 Men’s tournament.

The commercial value of another World Cup every four years is incredibly attractive to the governing body as a way to boost its already full coffers.

Australian football will struggle to keep up with other countries if the World Cup is hosted every two years, according to Merrick.

“At the same time a lot of countries, including Asian countries, are spending an enormous amount of money on facilities and preparation setups for national competition. We all know of England’s setup, which is huge at St George’s Park, and here we don’t have a designated specific setup to prepare national teams,” he said.

“There’s a lot of infrastructure that will have to change to give Australia a chance to qualify on a regular basis. We certainly have good players and good coaches and we can compete with anyone regarding players, coaching and strategy but when it comes to the sort of money involved in preparing a national team, friendly games, and the amount of travel involved, Australia is really going to suffer.”

Michael Valkanis – former A-League coach, player and current Greece assistant coach – believes that without aligning with FIFA international dates, it means the A-League will struggle to adapt to a two-year World Cup cycle.

“We saw the effects of the Socceroos going away to play, and it always makes it difficult on A-League coaches and teams to support that.” Valkanis said.

“You can see the effects it can have on finals games, and we’ve been crying out for a long time that we become parallel with the rest of the world with international dates.”

Some of Australia’s biggest competitors in the AFC are showing ambivalence towards the concept.

“It would depend on how it would all be organised,” a Korean FA official told Deutsche Welle.

“If we want to have consistent success then we need to play as many competitive games against South American and European teams as possible. At the moment, we play one or two games every four years if we qualify. It’s not enough.”

While the viability of a two-year World Cup cycle is being studied, it is unclear how determined FIFA is to implement such a radical change to the football calendar against intense opposition from some of its members.

Merrick believes the end result could be FIFA demanding a portion of the confederation’s revenue.

“I think four years is probably a better situation at the moment – maybe three years down the track – but I think confederations will have to come to an arrangement with FIFA, and FIFA will want to take some of their revenue somehow through licensing,” Merrick said.

Those involved in international football already believe that the best model is the one we have currently, something that Valkanis is a strong fan of.

“I am a traditionalist. I think the World Cup is something special that stands out from any other competition in the world,” he said.

“The only other event that comes close is the Olympic Games, and to change the format so we see it every two years instead of four, I don’t think it leaves it the same. It is special the way it is.”

Football Australia CEO James Johnson will have a challenge on his hands navigating what a change in the World Cup’s schedule means for Australian football, as FIFA continues to push for increased revenue from the game.

A-League supporter numbers grow – but 2 million football fans still unattached

Despite attendances dropping in A-League matches over the past few years, supporter numbers across the board have grown in the past 12 months, according to a recent Roy Morgan report.

“A-League clubs have enjoyed a substantial increase in support over the last year in line with the increases seen for other football codes such as the AFL and NRL,” Roy Morgan Industry Communications Director, Julian McCrann, stated.

“Over 3.6 million Australians now profess support for an A-League club, an increase of over 1 million (+38.3%) on a year ago.”

“As we have seen across other football codes the COVID-19 pandemic has forced many sports to be played in front of empty stadiums but live on TV to supporters stuck at home in the many lockdowns we have seen over the last 18 months around Australia.”

Sydney FC have the biggest supporter base with 640,000 fans according to the report, a 32% increase on last year’s numbers.

Melbourne Victory were also well placed on the supporter ladder, slightly behind Sydney with 632,000 fans, an increase of 46% on a year ago.

A-League Men’s champions Melbourne City and expansion side Macarthur FC also saw impressive numbers of increased support.

“Another big winner over the last year has been Melbourne City which won its first A-League Men Championship earlier this year after defeating Sydney FC in the Grand Final (between Melbourne’s fourth and fifth lockdowns) in late June,” McCrann said.

“Melbourne City’s support has increased by an impressive 50.9% on a year ago to 249,000 to have the highest support of any A-League Men expansion team.

“The newest club in the A-League Men, Macarthur FC, has had a successful first season in the league with a finals appearance, a victory in an Elimination Final, and a loss to eventual Champions Melbourne City in the semi-final.

“Not only has Macarthur FC performed strongly on the pitch but they have already attracted 84,000 supporters to rank in tenth place overall.”

Whilst all A-League sides saw an increase in supporters in 2021, Central Coast Mariners experienced the largest percentage rise from 2020 – with fan numbers growing by 90%.

In regards to television numbers, over 1.5 million Australians watch the A-League Men’s competition.

However, the report states that 3.5 million Australians watch any football match on television, including leagues such as the English Premier League or international tournaments such as the FIFA World Cup.

This represents a huge untapped audience of around 2 million Australians, something which should be capitalised on.

“Looking ahead, the challenge for the A-League will be to continue to grow the league in an increasingly competitive sporting market and find a way to connect with the millions of Australians who love their football but don’t presently engage with the A-League,” McCrann said.

“There are over 2 million Australians out there who watch high quality football competitions, such as the English Premier League, who are yet to become fans of the A-League. This at-hand market of 2 million Australians is a significant market for the A-League to target during the recovery from Covid-19.”

The Australian Professional Leagues (APL), the new body running the professional game in this country, have continually emphasised in their messaging that they want to target football fans of all types to engage with the local elite competition.

The organisation’s investment in a $30 million digital hub is set to play a big part in converting these fans into A-League supporters.

“It is the biggest single investment football has made in itself. It’s a $30 million investment into digital infrastructure and data infrastructure that will serve the football fan. It won’t be the home of Australian football; it will be Australia’s home of football,” Danny Townsend, Managing Director at the APL, recently told FNR.

“What it will deliver is content – audio-visual, editorial and everything else you need.

“Part of the reason we are doing that, and investing in what we are calling APL studios, is ensuring that by organising the football community in one place we are able to deliver the utility in their everyday lives and focus on how they choose to consume football. If you do that – they’ll keep coming back.

“You put great content in there, you serve it, and you will continue to understand that fan and all of their preferences.”

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