https://www.codesports.com.au/subscribe/news/1/?sourceCode=CSWEB_MRE170_a_FBK&dest=https%3A%2F%2Fwww.codesports.com.au%2Ffootball%2Fa-leagues%2Faleagues-financial-crisis-club-funding-slashed-by-50-per-cent-as-tv-deal-tanks%2Fnews-story%2F3455d7dbeebef563a6472d58a177750a&memtype=anonymous&mode=premiumThe Australian Professional Leagues (APL) board is set to confirm a huge cut to the central distribution fund, derived from TV rights and commercial revenue, from $2 million this season to just $1 million in 2024-25. The 50 per cent reduction in payment to clubs will cover just over one third of the A-League Men’s salary cap of $2.6 million.
CODE Sports understands the APL received as little as $5 million in cash from its TV rights deal this season, announced just three years ago as a $30 million per year deal, after production costs were factored in and penalties around benchmark subscription rates not met.
The APL has two years remaining on its five-year deal with Ten/Paramount+.
The dramatic reduction in payment to A-League clubs, many of whom are already cash strapped, lays bare the APL’s financial plight. By comparison, most AFL clubs and all NRL clubs receive central payments totalling more than 100 per cent of their respective salary caps.
The $140 million private equity injection from Silver Lake - announced less than three years ago - has been spent, although the US firm maintains a position on the APL board and will be involved in the future direction of finances in today’s meeting.
The bleak outlook comes at a galling time for the domestic competition after a high quality weekend of on-field action where Sydney FC won the A-League Women’s grand final, Melbourne Victory won an epic elimination final against rivals Melbourne City on penalties and Central Coast Mariners became just the second Australian team to win an Asian club continental title by lifting the AFC Cup.
The news also arrives at a time when Newcastle United is without an owner, the license for Perth Glory was sold for just $1 and the anticipated introduction of a Canberra men’s team remains in doubt.
How clubs navigate the off-season and set budgets for 2024-25 is uncertain, with sales of young Australian prospects, like the reported $3 million Adelaide United received from Bayern Munich for Nestory Irankunda, set to be the saving grace for clubs equipped to develop talent, a topic covered in today’s episode of Saving Football: Elite Development.
Until now, the central distribution fund underpinned all A-League clubs’ bottom lines, with a former club executive telling CODE Sports it has “always been the No.1 revenue stream.”
The A-League Men’s salary cap is set at $2.6 million, although at least another $3 million is needed per club, per season to cover costs such as coaching, support staff and logistics. Another $1 million annually is required to field an A-League Women’s team.
Next season’s distribution figure of around $1 million is nearly a 70 per cent reduction from less than a decade ago, when each club received more than $3 million per season when the A-Leagues were under Football Australia control. The figure was $2.4 million last July but cut to $2 million in August, just weeks after clubs had already set budgets for the current season.
The APL’s financial state caps a torrid three years after it secured separation from Football Australia, following a bitter six-year political battle that saw the Lowy family walk away from the game in 2018, just 13 years removed from the creation of the A-League under chairman Frank Lowy.
The clubs agitated for change, arguing they had no control over their own destiny.
The APL promised a new dawn when the breakaway was confirmed in December 2020 and a year later, with the $140 million from Silver Lake confirmed, then-CEO Danny Townsend told CODE Sports: “You’ll blow through that money quickly if you’re not careful. It’s about spending it wisely and doing it in a structured way like any other business.”
A series of strategic mis-steps, most notably the reported $50 million spent on the now defunct digital arm KeepUp, has sent the APL into a spiral financially.
Townsend left the APL last October, replaced by Nick Garcia, while inaugural chairman Paul Lederer stood down and was replaced by former Labor federal minister Stephen Conroy.
Garcia and Conroy, tasked with cleaning up the mess, will deliver the harsh news to clubs today.
Under Conroy’s leadership, along with Football Australia’s new chairman Anter Isaac, the once-fractious relationship between the APL and FA is improving; a crucial development given the A-Leagues are the major pipelines for developing future Socceroos and Matildas.
Football Australia CEO James Johnson said the governing body is committed to helping the APL through its current troubles.
“We are in very positive dialogue with the APL,” Johnson told CODE Sports earlier this month. “We are here to help. Might have been frosty a few years ago. Not now.”