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Game growth overshadows player payments

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27 September 2012

Tigers
Monash research has found total player payments are not keeping pace with increases in AFL revenue.

Monash University research into the financial dealings of the Australian Football League (AFL) and its clubs reveals payments to players declined proportionately over a decade, while the League poured funds into off-field support of teams and game promotion. 

Dr Ross Booth from the Department of Economics, and Professor Robert Brooks and Dr Neil Diamond from the Department of Econometrics and Business Statistics in the Faculty of Business and Economics, reviewed the revenues from 2001 to 2009 to understand the player salary allocations and other forms of expenditure.

“We found the share of revenue going to the players was on a downward trend over the period 2001 to 2009 while total revenue continued to rise,” Dr Booth said.

“The total player payment over the period had fallen as a percentage of total football revenue from 27.5 per cent in 2001 to 21.3 per cent in 2009. These figures led us to further investigate how both the clubs and the league spend their revenue.”

The research found an expected increase in both income and expenditure however, in relative terms spending on the club football departments fell, while spending increased in areas such as ‘fitness and conditioning’, ‘team’ and ‘recruitment and list management’.

The researchers then looked at the disbursement of the league’s growing operating surpluses - resulting from such things at the income from the broadcasting rights and increased attendance at games - where they found the share going to the clubs had fallen.

AFL distribution of the league’s operating surplus to the clubs fluctuated during the reviewed period with a high 89.7 per cent in 2001 before settling for a low of about 62-63 per cent in the period 2007-2009.

At the same time there were significant increases into the allocations for ‘facilities development’ ‘new markets’ and the ‘future fund reserve’.

“The results highlighted the clubs’ strategies to increase their spending on better coaching and improved facilities as a way to achieve success, while the AFL’s strategy was focussed on game development and promotion,” Dr Booth said.

“In a league such as the AFL, where there is strong competition from other football codes, other sports and forms of entertainment, there appears to be a pressing need to ensure the future of the game is secure. One way to do this is to expand the competition and grow the code and this costs money.

“Where the AFL has a limited income stream this means that to expand and develop one area, other areas will be harnessed and in this case, it’s partly a declining share of revenue being allocated to the players,” Dr Booth said.

The research has been published in The Economic and Labour Relations Review.