AFL POSTS 23 MILLION DOLLAR PLUS LOSS
Posted: Sat Feb 18, 2012 12:16 pm
AFL... imploding
http://www.theage.com.au/AFL/AFL-news/f ... 1terx.html
THE AFL's ambitious push into the northern states has stretched the code to its first financial loss in a decade and again highlighted the wages paid to league chief Andrew Demetriou.
Confirmation that the AFL will post a $23.6 million loss came as the league revealed Demetriou's base salary had risen again from $1.35 million to $1.4 million.
While Demetriou's total remuneration of $1.8 million was technically lower than the $2.2 million he took home in 2010, the 2010 figure was boosted by a special ''retention bonus'' that was due after his seventh year in charge and was not repeated in 2011.
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Though the league drew record revenue, the cost of establishing new clubs on the Gold Coast and in western Sydney has sucked tens of millions of dollars from the 2011 balance sheet.
On the selective figures released yesterday, $98.6 million of spending was unaccounted for, but the league rejected suggestions that all of that money had been spent on the expansion strategy.
The league would not reveal how much it had spent on expansion but said it was ''less than half'' the $98.6 million.
Greater Western Sydney alone soaked up $22 million in ''extraordinary'' funding from the league.
Expansion into the northern states - where AFL has historically been a poor cousin to the rugby codes - has long been controversial. The AFL maintains it could take up to three decades for the two new clubs to be financially viable.
Brownlow medallist Chris Judd is among the many football greats who have expressed reservations about the expansion to 18 teams. He warned in 2009 that poor crowds and a drop in the standard of football could be a byproduct of expansion.
The $343 million of revenue achieved by the league in 2011 was a record, though it was only 2 per cent better than the previous year. Revenue had risen by 11 per cent between 2009 and 2010.
Demetriou said yesterday the modest growth in 2011 was understandable given the ''tough year'' felt across much of the economy, particularly in corporate hospitality.
Demetriou forecast revenue would top $400 million this year thanks to a new five-year broadcast rights agreement.
The league said the $23.6 million loss was not a surprise and had always been part of the plan to accelerate expansion.
AFL Commission chairman Mike Fitzpatrick said the league hoped to recoup the loss by generating profits of ''at least this amount'' over the next five years.
The AFL made a net profit of $5 million in 2010 and about $2.73 million in 2009.
The league is confident the new clubs will eventually increase the code's revenue base by tapping new markets and creating extra games of football to be sold as part of its television rights package.
Analysts at investment bank Goldman Sachs said the strategy was sound, with analyst Christian Guerra saying the spending on new clubs would eventually prove to be a good investment.
Mr Guerra said the AFL should be able to cover the $23.6 million loss over five years.
Geelong president Colin Carter, a member of the AFL Commission from 1993 to 2007, said he was not surprised to learn the league had made a loss in 2011.
''It represents an investment in the future,'' Carter said. ''It doesn't surprise me and the jury will tell us in the future whether that pays off.''
The AFL last declared a net loss in 2001 when the late Ron Evans was chairman of the Commission. The league lost $16.8 million that year after deciding to pre-pay funds into the players' wage pool.
Demetriou was confronted about the size of his wage during the league's tense pay dispute with the AFL Players' Association last year.
The CEO's pay has soared since he took over from Wayne Jackson in September 2003 on a salary package of $560,000.
On top of his rising base pay, the league confirmed that bonuses paid to Demetriou in 2011 for achieving ''key performance indicators'' were higher than in 2010.
The league declined to say when Demetriou would next qualify for a ''retention bonus'' on the grounds it was commercially sensitive information.
The league also declined to reveal what base pay and bonuses would be granted to Demetriou in 2012.
''I don't set my pay,'' Demetriou said on radio yesterday.
''It's done through proper corporate governance, through the chairman of remuneration. It has been benchmarked by an external third party.
''I'm very grateful, and I feel very privileged to be in this role, and I don't take it for granted. But I don't really know how it compares to other CEOs.''
Carter, a corporate governance expert and director of major companies such as SEEK and Wesfarmers, yesterday declined to comment on Demetriou's pay.
The AFL's nine-person executive team received salaries and bonuses totalling $5.08 million in 2011.
Demetriou is entering his ninth season in charge of the AFL and has not indicated how long he intends to continue in the role.
The AFL's pre-season competition started last night at Etihad Stadium and the season proper begins on March 24.
Greater Western Sydney will play its first regular season match against cross-town rivals the Sydney Swans at the former Olympic stadium at Homebush.
