Fees, fees, fees...

by The Supercoach on Feb 28, 2012

4 comments | | print

A lot has been said in recent days about a certain A-League club. Particularly the way that the owner runs this club and what this club wears on their shirts. I’m not going to come down on either side on this disagreement, enough has been said already and I’m not as tapped in as others.

For me though, the most disturbing issue to arise from this whole sorry saga is the fact that different teams appeared to have paid different amounts for their acquisition fees and that there is a lack of transparency from the FFA on how these fees are determined.

I’ll readily admit, I’m not across how the A-League is administered and manage as much as some of my other colleagues, but when I first heard that there was a licence AND an acquisition fee, my first question was why?

Why are there two fees that an owner or club must pay to become a member of the A League? It just doesn’t make any sense to me.

What was disturbing was that these acquisition fees differ in price. The explanation offered by the FFA was this:

"There is a difference between a licence fee and an acquisition fee and the distinction is important,"

"The acquisition fee for a licence is unique to each club and reflects the particular circumstances of that club and its market, its history, its success, its support, prior investment including by FFA, the potential of the market and other factors that are relevant to an assessment of value.

"In the case of the Jets, those market variables included the fact there was an established club with a successful history and strong supporter base in a traditional football area.

"The agreement by Hunter Sports Group to the acquisition price reflected those market factors and followed an open and comprehensive commercial negotiation and due diligence process."

My initial question that I haven’t been able to find an answer for is:

“Why should acquisition fees differ for different clubs?”

Maybe I’m looking at it simplistically, but there should be a single, flat licence fee for all clubs and that licences should only be granted to clubs who can demonstrate that they have the necessary fan base and corporate backing to be viable.

The big issue is that it appears that Hunter Sports Group has paid the FFA a multi-million fee while no other club has paid over $1million. If I were a member of the Hunter Sports Group, I too would be speaking to my legal team about potential legal action.

On a very basic level, different clubs paying different amounts to become participants in the
A-League seems incredibly unfair. A cynical perspective is that the FFA may in fact use this acquisition fee either to fill their coffers from rich owners or may use these acquisition fees to determine which teams, or owners are granted licences by charging less desirable teams with exorbitant acquisition fees.

Making the assumption that it the FFA is right to have two different fees (which is one that I don’t believe is correct), what is clear is that transparency on the methodology used to determine both licence and acquisition needs to be made public. For every day that these methodologies remain a closely guarded secret, the more the FFA loses credibility with the public.

But why is this important?

The Exercise, Recreation and Sport Survey (ERASS) 2010 report highlights that football (soccer) is the most participated in team sport in Australia, with participation levels increasing from 295,200 in 2001 to 460,300 in 2010, a massive jump by anyone’s standards.

This means, that in theory, there should be more and more interest in the A-League, as the professional league in Australia, in future years as participation and interest in football continues to grow.

Meanwhile, while attendance rates have grown over the last five years, they’re still well below Rugby League and AFL.

If both the FFA and A-League are viewed by the general public as unethical, then attendance will suffer; this would have flow on implications for the League and individual club viability, as well as the all important television rights deals.

Perhaps withholding AFL, football in Australia has never been stronger at the local level and it needs strong leadership and transparency at the highest level.