User:M.Finemore/Can Money Once Again Buy Success in the AFL

Video Presentation
http://www.youtube.com/watch?v=1hNwyutiTlM

Abstract
This essay will investigate the effect a limitation put on football department spending will have. The AFL has pride in the equality of their competition and has fairness stabilisers such as the salary cap and the AFL national draft in place to ensure all clubs have a fighting chance each season. However recently the differential in football department spending between the more affluent and poorer clubs is increasing exponentially, leading many to believe this is the new divide between clubs and AFL intervention is required to ensure that the competition’s fairness is still intact. It was found that in season 2011 that the top six spenders in the football department all finished in the finals whereas the bottom six spenders all finished outside the finals. An advantage of putting such a cap or limitation on football department spending is that it will bring the competition to closer the fairness. There is also an argument that this discrepancy in football department spending is compromising the effectiveness of the fairness stabilisers in place. Disadvantages of capping football department spending include the punishment of clubs administering a successful business, stifling of entrepreneurial activity and the stagnation of growth of the game. Such a debate has political precedence as it is effectively a capitalist versus socialist debate. It was concluded that one season of correlation does not equal causation and the consequences of such a limitation would outweigh the benefits at this point in time.

Introduction
The Australian Football League is arguably the biggest sporting code in Australia. An imperative part of the AFL module which has bred this success is the fairness of competition amongst the competing teams. This is evidenced through the major changes made in the past 30 years where the AFL has implemented a salary cap and a national draft to promote equality of competition. The salary cap puts a price ceiling on the total player payments, the total player payments is the addition of every player’s salary and this cannot exceed $8.22m. The salary cap reduces the capacity for the wealthier clubs to acquire the better players through their financial superiority which happened during earlier decades in the previous Victorian Football League (VFL). The national draft is a process used to allow teams to obtain young players who have nominated their eligibility. This occurs through an order preference system where teams finishing lower on the standings acquire the early picks in the draft, designed to give them first chance at choosing the best young players. Despite these fairness stabilisers in place there is a new divide inequality, that of football department spending. Football departments include hiring additional specialist coaches, the cost of high tech training, player development, medical and rehabilitation facilities. There have been proposals put forward to the AFL to cap football department spending in the same way they have capped total player payments to ensure the continuing fairness of the competition. This essay topic was chosen as it is a major point of conjecture in the AFL at the moment and has influences of all three spheres of business, politics and sport. The essay will discuss the advantages, disadvantages and possible repercussion of any changes to football department spending allowances as well as offer recommendations towards a fair resolution for all stakeholders.

Advantages
The most advantageous outcome of putting a cap or ceiling on football department spending is that it brings the competition closer to complete fairness. As stated above the AFL prides itself on the fairness of competition and the governing body believes all teams have an opportunity to win a premiership within a player’s generation cycle (8-12 years), this is unlike prominent European football leagues like the English Premier League and Spain’s La Liga where the same teams continually compete for the title. This fairness is arguably now being compromised due to the wealthier clubs increasing their football department spending. To illustrate such a point Collingwood the 2010 premiers spent $20 million compared to North Melbourne who spent $14.5 million. This nearly 40% differential in spending allows Collingwood many luxuries that North Melbourne are unable to obtain, such as mid season overseas preseason camps for high altitude training. Masters 2011 wrote that the budgets of the football departments of the wealthier AFL clubs ensure that money can still deliver finals places. His reasoning cannot be faulted on the 2011 results. The top six spenders on football departments being Collingwood, Geelong, West Coast, Essendon, Carlton and Hawthorn all made the final eight. Whereas the bottom six spenders North Melbourne, Port Adelaide, Adelaide, Richmond, Western Bulldogs and Melbourne the clubs that spent the least on their football departments did not make the finals. While there are no guarantees the more you spend the higher up the ladder you finish, to say that this occurrence is completely coincidental would be naive.

There is also the argument that the difference in the spending between the clubs undermines the fairness stabilisers already in place, the salary cap being the best illustration. The purpose of the salary cap is to spread the quality of the players over the teams by not allowing the best and presumably the highest paid players to conglomerate in a select few teams. If one team has too many star players they will be unable to pay them the salary they are worth while still adhering to the salary cap and will be subsequently forced to offload the stars or more likely sacrifice their mid range players, allowing increased salary cap space. However the players from the wealthier clubs have been reluctant to move to a different club despite the larger salary offered elsewhere. Chris Dawes from Collingwood is the most recent example. (Windley 2011). Masters (2011) points out rich clubs hire coaching specialists, build high tech training, rehab facilities, dress players in smart suits and put on lavish entertainment for the wives. There is a powerful incentive to remain at a club where the player knows he is working in a five star hotel situation. This wealth of resources also gives the richer clubs an upper hand when recruiting established players. A great example was Collingwood’s recruiting of Luke Ball. Ball was recruited second overall by St Kilda in the 2001 draft ahead of Chris Judd.

Ball struggled with a debilitating groin injury towards the end of his St Kilda tenure. Gleeson (2011) wrote that Ball would appear an exercise in illustrating where and how the money is spent by a well-resourced football department. That department was able to identify, entice, recruit and then rebuild Ball, turning him back to the player that resembled his lofty draft pick.

Disadvantages
When analysing the disadvantages that would be incurred as a result of placing a cap on football department spending, the obvious one is it that it punishes the clubs that administer a profitable business. Other possible repercussions of such a cap would include the stifling of entrepreneurial activity, the stagnation of the growth of the game, the lack of incentive for clubs to increase profit and in turn unintentionally reward the mediocre financial management of certain clubs. It has to be remembered that the AFL is a competition and hand outs and free rides go against the ‘strive to be the best’ ethos of professional sport. Management that work within clubs do so with the intention of providing the best resources to their players and coaching staff. If clubs have succeeded in amassing enough revenue through sponsorship, investment, membership, merchandise and attendance at game ticketing then many would argue that they are entitled to continue to reinvest in their football clubs as long as it is within the AFL rules and clubs don’t over exceed themselves. AFL clubs are run as a business with the primary objective being to win the premiership. Many would argue that the competition is fair enough already and the automatic stabilisers in place at the moment with the salary cap and draft are doing enough. While we have seen periods of domination from teams in the past such as the Brisbane Lions in the early 2000’s and the current Geelong team, these are rare occurrences in the modern era. History proved that the Brisbane team slipped down the ladder shortly after this dominant period and were forced to rebuild and the Geelong team will have to do the same reasonably soon as well. Sustained dominance is extremely hard to achieve due to the salary cap and draft. Positions on the ladder over years tend to behave in a cyclical manner. Clubs finishing lower on the ladder gain preferential draft picks and are able to build their playing list up to become a premiership threat. To illustrate such a point outgoing Collingwood coach Michael Malthouse proposed the theory of the premiership clock back in 2005. This is where your team can only win a premiership if you are situated in between 11 and 1 o’clock on the clock face. While this seems to be an obscure analogy, it complements the fairness of the competition. Once your team surpasses 1o’clock their chance to win a premiership or premiership window is over. This is where the team slips down the ladder due to retirements and other factors and the rebuilding phase commences and the team eventually works itself around the clock face progressing towards 11 o‘clock and a another shot at the premiership.

Political Relevance and Discussion
This debate about whether to put a cap on football department spending has political and economic precedence and can be categorised into a capitalism versus socialism debate. Capitalist promoting the free market economic system will despise the thought of businesses and in this instance clubs having limitations thrust upon by a governing body. As the belief is that the free market system allows innovation and growth usually resulting in benefits for greater society. Socialists would argue that wealthier clubs spending is only going to increase exponentially and it will be the people inside the club that benefit most rather than the greater AFL community and the redistribution of wealth will be very limited.

Which argument people side will usually dependent on self interest. This is why it will be extremely difficult to reach a compromise where the AFL clubs and their hierarchy of management will all be satisfied as they all will subjectively determine the merit of the idea. The wealthier clubs will give the idea a resounding no, whereas the poorer clubs will be excited by the proposal.

Recently the AFL has been accused of making knee jerk reactions to potentially short term problems. Football department spending is the latest topic and has been highlighted only by recent by the success of the wealthier clubs as Masters mentioned. However if the AFL truly believe in their system and the current equalisation scheme there should be no tampering and the system should remain as is. Only five years ago there was talk of the demise of the Melbourne based football teams based on the interstate teams dominance of the final series and subsequent calls for the AFL to interject. Due to the cyclical nature of the AFL fairness stabilisers this has turned around with the Victorian teams similarly dominant in this year’s final series.

Conclusion
In conclusion, I believe that while there is cause for concern in the differential in the spending amongst clubs, there is not sufficient evidence for change. The realisation is that there is no proven causation between football department spending and on field success. One season of correlation does not equal causation. However, if the disparity in football department spending between the clubs reaches upwards of 100% then the problem will need delving into. A possible recommendation for such an occurrence would be the clubs are only allowed to spend a certain percentage of their revenue. This will continue to provide the incentive for the financial sustainability of clubs without putting the poorer clubs at too much of a disadvantage where they are unable to compete all together and the AFL have a similar trend to European Football where the same clubs are competing for the top honours.

If the AFL is truly worried about the complete fairness the competition there are issues that need to be addressed before a cap is put on football department spending. This includes the fixturing of games. With 18 teams and 22 rounds there are bound to be some inequalities as the fixture is designed by the AFL and not drawn at random. Similarly not all teams get equal amounts of exposure, as the more popular teams play in the free to air timeslots to increase the amount of revenue for the television rights and as a consequence limits the exposure and reach of several other clubs.