User:Stewart.boyd/Business, Politics and Sport – The expansion of the Australian Football League







Australian Football is one of the most skillful and entertaining football codes played anywhere in the world. Yet it does not enjoy the same international exposure or recognition as soccer or even rugby codes. These other codes, began in England and spread internationally with the expansion of the British Empire in the 19th century. Indeed, until just a few decades ago, Australian Football was mostly a game played by expat 'southerners'. From its humble beginnings on the Victorian goldfields in the 1850s this is now changing. Driven by the vision of the Australian Football League (AFL) Commission, created in 1985, the game is expanding rapidly throughout Australia and internationally AFL Commission, 2007. At the elite level, a new AFL club has been established in southern Queensland - the Gold Coast Suns, and in NSW - Greater Western Sydney or GWS Giants. More importantly, the AFL is investing heavily in junior and womens programs throughout Australia. It is also expanding internationally with outreach into China and South Africa and the establishment of the AFL International Cup competition. This growth has been underpinned by two important factors: the political and financial support of the state and federal governments in Australia and the enormous revenue being generated by television broadcast rights. In a tough competitive market against the other football codes, Australian Football's future for further expansion is optimistic.

Background


The origins of Australian Football are a little murky. There are records of the early settlers playing a form of 'foot-ball' in the 1840s. There are also records of Irish, English and Scottish immigrant miners entertaining themselves with a hybrid Rugby and of Gaelic football on the gold fields of Victoria in the 1850s. Over time, rules were created and the first recorded game of Australian Football was played on 7 August 1858 between Scotch College and Melbourne Grammar.

The game blossomed throughout Australia. By the 1860s the game had expanded nationally to Western Australia, South Australia, New South Wales, Queensland, and internationally to New Zealand. Australian Football's heartland remained Victoria. In 1897 the Victorian Football League (VFL) was formed, initially comprising seven teams from Melbourne and one from Geelong. However, despite growing quickly in southern Australia, by the 1890s the game was in decline in NSW, QLD and NZ due to competition from other codes and colonial rivalry. Throughout the 20th century, Australian Football was by far the most popular code in Victoria, South Autralia, Western Australia and Tasmania. Acknowledging the need to become an Australia wide game to survive against the expansion of rugby and soccer, the VFL renamed itself the Australian Football League in 1985 and began its expansion into the other states AFL.com.au Network, 2007

In the 2011 season, the Gold Coast Suns joined the competition and in 2012 the Greater Western Sydney Giants will become the 18th team in the competition (Official website of the AFL: AFL.com.au Network, 2000). The expansion makes the AFL Commission a unique business, operating in all Australian states and territories. The immediate goal of the AFL Commission now is to consolidate this expansion and to expand its presence internationally.

The AFL's Broadcasters and Government Relations Underpin Financial Performance and Growth
Despite only eleven of the sixteen AFL clubs trading profitably in 2010, the league as a whole recorded a revenue of $335.9 million. This record profit was $32.4 million more than in 2009(Fitzpatrick, M., 2010: pg. 15). Furthermore, the operating surplus before grants and distributions was $230.4 million. After payments from reserves of $35.1 million, the net profit stood at $4.8 million (Anderson, I., 2010: pg. 57). The AFL clubs earn most of their own income from membership fees, gate takings and merchandise. This is an important source of revenue but clubs could not survive without the disbursements of cash from the AFL Commission, which the Commission receives for managing the broadcasting rights on behalf of the clubs. In 2011, the AFL Commission sealed a five year $1.235 billion broadcasting rights deal with Channel 7 and pay-TV giant Foxtel [http://www.foxsports.com.au/afl/afl-poised-to-announce-historic-new-tv-deal-with-foxtel-channel-7-worth-an-estimated-1-billion/story-e6frf33l-1226046219071 Fox Sports Staff,. 2011]. The AFL can command such huge broadcasting sums due to the popularity of the game. During the premiership season, for example, broadcasters showcased the game to an average audience of 4.16 million each week. Digital media partner, Telstra BigPond attracted 3.7 million unique browsers per month [http://www.afl.com.au/portals/0/afl_docs/afl_hq/annual_reports/2010/AR2010_04_ExecSummary.pdf Fitzpatrick, M., 2010: pg. 15]. Furthermore, the 2010 Grand Final between Collingwood and St Kilda was the most-watched sporting program of the year, with an average audience of 3.639 million people on the channel Seven Network, while the 2010 Grand Final replay attracted an average audience of 3.522 million and was the second most-watched sporting event in Australia, contributing a further $16 million in revenue (Anderson, I., 2010: pg. 57). The broadcasting rights revenue has allowed the AFL to ensure the financial stability of clubs. The AFL also invests nearly $24 million into the Gold Coast and GWS regions, resulting in additional revenue from these two new priority growth markets [http://www.afl.com.au/portals/0/afl_docs/afl_hq/annual_reports/2010/AR2010_09_FinanceAdminCorporate.pdf Anderson, I., 2010: pg. 57].

Australian governments at all levels have been quick to capitalize on the game’s popularity, often making election promises related to improving major AFL infrastructure. For example, according to the AFL’s 2010 Annual Report, the NSW government has contributed $45 million to redevelop the Royal Agricultural Society’s show grounds at Sydney Olympic Park, so they could become the home of the GWS Giants AFL club. In addition, the South Australian government has committed $535 million to redevelop the Adelaide Oval, and the Victorian government has agreed to contribute $30 million to the redevelopment of the Great Southern Stand at the Melbourne Cricket Ground [http://www.afl.com.au/portals/0/afl_docs/afl_hq/annual_reports/2010/AR2010_04_ExecSummary.pdf Fitzpatrick, M., 2010: pg. 13]. At the community level, local governments have also supported the game through the provision of new and improved suburban grounds and club rooms. In emerging markets, governments have also recognized the economic benefits – particularly to the hospitality sector – by hosting AFL games. The ACT government, for example, made a 10 year agreement for the GWS giants to play 4 games per year at Manuka Oval in Canberra, The financial support provided by the federal, state and local governments was phenomenal and exceeded $100 million. This form of funding ensures AFL’s future financial stability [http://www.afl.com.au/portals/0/afl_docs/afl_hq/annual_reports/2010/AR2010_04_ExecSummary.pdf Fitzpatrick, M., 2010: pg. 13].

Flourishing of AFL Queensland, Gold Coast and the licensing of GWS
In Recognizing the Gold Coast region as a priority area for expansion, in 2000, AFL Queensland implemented a state development plan on behalf of the AFL Commission to increase grass root participation in the state Demetriou, A., 2010: pg.19. Initiatives included expansion of the South-east Queensland competition, support for regional bodies especially in the Cape York region of far north Queensland, refinement of talent pathway programs, new administration and talent development headquarters in Brisbane, the development of community facilities in Townsville and a multi-sports complex on the sunshine coast Demetriou, A., 2010: pg.19. The development plan has been highly successful. In 1999, 23,000 people were actively playing AFL in Queensland. By 2010, participation had increased to 112,447 people[http://www.afl.com.au/portals/0/afl_docs/afl_hq/annual_reports/2010/AR2010_04_ExecSummary.pdf Demetriou, A., 2010: pg. 19]. On 31 March 2009, Queensland welcomed its second team to the AFL competition when the Gold Coast Suns was granted a provisional license[http://www.afl.com.au/portals/0/afl_docs/afl_hq/annual_reports/2010/AR2010_04_ExecSummary.pdf Demetriou, A., 2010: pg. 20]. In 2011, the Gold Coast Suns became the 17th club in the AFL competitionOfficial Website of Gold Coast Football Club., 2011.

Apart from south Queensland, the AFL Commission has also identified the suburbs of Western Sydney as an area it must penetrate in order to consolidate the game in NSW. This will be a huge challenge given the popularity of rugby league in this area. On 29 July 2010, the GWS Giants were licensed and became the AFL’s 18th club. They will enter the AFL competition in 2012. The license to GWS, is the seventh issued by the AFL, since it was first established in 1985 [http://www.afl.com.au/portals/0/afl_docs/afl_hq/annual_reports/2010/AR2010_04_ExecSummary.pdf Demetriou, A., 2010: pg. 21]. In credit to its broadcasting revenue, the AFL Commission is cashed up and prepared to make the long term investment required until the Gold Coast and GWS are financially viable.

AFL: A global game
Kevin Sheedy: “The smaller the world gets the more I see other games such as soccer, rugby and American Football, the more I am convinced that we have the greatest game on the planet and we should be sharing it with the rest of the world” 2008: AFL.com.au Network.

For more than a decade Australian Football has been played by teams across the world. The first international competition was in 1995 at the Arafura Games in the Northern Territory capital of Darwin. Played annually, these Games bring together Asia Pacific nations and were instrumental in the formation of the International Australian Football Council. The success of the Arafura Games ignited the first International Cup in 2002, making the AFL Commission the governing body of Australian Football internationally. In 2002, the first official International Cup was held in Melbourne, with eleven nations competing. Ireland took out the top spot. By 2011, the International Cup competition expanded to include 18 men’s teams and 5 women’s teams 2011: AFL.com.au Network. The International Cup competition has helped expose AFL internationally. There are currently 14 recognized international bodies across four regional delegates – America, Africa, Europe and Asia Pacific 2011: International Football. Global participation has rapidly increased and now exceeds 60,000 registered players outside Australia [http://www.afl.com.au/portals/0/afl_docs/afl_hq/annual_reports/2010/AR2010_10_CommunityDevelopment.pdf Mathews, D., 2010: pg. 89].

The AFL Commission has deliberately focused its expansion efforts on two countries – South Africa and China. In South Africa, the AFL Commission no doubt hopes that the game will prove as popular with the black population as it is with indigenous Australians. In April 2007, AFL South Africa launched Footy Wild, a development program for youth players. In one year, the program has grown to include 8,000 Footy Wild players and over 500 volunteer coaches, umpires and administrators http://www.afl.com.au/development/international/internationalleagues/southafrica/tabid/10346/default.aspx, 2011: AFL.com.au]. In April 2010, The AIS-AFL Academy toured South Africa competing against the South African Lions at Sahara Park Newlands in Cape Town. Furthermore, the Australian Under-23 amateur side also successfully toured South Africa during the 2010 South Africa National Championships in Cape town (Mathews, D. 2010: pg. 74).



The second key international growth market, identified by the AFL, is China. In part, efforts to expand the game there resulted from the 'China Strategy’ implemented by the Melbourne Demons AFL club. The Club’s objective was to exploit links between Melbourne's large Chinese community and promote interest in the game abroad. The strategy gave two Chinese players, Zhao Wei and Zhao Yong Gen, the opportunity to train in Australia with the Melbourne Football Club on a two-week pre-season development scholarship 2011 AFL China – AFL.com.au. A major highlight was the exhibition match between two AFL Clubs, the Melbourne Demons and the Brisbane Lions at Jiangwan Stadium on October 17, 2010 (AFL China – AFL.com.au, 2011). More than 7000 people attended this match as part of the Kaspersky Cup, AFL Shanghai Showdown. The match was televised live in English and Mandarin on International Channel Shanghai and G-Sports Channel with a total average audience of 300,000 viewers. Furthermore, in 2010 a full-time development officer has been appointed in China, introducing grass root level development program to more than 300 children in Shanghai schools (Mathews, D. 2010: pg. 78).

Conclusion
Since the first game in 1858, Australian Football has expanded throughout Australia and internationally. Today, it is played by over 751,015 people across Australia. It has also become a highly successful business enterprise run by the Australian Football League Commission. Its success is underpinned by two key factors. The first factor is the Commission’s adept handling of broadcast rights agreements which have reaped a financial windfall. These funds are used to keep several of the clubs financially viable and to finance its development and expansion program at both the elite, state and community levels across Australia. The second factor has been the favourable political treatment AFL has received from governments. Once again, the AFL Commission can take some credit for astutely managing these relationships. They have resulted in significant government investment in AFL facilities to support the game, both at the elite level and in the community. Within Australia, the AFL has eyed south east Queensland and western Sydney, as high population areas in which it must penetrate and capture market share, to ensure its status as the pre eminent national football code. As a result of its expansion and development initiatives in both Queensland and New South Wales, membership numbers for newly developed AFL clubs, Gold Coast Suns and GWS Giants has generated further revenue for the AFL Commission. This has fostered the financial stability of the sport in the heartland of rugby league. Beyond these two focal areas it allows the AFL Commission to continue to its wider national expansion objectives. Outside Australia, the dominance of soccer as the ‘World Game’ means the AFL Commission faces a tough environment to expand the game. Its strategy of focusing on South Africa and China, as well as support for the International Cup competition is bearing fruit. The game appears to have a bright future.