National Registration Fee increase turns spotlight on FFA finances

Just as Judith Griggs wraps-up her work on the FFA Congress Review Working Group, the spotlight turns to FFA finances and financial management

At a time when sports management expert, Judith Griggs, is said to be 24 days away from finalising the report that is due to FIFA on the shape of a new FFA Congress, the fun and games continue.

Earlier in the week, Ray Gatt of The Australian wrote about the shock to all parties of the increase in the national registration fee (NRF) – we’ve previously referred to it as a ‘great big tax’ – of $1.40 to $14 for juniors and $8 to $33 for adult players. The fees had not been increased since 2013. 

The threshold issue is whether there should be a fee in the first place.

There shouldn’t; but such is the state of football’s finances that we have one, and have had one for decades. 

The junior fee increase is reasonable, roughly in line with inflation in those five years. The adult increase? A remarkable 32%, approximately three times the rate of inflation, and coinciding with a period of sustained low levels of wage increases in Australia.

What is even more remarkable is just how much the national registration fee now contributes to FFA’s bottom-line. As we have previously reported, the last time we knew this for certain was when FFA last had a mildly transparent annual financial statement (in 2010) with the NRF then representing approximately 6-7% of revenue.

It is much greater now. 

The latest Australian Sports Commission data shows that 663,400 5-14 year olds play football (both indoor and outdoor). As a proportion of all 5-14 year olds involved in physical activity, that is a participation rate of 14.1%. Compared with 2013 data, it is a significant increase in the overall number of children who play from 345,700, but a decline in the participation rate, which was then16%. 

The same ASC data shows that 1.1 million adults play the game, or 5.5% of adults. This compares with 499,500 and 3.6% in 2014.

The ASC data also shows on what basis the 1.76 million total players play the sport: for example, whether via a club or association, recreational only, a leisure centre, private training, or school.

For children, ASC data shows 574,900 or 86.6% play as part of a sports club or association, while half of adults play with a club or association.

If we were to assume that only half of these numbers played with a club affiliated to FFA – which is most probably a significant understatement – then that would mean the contribution to revenue of the NRF is in the vicinity of $13.7 million comprised as follows:

• Juniors:  50% of 574,900 = 287,450 x $14 = $4.0 million

• Adults:  50% of 586,100 = 293,050 x $33 = $9.7 million

Based on a letter sent by FFA CEO, David Gallop, to Member Federations on 27 June, which anticipates total revenue in 2018-19 of $121 million, this means that the NRF contributes at least 11% of total revenue. It is likely to be much greater because the number of players playing with a club affiliated to FFA is likely to be much greater than the fifty per cent we have assumed for illustrative purposes.

Where does the money go?

According to the letter to Member Federations, in 2018-19 the anticipated $121 million total revenue will be spent on the A-League, the 2019 Asian Cup, the 2019 Women’s World Cup  and ‘sustaining’ grassroots programs. Gallop states that the increase in the NRF is necessary to “maintain programs for the junior national teams and the Matildas” as it is a particularly “intensive year” in the four-year funding cycle. 

Distributions to A-League clubs and Member Federations

In recent years, the single biggest expense item has been the distributions to the nine Member Federations and the A-League clubs. In 2016-17, it accounted for $32 million or around 30% of expenses. In 2018-19, that is set to increase to roughly $40 million or 33% of expenses.

In 2018-19, between the nine Member Federations – who, by the way, also charge their own large ‘tax’ on players – they will receive $5.9 million from FFA. 

In a separate letter to A-League Chairmen and CEOs (as revealed by Gatt), Gallop informs the clubs that they will each receive $3.4 million to cover both A-League and W-League player wages, excluding travel subsidies for the A-League, W-League, Youth League and FFA Cup. These travel subsidies generally vary by club to take account of the different costs incurred by, for example, Perth Glory compared with Sydney FC. The distribution also excludes a share of the $3 million Marquee Player Fund at FOX Sport’s insistence who have indicated that it must be used for the A-League as a whole.

Team and Employee wages

The second largest expense is team and employee wages which, last year, accounted for $26.6 million or 25% of expenses. If counted with executive management salaries – a further $4.7 million in 2016-17 – then this expense item is roughly equivalent to that of distributions to Member Federations and A-League clubs. 

Socceroos

Some attempt to sheet the blame home to the Socceroos whenever there is an increase in the NRF. This is not so. Ray Gatt also reported that the 23 Socceroos received $300,000 each for taking part in the World Cup. That accounts for $6.9 million of the approximately $12.8 million FFA received from FIFA for the World Cup. 

So while the $300,000 is headline-grabbing, and may be generous compared with players from other national teams, the NRF doesn’t pay for the Socceroos. They have more than covered their costs for many years when revenue from sponsorship, events, merchandise, licensing and World Cup participation, as well as their share of the broadcast deal, are taken into account. 

David Gallop alludes to this in the letter to Member Federations where he notes that $3.8 million in revenue will be “lost” in 2018-19 “due to the absence of a structured World Cup qualifying process” – in other words, no qualifying games in the year after a World Cup.

What about FFA revenue?

As noted earlier, there is little information on the breakdown of revenue, which is one of the reasons why the A-League clubs fought so hard to have an insight into FFA accounts, and have pursued the battle with the FFA Board on the structure of football including the composition of the Congress. 

What we do know from Gallop’s letters is that:

• On the basis of Australian Sports Commission participation data, which is widely quoted by FFA, the NRF will bring in at least $13.7 million but probably more.

• Another $5 million will be received from FOX Sports as part of the broadcasting agreement, presumably taking up the contribution to $57 million.

• Gallop also mentions the need to secure another sponsor of $1.5 million value. 

We also know that, in addition to the $12.8 million from FIFA for World Cup participation, FFA receives a further $5 million from FIFA each year as the standard payment made by FIFA to all of its member associations. This was a key election promise of FIFA President Gianni Infantino, and with a FIFA Presidential election next year, is unlikely to stop; in fact, FIFA has budgeted for a 20% increase over its four-year financial plan from 2019-2022.

The equation from an A-League clubs’ perspective, and the primary point of contention between the clubs and FFA when the FFA wars commenced, looks like this:

• The clubs (including their A-League, W-League and NYL operations) would bring in at least 80% of the TV deal and digital rights, and at least half of sponsorship for a total value of around $70 million. That is likely to be conservative. It also doesn’t include smaller revenue items such as merchandise and licensing.

• In return, the clubs get less than half of that in direct distributions ($34 million); and FFA centrally cover travel subsidies, access to a Marquee Fund and administration and marketing of the competition. If the latter four items cost FFA $36 million, then their management of the competition needs attention and fast. If they don’t cost FFA $36 million - and there is no way that they do - then it is plain wrong to suggest that the increase in NRF is in any way contributing to, or subsidising, the professional levels of domestic competition. 

By the way, while player fees increase, and Judith Griggs puts the finishing touches to her report, former NAB banker, Joseph Healy has been re-appointed to the Board for a further two-year term. This is after his second four-year term expires later this month. While the two-year re-appointment is allowable under the FFA Constitution, presumably A-League clubs and even the normally acquiescent Member Federations would be questioning the timing and necessity of this pre-emptive two-year appointment when the entire FFA Congress is about to be restructured.