Challenges Facing Football Federation Australia Limited
Football Federation Australia Limited is a company that manages several sports in South Australia. The company has experienced several challenges since it was first established in 1911. Some of the challenges include low spectator attendance, therefore, leading to poor revenue collection. This paper focuses on some of the leagues supervised by FFA Limited (MLS and A-League). MLS made a successful improvement in regards to the attendance rate and the overall revenue collected. The success is mainly due to establishing a competitive balance that gives spectators the desire to watch games. Besides, the MLS league increased the number of international star players that a club can sign in. An increase in the viewers base and followers increased club and FFA revenue. The A-League should implement similar strategies to be as successful as the MLS or even surpass their success level. Some of the techniques may be increasing the number of global players that a team can sign, while others may be unique.
Keywords: Competitive balance, Spectator attendance, and international players.
Football Federation Australia Limited
Football Federation Australia Limited is a body that governs beach soccer, soccer, and futsal in Australia. It is headquartered in Sydney. The federation was first established as Football in Australia in 1963, even though Australia’s initial sport’s governing body was founded in 1911. In 2003, the company was renamed the Australia Soccer Association, after which it was reconstituted in 2005 as Football Federation Australia. In modern recognition, a joint decision was accepted to set up the name to provide a united sport in consideration from the present company CEO, Johnson James.
Moreover, Football Federation Australia has several roles in governing sports in Australia. It supervises futsal, beach, Paralympic, youth, women, and men national teams in Australia. It also oversees the national body that governs sport and the state coaching programs. It supports amateur, professional, and semi-professional football sport in the state. The company decided to quit the Oceania Football Confederation, where it was one of the founding members, and joined the Asian Football Confederation in 2006 January. In 2013 August, Football Australia joined ASEAN Football Federation.
Additionally, In 2008 February, Football Federation Australia officially declared their bidding on the 2015 AFC Asia Cup, 2022, and 2018 FIFA World Cup. The federation decided to withdraw its bid for the 2018 World Cup; instead, they focused on the 2022 contest bid (Bossi, 2015). The body failed in its bid for the 2022 World Cup, receiving just one vote from FIFA’s executive. In 2015, after United Arab Emirates (UAE) and Iraq were defeated during the 2015 AFC Asian Cup, an organization known as the West Asian Football Federation tried to eliminate Football Federation Australia from the AFC cup mainly because Australia was hugely benefiting from Asia’s involvement yet giving minimal return and profit. Several board directors of the FFA company were replaced, in which Chris Nikou replaced Steven Lowry as the Board chair in 2018. The company in 2020 earned a right to act as a joint host of the FIFA Women’s World Cup of 2023 together with New Zealand.
The vision of Football Federation Australia Limited
Football Federation Australia Limited’s vision is divided into three parts that, when merged, provide FFA and football’s preferred future. The sports organizations in Australia must share a shared vision, understanding, and beliefs for football to develop and progress. The three dreams include football, governance, and management. FFA has an effective and efficient construct administered and continuously managed to ensure transparency, profitability, sustainability, and accountability in terms of leadership. Concerning governance, the FFA is perceived as an efficient, professional, and accountable Football governing body valued by all the company stakeholders. Football is a voluntary sport for South Australian people with known values for coaching and officiating reliable ways from contribution to performance.
FFA’s goal is to develop and nurture sport while operating as the voice uniting coaches, administrators, spectators, and players.
The federation’s main objective is to foster a friendly relationship between officials and players by encouraging soccer in the country. The second objective is to control soccer throughout the country, preventing constitution breaches, and protect against soccer abuse.
The federation aims to guide its members to comply with the Football Australia constitution, its applicable statutes, regulations, and by-laws guiding the game in different regions.
Comparative Analysis of the Market Factors on the MLS and A-League
League Financial Strength
The financial strength of the A-League increased considerably in 2018. The league’s overall revenue increased by twenty-five percent, from 105.6 million dollars in 2017 to 132.5 million dollars in 2018. The income was obtained from sponsorship, host government, registration and affiliation, prize money, grants, broadcast, gate receipt, and many others. Broadcast provided an increase of 16.9 million dollars. The broadcast category includes the international and domestic transmission rights to Football Federation Australia Tournaments (FFA Cup, Hyundai A-League, and Westfield W-League). The class also comprises friendlies of Westfield Matildas, some Qualifiers of World Cup, and Caltex Socceroos. The considerable rise in revenue collection signifies the start of the 6-year association with Fox Sport that started in 2017 July (Hall, 2017). The number of sponsors increased, providing a rise of 2.1 million dollars in revenue. The increase comprises both values in-kind and cash value. A portion of this increase is credited to sponsorship related to 2018 World Cup participation. Nevertheless, the overall rise in support was experienced even in the exclusion of World Cup incentives.
Furthermore, the gate receipt also provided a significant increase in the overall revenue. The increase was approximately 0.7 million dollars from the 2017 financial year. Gate receipts were collected across Westfield Matildas, Hyundai A-League, FFA Cup, and Caltex Socceroos match. This increase is accredited to the rise in FFA cup matches in the 2018 financial year. Similarly, the host governments also played a part in increasing the overall revenue collected. The funds provided by the host governments led to an increase of 2.8 million dollars. This class comprises the revenues collected from different state governments to safeguard the rights to hold various matches in their nations. Football Federation Australia also received several grants for particular aims from multiple sources such as the Sports Commission of Australia, numerous government departments, AFC, and FIFA (Football Australia Finance…. 2021). These grants led to an increase of revenue by 1.2 million dollars. In the 2018 financial year, activity in planning the bid by Australia to host the 2023 Women World Cup began in which the grant revenue regarding the preparation has already been identified. FFA received several prizes increasing the overall revenue by 8.2 million dollars. In the financial year 2018, participation in the world cup 2018 increased prize money. All the prize money was shared among the players.
MLS on the other hand experienced a great increase in their revenues. Much of increase arise due to the growth of the number of spectators attending their matches. MLS match attendance increase from 17000 to 21000 raising both gate receipt and the overall revenue collected. The viewers of their matches globally also increased raising the revenue collected from broadcast. This steep growth in the collected revenue can mostly be attributed to the implementation of the rule allowing the clubs to increase the number of foreign players they sign-in. Similarly, the increase in the attendance was due to the construction of a new modern stadium that attracted many of the MLS fans to watch the matches. They built a unique stadium from in the center of the city that caters for the needs of the supporters and superstars (Ogden, 2016)
Ownership Financial Strength
MLS is operated as a single entity structure of the business and reserved salary cap (Baxter, 2015). The number of selected players allowed to be signed by teams is just three. Sometimes the governance board of the league allows exceptions to the spending rule by the groups. They may let other teams sign more than three players whose pay does not count against the limit. They allowed the teams to spend an additional 500000 dollars in the league’s money to sign in players. The board is even willing to allocate more funds without changing the limit of the salary. They are making this decision to attract more valuable international players to play in MLS to keep developing domestic hopes. Retaining low salary limits helps the team to minimize spending.
Besides, the owner aims to make sure that they spend more money efficiently and effectively. The league spent approximately 250 million dollars on the development of players and the salaries in 2006. The money also included the academy programs. MLS board of governance also allowed the potential owner to possess multiple teams. The owners who could manage several teams were given the opportunity, which helped raise their financial strengths (Baxter, 2015). The owners were able to purchase international players, which, in turn, attracted the attention of fans, increasing gate receipt and broadcasting fee. The number of fans attending the matches increased from just 17000 to 21000 people. An increase in fans’ number for a team results in an improved club and federation’s revenue. Similarly, the owner’s financial strength may help the team win prizes. The more the awards, the more the prize money.
On the other hand, several clubs on the A-League have huge unpaid depts. This shows how weak the financial strength of their owners is. For instance, Bakrie Group is fighting hard to handle and pay approximately eight billion dollars debt. The club also have scarce resources for recapitalization. Several other clubs are such as Brisbane owe creditors such as its staff and players over two million dollars. The private club owners in the A-League are entitled to a loss of approximately 200 million dollars combined (Stensholt, 2017). That challenge makes these clubs attractive to investors.The owners of clubs in the A-League have weak financial strength compared to MLS clubs.
Global Off-Field Business Opportunities
MLS and A-League agree, and they are searching for other various means of obtaining the best returns from soccer. They participate in many various off-field businesses to increase their revenues. One of the opportunities lies in the broadcasting deals signed. Galaxy is the leading club in bringing the success to MLS. They are respected beyond the game and have also succeeded on the pitch (Ogden, 2016). International clubs like Liverpool, Manchester United, Tottenham, and Chelsea have created interests, and A-League needs to adopt global networking. People worldwide watch international matches that the broadcasting Television pay the registration fee to the league to gain broadcasting rights (Plumley, Ramchandani, & Wilson, 2018). They want many people to watch the A-League to their chance with channel seven, nine, and ten market penetration. The league hopes that the TV broadcasters will ring the matches into the mainstream and offer A-league clubs financial stability. Nevertheless, the company has a challenge in securing the agreement since other organizations are interested in signing a deal with Channel nine.
Besides, FFA also participates in the Youth Academy programs, which helps raise additional federation revenue. Youth academy reaches as down as under twelves offering pathways to the juniors. Currently, FFA is branching out to have the senior group and younger ages in the club. The youngsters are the immediate club territory. The younger generation produces dedicated players developed by A-League (Bossi, 2015). Besides, it helps raise the club’s revenue when the young professional player who wants to be signed in by another club comes through its youth rank. Furthermore, the club has constructed a new football stadium of its kind in Parramatta. The approximate capacity of the stadium is 30000 individuals. Enhanced joint facility and actual match day experience in a current stadium will clear the way for A-League clubs.
Football has become an international sport. However, MLS does not have several international players. Clubs are restricted and limited to the number of valuable international players they can employ. The MLS clubs are allowed to sign up for three foreign players. Major League soccer only allows one hundred and sixty international players every season, distributed among the clubs (“Football Australia Financial …”, 2021). Due to this strict rule, there is a small number of players in MLS playing for their national teams. These players tend to be stars when they come along. MLS misses several players when some are playing for their national teams since their schedules continuously collide with the FIFA.
International Football is one of its kind compared to the main American sports such as baseball, basketball, football, and hockey. Global soccer no draft similarity, free agency, and it is rare for the teams to trade their players. Instead, the players move up the grades to get their desired teams after reaching their peak (Hoff, 2016). Players may sometimes have free agency, though it is rare. Trade between teams only involves cash and not a different player in return. MLS super draft occurs annually. Here the clubs chose college players, hoping to help them climb the rank in the league. Also, it creates a shift in MLS teams where the worst clubs are allowed to pick first as the champions pick last. The draft theory in MLS promotes equality among clubs, thus, enhancing competition every season. The approach assists in strengthening weak teams and prevents strong teams from bringing in strong players.
Global Media Exposure
MLS and A-Leagues’ worth and value have steeply risen as fans throughout the world progressively follow their preferred players, tournaments, and clubs. The exploitation of television rights signifies the maximum value of loss and profit for the top MSL leagues and clubs. TV broadcasters fight to gain the rights to air soccer league games and be the legitimate holder of the competition’s broadcasting rights. In this context, the battle to acquire the elite football leagues’ rights has been the most vital broadcasters (Baxter, 2015). The European premier league often has been the leading concerning TV rights’ value compared to other leagues. With a centralized distribution platform, the English Premier League is well known for proper distribution of broadcasting money with all the clubs. Fair and appropriate distribution aim at establishing a competitive balance and preventing a huge financial difference.
Moreover, new guidelines and rules created changes in the media rights landscape when MSL was first established. A new mentality that was profit-driven emerged as the pillar of the organizations of the clubs. The commencement of a new era was marked in 1992 when the premier league inflicted new guidelines as the league influence grew in both the domestic and international media market. The introduction of leagues on Sky Sports is the reason for the turning point. The technology’s significant improvement is the launch of subscription-based broadcasting that used satellite signals as an entrance to permit viewers’ access. Many other features related to the reportage of sports emerged. They include installing several cameras around the field to cover the play from the vast display of the TV’s angles. Football clubs own the broadcasting rights; however, they always give the A-League a mandate to license the rights to the buyers centrally. The MSL constitution controls the licensing and ownership of righteousness, and three-quarters must approve any alteration of the clubs. Many of these rights can be directly utilized by clubs. It is clearly defined the rights that can be used under the agreement of the club license. However, selling of these rights to third parties by clubs is prohibited. There is currently joint broadcasting in the local market marked by BT and Sky broadcasters in the 2016-12019 and 2013-2016 cycle. These broadcasters have divided the rights between each other.
Strategies for A-League
MLS have used several strategies to ensure their success. A soccer league’s success is determined by the spectator attendance and the number of viewers watching the league. MLS has employed several strategies to ensure an increase in the attendance of the spectator. Similarly, A-League should follow the footsteps of MLS to enhance their success.
The first strategy that A-League should employ to ensure their success is to increase the number of international star players in their clubs. One factor that affects the popularity and spectator attendance is star players’ presence (Hall, 2017). The presence of a star player in one of the performing teams may increase spectator attendance and raise gate revenue. MLS has a restriction on the number of foreign players that should be available in the league. They allow teams to sign in a maximum of three international players each season. However, sometimes they make exceptions concerning this rule, thereby allocating more funds for the clubs to spend on the global players. The addition in the number of international star players has dramatically improved the attendance in their matches. Moreover, the number of viewers watching MLS matches worldwide has increased due to star players’ introduction in their leagues. At the start, the attendance was as low as 17,000 spectators. But when they started signing in international players such as Beckham and Drogba, the number sharply increased (Hoff, 2016). A-League should increase the number of international players allowed in the league each season to improve their success.
Besides, MLS built a modern stadium for their matches to attract more spectators and viewers. Similarly, A-League should build new stadiums every season for their matches to raise game attendance. The stadium in which a team is laying is another significant factor for spectator attendance in sports. Many sports management and organizations will always build new stadiums hoping to increase their match attendance. There is still an increase in match attendance of approximately thirty percent in the stadium operation’s initial year. Spectators enjoy watching matches in a comfortable stadium (“Football Australia Financial …”, 2021). A new modern stadium always provides all the expected comfort to the spectator. In the second year of stadium operation, the teams still experience a decline in attendance. Therefore, A-League should always focus on renovating and maintaining the condition of their stadiums. Besides, it ensures the quality of the stadium remains intact.
Another strategy MLS has used to ensure its success is to provide a competitive balance. It creates parity and equality of clubs in a sports league. MLS has confirmed competitive compensation through their supper draft, which occurs every year. In the strategy, teams pick players from youth colleges, and the weak team is allowed to pick first, leaving the established teams to choose last (Hoff, 2016). Competitive balance is a vital factor in spectators’ attendance because people do not like attending games to ensure the possible outcomes. Currently, both the NFL and NBA have the same technique for establishing equality in clubs concerning competitive balance. These leagues ensure parity through the rookie draft and salary cap. A-League must always provide competitive balance to enhance spectator attendance. The association can achieve this by employing a rookie draft strategy. The draft is structured in a seventeen-lottery format. It is set up in a structure that the clubs that previously missed the playoffs are placed in the lottery process to establish the draft’s order. The draft is set up in that the teams with poor records in the previous season are allowed to get higher picks.
However, the A-league needs to apply some strategies to remain competitive. A-League should employ some of the unique approaches to ensure their success by implementing formats and rules concerning competitive balance. The A-League should implement a financial fair play rule. Besides, there is no limitation and restriction to the number of foreign players that a team can sign in. The signing-in rules should be left open to allow free movement of players worldwide to join A-League. Elimination of the regulations restricting the number of star players to be signed in by a given club increases the number of star players in the league, raising the spectator attendance. Implementation of the free signing rule will ensure competitive balance since all the teams will be open to employing players they feel are perfect from any part of the world. Similarly, the star players will help the teams win prizes, increasing prize money. Besides, as these international players have their followers worldwide, the A-league matches’ viewers will also increase with foreign players’ signing.
Furthermore, the A-League should invest more in off-field businesses to increase their revenues. The league should start-up academies for training juniors and young stars (Bossi, 2015). The academies will increase the earnings of the club since the trainees will be paying training fees. Besides, when the youngsters move from a lower rank to a higher one, other teams will be interested in them, leaving the club with a considerable sum of money when they transfer to other clubs. Another off-field business is sponsoring other national teams to gain popularity. The sponsorship can be achieved through finance provision for their training purposes. Many players and viewers will be attracted to the league, in turn increasing its revenues. That is revenues collected from broadcast and gate receipts.
Additionally, increasing the number of matches to be played each season is another viable strategy for the A-League to gain popularity. The number of games affects the total gate receipt revenue collected each season since the attendance will be increased. An increase in the number of matches also increases the broadcast cost because the TV broadcasters will increase the number of rounds they present to the viewers. Players will also be motivated since their salaries will increase. Similarly, the winning incentives will also boost their morale, making them play harder, increasing the league’s earnings.
In a nutshell, Australian sports have been broadly supported by the FFA. It is the governing body the manages sports in South Australia. The company has a long history starting from its initial stages when it was established to its current state. FFA’s was developed to nurture sport while operating as the voice uniting coaches, administrators, spectators, and players. Its objective was to foster a friendly relationship between officials and players by encouraging soccer in the country and controlling soccer throughout the country by preventing constitution breaches and protecting the league against soccer abuse. Also, FFA has an effective and efficient management system that continuously ensured transparency, profitability, sustainability, and accountability in terms of leadership. The MLS has been more successful in its operation and terms of revenue collected compared to A-League. The success may be attributed to an increase in the number of supporters and viewers earned since beginning their operations. For the A-League to be as successful as MLS, its governing board must implement specific strategies to help it rise. Some of the methods might be similar to those of the MLS, as others may be unique.
Baxter, K. (2015, December 05). MLS goes from near extinction to remarkable success. Retrieved February 17, 2021, from Los Angeles Times: https://www.latimes.com/sports/soccer/la-sp-soccer-baxter-20151206-story.html
Bossi, D. (2015). The biggest issues facing the A-League heading into the 2015-2016 season. International Journal of Sport Management. https://www.smh.com.au/sport/soccer/the-biggest-issues-facing-the-aleague-heading-into-the- 20152016-season-20151003-gk0ixj.html
Football Federation Australia Limited. (2021). Football Australia Financial Reports. Retrieved February 18, 2021, from Football Federation Australia Limited: https://www.footballaustralia.com.au/governance/financial-reports
Hall, M. (2017). Can the A-League learn anything from the US experience with MLS. International Journal of Sport Management.
Hoff, E. (2016, December 21). Ideas for Making “MLS 4.0” a Success. Retrieved February 2021, 2021, from SB Nation: https://www.epluribusloonum.com/2016/12/21/14034360/mls-reform-ideas
Ogden, M. (2016, November 14). LAFC stadium key to success in MLS: ‘The world’s game in the world’s city’. Retrieved February 17, 2021, from ESPN Sports: https://www.espn.com/soccer/major-league-soccer/19/blog/post/2996154/lafc-stadium-project-key-to-success-in-mls-the-worlds-game-in-the-worlds-city
Plumley, D., Ramchandani, G., & Wilson, R. (2018). Mind the gap: an analysis of competitive balance in the English football league system. International Journal of Sport Management and Marketing, 18(5), 357-375.
Stensholt, J. (2017, March 03). Soccer’s big money challenge: make the A-League attractive to investors. Retrieved February 18, 2021, from Financial Review: https://www.afr.com/companies/sport/soccers-big-money-challenge-make-the-aleague-attractive-to-investors-20170301-guo7bs