The Smith Review into the sustainability of football in Australia has recommended that the Hyundai A-League freeze its salary cap, with the burden of costs to club owners seen as one of the most significant issues hindering future development of the game.
The Smith Review into the sustainability of football in Australia has recommended that the Hyundai A-League freeze its salary cap, with the burden of costs to club owners seen as one of the most significant issues hindering future development of the game.
The review was ordered by the federal government in April this year, with the Hon Warwick Smith (AM), the current chair of the Australian Sports Commission, asked to conduct a review of the financial health of the round ball code in Australia ahead of the 2015 Asian Cup, which will be hosted in Australia.
Smith’s findings were broad ranging, covering everything from the need to connect better with grassroots football, a greater need to seek feedback from A-League owners on strategic decisions, expansion of the A-League, cost management of FFA head office and broadcasting legislation.
But no doubt the most startling finding is that the any expansion of the current salary cap, which totals $24 million across the ten clubs, should be shelved and FFA should look to reduce the cap in order to bring it in line with other codes.
The report says that the $32 million in total spent on player payments (which include marquee payments) represents 40 per cent of income generated by the A-League.
The AFL, NRL and Super Rugby spend only 20 per cent of their income on player payments.
“While recognising the particular challenges faced by football, where there is strong international competition for talent, earning the right to grow must also apply to A-League player salaries,” the report said.
“Salaries have increased at an unsustainable rate, out of step with the income the product generates and at a time when the Australian dollar is extremely competitive in the international player recruitment market.”
“At a minimum the salary cap must be frozen, but it would be appropriate to explore options to reduce the cap. Options to adjust or remove the minimum player payment which artificially inflates incomes must also be considered.”
“Unless this happens, given the proportion that player costs represent in clubs’ total cost base, A-League clubs will, in the absence of a considerable increase in their revenue streams, struggle to move to a position of sustainability or profitability for the foreseeable future.”
The report also raised concerns about the affect of the marquee player ruling in terms of overall cost management.
“Clubs should not be recruiting players outside the salary cap unless FFA-s existing ‘capacity to afford- regulations are strictly applied,” it said.
“A-League clubs must tap into the participation base to establish a connection with grassroots. The juniors of today should be the players, volunteers, fans and football community of the future.”
The review also recommended that the A-League remains at its current 10-team format for the foreseeable future.
“A necessary element of this consolidation phase is for the A-League not to grow beyond this point until sustainability has been achieved, or where such a move – demonstrated through comprehensive business planning and modeling – would significantly contribute to sustainability,” it read.
“Pre-conditions should be identified that must be met before the A-League further expands and, once a decision has been made to expand, the criteria that new franchises must meet to ensure their long-term prospects should be set.”
The review also targeting cost cutting at FFA Head Office, saying that while the governing body required government funding, it would have to run a ‘lean’ operation.
The key findings of the report are available here, while the full report is available here.
