The true extent of Football Australia’s financial turmoil can be revealed, with the game’s governing body set to post a staggering loss of $15.3 million – almost double the previous record deficit of $8.3 million set last year.
Despite a commercial golden era for FA, with revenues climbing to an all-time high of almost $140 million, an explosion of its cost base and a series of significant one-off expenses – mostly related to now-resolved disputes with the Australian Professional Leagues – have chewed into FA’s bottom line to an alarming degree.
FA’s financial results, seen by this masthead, explain why new chief executive Martin Kugeler was forced to announce a drastic restructure earlier this week in which 20 per cent of the federation’s workforce will be made redundant.
They also reveal the true impact of long-running legacy issues with the APL, the body which has run the A-Leagues since the professional game’s messy split from FA.
The hatchet was officially buried this week, with confirmation that they had reached a $1 million settlement, enabling Kugeler and his counterpart, Steve Rosich, who started as APL chief in January, to work together off a clean slate.
But FA’s financial results hint at how much was at stake.
FA booked $6 million in “loss allowances”, or anticipated debts that are considered to be unrecoverable; last year, this item was labelled “expected credit losses” and was worth $4.11 million.
A major source of the recent FA-APL tension related to grey areas in the A-League’s independence agreement, and in particular how certain money, including product betting fees – the royalties paid by bookmakers to sporting organisations for the right to offer bets on their events – should be split between them.
There were also disputes over who should bear the cost of referees, as well as FA’s entitlement of 10 per cent of all inbound transfer fees to A-League clubs. The previous FA administration, led by former chief executive James Johnson, was determined not to cede any ground over these matters, but the new regime has taken a different view.
A further $3 million was spent on legal settlements, while another $3 million is listed as “business transformation costs” following a mass exodus of top executives over the past 12 months.
Take away those abnormal costs, and FA’s deficit reduces to a far more palatable $3.11 million – but there are broader concerns about the federation’s cost base.
The extra revenue brought in was almost entirely offset by a rise in employee costs, which jumped from $49.8 million to $63.1 million in a single year. That includes an increase in short-term benefits for “key management personnel” of more than $2 million, of which $810,000 is going to former board member Jaclyn Lee-Joe for services rendered in relation to FA’s launch of the PlayFootball 2.0 registration platform.
More to come …
