Cashed-up codes go for growth

As the Australian Football League and National Rugby League continue their battle for supremacy, the Australian love affair with sport means both organisations are in a strong position financially, according to an IbisWorld insight.

Revenue for sports organisations in Australia has grown by 2.7 per cent per annum for the past five years, increasing to $3.39 billion for 2011-12. This is estimated to jump 5.6 per cent to $3.58 billion in 2012-13, as both codes begin to reap the rewards of lucrative TV deals. The key will be whether the two rival codes can work together to protect these rights, as achieved in the Optus mobile TV case earlier this year.

The AFL is the larger of the two codes by some margin, in terms of revenue and match day attendances. Over the five years through October 2011, total revenue grew at an annual rate of 10.5 per cent to reach $383.4 million. The league’s financial performance was helped by record club membership and total attendance in the 2011 season, with the AFL ranked fourth in the world for average match attendance. Despite this, the AFL posted its first loss in 10 years, at $21.1 million. This was a result of funding provided to the Gold Coast Suns and the Greater Western Sydney Giants, to aid their entrance into the competition.

The NRL is a relatively recent creation, formed as a joint venture between News Limited and the Australian Rugby League in the wake of the Super League War of the late 1990s. Control of the competition was passed to the independent Australian Rugby League Commission in early 2012 to allay fears that News Limited’s influence could create a conflict of interest when negotiating TV deals. Total revenue grew by 8.3 per cent to $126.4 million in the year through October 2011. This allowed the organisation to increase grants to each of the 16 clubs to $3.65 million, with total club grants of $58.4 million ($2.1 million higher than in the previous year). The league also increased spending on events and community programs related to the start-of-season All Stars game by 93.2 per cent.

“With both organisations moving towards market saturation in their respective heartland regions, expansions into territories that were previously considered strongholds for the rival code have begun,” says the report. The AFL has been the first to move, with clubs established in growth regions of the Gold Coast and Greater Western Sydney, while the NRL has made no secret of its desire to expand to 18 teams in the next few years. It has already had games contested in Perth and Adelaide. In particular, Western Australia remains an attractive prospect for expansion for the NRL, as the league hopes to take advantage of the time zone when scheduling TV broadcasts. With the AFL signing a $1.3 billion deal last year and the NRL signing a new deal worth in excess of $1.0 billion dollars in August, both organisations are in solid financial positions.

This financial strength will allow the two codes to continue the push to become truly national games.

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