The business of sport

Sport is a passion for Australians, with millions flocking to play, watch, teach, talk about and analyse it every year. That passion has transformed what began as pastimes into a series of major businesses built around sporting codes, each with their own dramas and pathos.

The two headline football codes, represented by the Australian Football League (AFL) and the National Rugby League (NRL), draw in hundreds of millions of dollars in revenue every year. Then there’s the growing corporate dollars being spent across Australian soccer’s A-League, golf, tennis, cricket, swimming and a plethora of major sporting fixtures that attract participants from around the country and overseas, including Melbourne’s Spring Racing Carnival, the Formula 1 Grand Prix and even events like Adelaide’s Tour Down Under cycling race. Codes and dollars

var köper man Sildenafil Citrate säkert At the top end of the sporting scale, of course, are the AFL and NRL. They are more than just a game; both are major enterprises with emotional and financial reach right across Australia. The AFL and the Aussie Rules competition it shepherds had revenues of a massive $458 million in 2013/14, according to the AFL’s latest annual report. Of that, broadcasting and media rights accounted for $248 million, while corporate sponsorships and other commercial deals amounted to $164 million. Of AFL revenues, $215.9 million was paid out to the 18 clubs that make up the competition, while operating expenses and outlays on things like grounds, facilities and ‘new markets’ cut the AFL’s net profit to $12.5 million. The players themselves were paid a spectacular $189.9 million, with the average player earning just over $283,000, a figure that rose 6.7 per cent on the year before. Interestingly, while player payments are up overall, only two players earned over $1 million a year. Back in 2012, it was eight.

There are three simple reasons the AFL has become such a behemoth: bums on seats, eyeballs on TV and ears to the radio. In 2014, just over 7 million people attended games, up to 4 million watched the code each week on TV, more than a million listened on radio weekly and 84,000 downloaded content from the AFL website during the course of the year.

The NRL, despite its smaller footprint, turned in a handsome financial performance as well for the 2014 year. Its annual report shows revenue topped $344.9 million, of which $225.8 million, or 65 per cent, was broadcast rights and $119.1 million was commercial revenue from big games. Of this, sponsorship contributed $27 million. Basking in the glow

Given the number of sports and entertainment options all striving for success and growth, the corporate dollar is increasingly attractive. In all sporting codes, money is sought to support clubs and individuals from the top echelons to the local level. And corporations often want to harvest some of the kudos sport can deliver in this country.

AFL corporate partners manager Richard Simkiss says the code has the largest sponsorship deals in sport. “Toyota is our premier partner for the competition,” he says, “but we have 30-odd partners across the largest advertising categories in the marketplace and no two are the same. We have a very strong focus on understanding our partners’ needs up front. They can be about launching a new brand or product or selling more [existing] products.”

The AFL is negotiating a new broadcast agreement to commence in the 2017 season, and Simkiss says many of the major sponsorship deals are up for renegotiation around the same time. “It’s not just sport; we’re in competition with the whole entertainment sector,” he says. “Ultimately, it’s about the consumer buying choice.”

Graeme Samuel, former chairman of the Australian Competition and Consumer Commission, is currently an NRL commissioner and has also served as an AFL commissioner.

He says winning big sponsors for competitions and clubs is the name of the game. Sponsorships like Toyota and NAB for the AFL or Holden for the NRL and KIA for the Australian Tennis Open deliver  significant support and brand credibility. “The most significant income is obviously broadcast rights, but corporate sponsorship is very important,” says Samuel. “Senior sponsors might pay $1 to $2 million a year, and less for smaller companies.” New kid on the block

Gabrielle Trainor is a director of the Greater Western Sydney (GWS) Giants, the AFL team parachuted into rugby league territory in Sydney’s west in 2009 for a first game kick-off in 2012.

She says starting a team from scratch in hostile territory required a solid corporate support base to help the new club get noticed. Thankfully for GWS, that wasn’t a problem. GWS got “some fantastic  corporate partnerships with big names like Virgin, the ANZ and Lend Lease”, says Trainor. “They felt they got good traction, because we have the whole of western Sydney as our footprint. It attracts
a lot of businesses.”

Taking a business approach was vital at GWS. “Being a start-up club, we had to have very rigorous key performance indicators,” says Trainor.

While starting from scratch may sound a difficult task, it had its advantages. “We were able to hand-pick everyone involved,” she explains. “We’ve got strong values and so picked people aligned with these values.” That allowed the new club to develop a culture that “provides proper pathways for our players, especially with education”, says Trainor, adding that the club now has nine players doing economics degrees at the University of Western Sydney.

GWS, says Trainor, is run very much like a business, with performance targets, monitoring of progress and detailed budgets. Indeed, the board boasts corporate auluminaries like former Business Council of Australia chief Tony Shepherd and managing partner at PwC Joseph Carrozzi. Trainor herself has a background in law, has sat on public and private boards for 20 years and is a member of the Barangaroo Delivery Authority.

Business operations aside, Trainor says there’s another dimension to running GWS. “It’s a club … we have to be there for members and have success on the field,” she says. “There’s an enormous emotional side to it that makes it a lot more fun than making widgets. We have a lot of interaction with the players.” Give and take

Sponsorships are not a one-way street. Corporations team up with a sporting club or code to enhance their reputations. If sportspeople don’t keep their side of the bargain, sponsors will abandon them.

Australian swimmer Stephanie Rice was quickly dropped by her sponsor after making an inappropriate tweet, despite a prompt apology. Golfing champion Tiger Woods had a similar experience when he confessed infidelity in 2009.

Samuel says the NRL is in the middle of a rebranding operation, following a series of scandals around the off-field actions of some of its players. Reform began under CEO Dave Smith and his new commission from early 2013. Today there is “zero tolerance for poor off-field behaviour”, says Samuel.

Given the symbiotic relationship between brands and sports events, this attention to integrity is understandable. Andrew Inwood, founder and principal of research group CoreData, takes this further, noting that sponsors have to think carefully about events, clubs or players with whom they team up.

“There are two things delivered by sponsorship in the brand relation space,” he says. “Spending millions on football teams can deliver sponsors basic brand awareness. Then there’s also the transmission
of your values; what you stand for.

“If you tie up with the Collingwood [football] tribe, you’ve got to think about who [among your clients and customers] doesn’t like Collingwood before you make the decision.”

Conversely, a successful club can elevate a regional brand to a national level. Inwood cites the case of AFL team the Sydney Swans. ‘When the Swans went from
nothing to something,” he says, “they forced their sponsors, QBE, into national consciousness at a time when they had little national recognition.

“Brand power from sports sponsorships can be very strong.”

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