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Footy's $23m puncture

Date

Samantha Lane and Peter Ker

AFL chief Andrew Demetriou.

AFL chief Andrew Demetriou.

THE AFL's ambitious push into the northern states has stretched the code to its first financial loss in a decade and again highlighted the wages paid to league chief Andrew Demetriou.

Confirmation that the AFL will post a $23.6 million loss came as the league revealed Demetriou's base salary had risen again from $1.35 million to $1.4 million.

While Demetriou's total remuneration of $1.8 million was technically lower than the $2.2 million he took home in 2010, the 2010 figure was boosted by a special ''retention bonus'' that was due after his seventh year in charge and was not repeated in 2011.

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Though the league drew record revenue, the cost of establishing new clubs on the Gold Coast and in western Sydney has sucked tens of millions of dollars from the 2011 balance sheet.

On the selective figures released yesterday, $98.6 million of spending was unaccounted for, but the league rejected suggestions that all of that money had been spent on the expansion strategy.

The league would not reveal how much it had spent on expansion but said it was ''less than half'' the $98.6 million.

Greater Western Sydney alone soaked up $22 million in ''extraordinary'' funding from the league.

Expansion into the northern states - where AFL has historically been a poor cousin to the rugby codes - has long been controversial. The AFL maintains it could take up to three decades for the two new clubs to be financially viable.

Brownlow medallist Chris Judd is among the many football greats who have expressed reservations about the expansion to 18 teams. He warned in 2009 that poor crowds and a drop in the standard of football could be a byproduct of expansion.

The $343 million of revenue achieved by the league in 2011 was a record, though it was only 2 per cent better than the previous year. Revenue had risen by 11 per cent between 2009 and 2010.

Demetriou said yesterday the modest growth in 2011 was understandable given the ''tough year'' felt across much of the economy, particularly in corporate hospitality.

Demetriou forecast revenue would top $400 million this year thanks to a new five-year broadcast rights agreement.

The league said the $23.6 million loss was not a surprise and had always been part of the plan to accelerate expansion.

AFL Commission chairman Mike Fitzpatrick said the league hoped to recoup the loss by generating profits of ''at least this amount'' over the next five years.

The AFL made a net profit of $5 million in 2010 and about $2.73 million in 2009.

The league is confident the new clubs will eventually increase the code's revenue base by tapping new markets and creating extra games of football to be sold as part of its television rights package.

Analysts at investment bank Goldman Sachs said the strategy was sound, with analyst Christian Guerra saying the spending on new clubs would eventually prove to be a good investment.

Mr Guerra said the AFL should be able to cover the $23.6 million loss over five years.

Geelong president Colin Carter, a member of the AFL Commission from 1993 to 2007, said he was not surprised to learn the league had made a loss in 2011.

''It represents an investment in the future,'' Carter said. ''It doesn't surprise me and the jury will tell us in the future whether that pays off.''

The AFL last declared a net loss in 2001 when the late Ron Evans was chairman of the Commission. The league lost $16.8 million that year after deciding to pre-pay funds into the players' wage pool.

Demetriou was confronted about the size of his wage during the league's tense pay dispute with the AFL Players' Association last year.

The CEO's pay has soared since he took over from Wayne Jackson in September 2003 on a salary package of $560,000.

On top of his rising base pay, the league confirmed that bonuses paid to Demetriou in 2011 for achieving ''key performance indicators'' were higher than in 2010.

The league declined to say when Demetriou would next qualify for a ''retention bonus'' on the grounds it was commercially sensitive information.

The league also declined to reveal what base pay and bonuses would be granted to Demetriou in 2012.

''I don't set my pay,'' Demetriou said on radio yesterday.

''It's done through proper corporate governance, through the chairman of remuneration. It has been benchmarked by an external third party.

''I'm very grateful, and I feel very privileged to be in this role, and I don't take it for granted. But I don't really know how it compares to other CEOs.''

Carter, a corporate governance expert and director of major companies such as SEEK and Wesfarmers, yesterday declined to comment on Demetriou's pay.

The AFL's nine-person executive team received salaries and bonuses totalling $5.08 million in 2011.

Demetriou is entering his ninth season in charge of the AFL and has not indicated how long he intends to continue in the role.

The AFL's pre-season competition started last night at Etihad Stadium and the season proper begins on March 24.

Greater Western Sydney will play its first regular season match against cross-town rivals the Sydney Swans at the former Olympic stadium at Homebush.

21 comments

  • Poor Andy will have to wipe away his tears with the meagre 1.4 million he received

    Commenter
    cynic
    Date and time
    February 18, 2012, 9:34AM
    • So the AFL has now officially made the transition from sport to a business, all we need now is a public listing on the ASX.

      Commenter
      niceguy
      Date and time
      February 18, 2012, 10:14AM
  • Yet another elite getting more money than he is worth. Take a real pay cut!

    Commenter
    James
    Date and time
    February 18, 2012, 10:03AM
    • Couldn't happen to a nicer sporting organization........

      Commenter
      PKD
      Location
      Country Vic
      Date and time
      February 18, 2012, 10:20AM
      • "The league declined to say when Demetriou would next qualify for a ''retention bonus'' on the grounds it was commercially sensitive information."

        Why? What are the reasons it is commercially sensitive? Who would benefit and who would be disadvantaged by it being known? How would they benefit or be disadvantaged?

        Come on Ms Lane - can we have a bit of proper investigation please, or are you just part of the AFL's 19th club? Why are his performance indicators a secret? I want to know what they are and how they are achieved? I want to know how much of his achievement of performance indicators is due to money from the gambling industry. I want to know why he gets a bonus when his organisation made a loss. What sort of performance indicators are those that allow the CEO to benefit when his company makes a loss? They seem pretty soft to me. Out in the real world I see companies making losses are laying off their workers yet in the AFL's 19th club, everyone gets looked after regardless of performance. Seems to me it's time the 19th club was subjected to a salary cap and a public, not in-pocket, review..

        Commenter
        Tom Wills
        Location
        Batmania
        Date and time
        February 18, 2012, 10:21AM
        • Love the tag line - Tom Wills, Batmania.

          The elephant in the room is the $98m 'unaccounted for'. WTF. I run a business and I have to account to the other business owners and tax dept for every cent.

          The GWB (where the b stands for bogan) will be a mega fail. I lived out there once and they won't get two men and dog paying to go to the games. ALL the tickets will be given away. Can we go back to Andy and Fitzy and recover the money in ten years time?

          The players should note their grievances now, and when GWB fails, take a class action for the artificial salary cap they are enduring because their rightful wages are being used to prop up ' a good idea'. I would be spewing if I was Judd or Franklin or Swan or most of Geelong.

          Commenter
          kepler22b
          Date and time
          February 18, 2012, 12:16PM
      • The AFL's imperialism will eventually destroy it. They should have settled for the success they once had as a heartland competition. Now they chase money only- and even that is starting to fail.

        Commenter
        Michael J.
        Date and time
        February 18, 2012, 10:22AM
        • Like

          Commenter
          niceguy
          Date and time
          February 18, 2012, 11:11AM
      • Wow - that's terrible!

        Well I guess we'll have to forget pokie reform so you can continue to feed off the carcasses of people with a pscchological problem.

        What nauseatingly transparent self-promoting puke!

        Commenter
        81dvl
        Date and time
        February 18, 2012, 10:25AM
        • Can't stand all the hype of this game especailly in Melbourne. Was such a breath of fresh air the last few months not reading all these unimportant articles evolving around AFL.

          Commenter
          chris
          Date and time
          February 18, 2012, 10:40AM

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