Who would've thought footy would be discussed in the Economist ....
Labour relations in Australian football
Raking it inThe Economist
Nov 11th 2011
by C.S. | NEW YORKTHIS year’s Australian football season ended on October 1st, when the Geelong Cats (pictured) pulled away from the Collingwood Magpies in the final quarter to win by 119-88 in front of nearly 100,000 delighted fans.
The Cats’ victory celebration, however, did not last long. The champions joined players from the Australian Football League’s (AFL) other 16 teams in turning their attention to negotiating a new collective bargaining agreement (CBA), which they hoped would include higher salaries and better travel conditions. But the league’s administrators refused to budge. On October 31st the CBA expired and rolled over into a new five-year term with barely any of the changes the players had sought. The sport’s unique organisational structure is likely to keep them frustrated for the foreseeable future.
Australian football has grown rapidly of late. For nearly a century it was mainly played west of the Great Dividing Range, especially around the southern city of Melbourne, and was separated from the rugby-dominated eastern seaboard by an imaginary border known as the Barassi line. In recent decades, however, it has broken through that boundary: the AFL moved a team to Sydney in 1982, added a team in Brisbane in 1987 and welcomed a team from Gold Coast this year.
The league is also starting to make a push abroad. Hybrid versions of Australian and Gaelic football have been played since the late 1960s, and several Irish athletes have abandoned the amateur Gaelic sport to play professional Australian football. Volunteers have coached children in South Africa since 2001, developing thousands of registered players and making it the AFL’s most promising international player market. The league has also organised demonstration matches in China, and began broadcasting games there this year. It recently announced a partnership with the city of Tianjin, near Beijing, to build an AFL oval. This year’s amateur international cup featured 18 national teams, including a combined Israel-Palestine side.
This spending has paid off handsomely, as the number of professional club teams, player registrations and broadcasting revenues are all at record highs. Since Andrew Demetrieu, formerly the head of the Players’ Association, became the AFL’s CEO in 2003, total annual revenues have risen from A$191m ($197m) to A$366m, a 69% increase in real terms. In April he announced a A$1.25 billion broadcasting deal for the next five years.
Little of this bounty has reached the players. Unlike American sports leagues, in which billionaire owners and their stables of multimillionaire players spar over the division of revenues, the AFL has no private owners and very few millionaires. It is composed of member-owned clubs (like football’s FC Barcelona) that are mainly private companies limited by guarantee, a form of non-profit corporation. They raise funds through ticket sales, sponsorship, merchandising, and by charging dues to their members, who collectively own the organisation and elect its leadership. The clubs in turn select the AFL board to promote their interests, including negotiating broadcasting revenue and regulating salary caps. The revenues are shared unevenly to give struggling clubs a helping hand.
This management structure is a product of a culture with egalitarian attitudes towards work and wealth and religious devotion to its “footy” clubs. It has proven very effective both at promoting the sport and at reining in the salary aspirations of elite players. In an American or European labour dispute between players and franchise owners, fans remain spectators to any work stoppage, and usually wind up paying higher prices to watch their beloved teams. In the AFL, in contrast, club members are jostling with players for a share of revenue that could otherwise go towards lower ticket prices or improved stadiums. Like club stalwarts anywhere, their sympathies ultimately lie with the clubs they own as a group, rather than with the particular employees (players) that happen to be passing through.
As a result, the AFL pays out just a quarter of its revenues in player salaries, about half the ratio in American professional sports. (The National Basketball Association is in its fourth month of a lockout while owners attempt to bargain players down from their current 57% share.) Real average player salaries have been flat during Mr Demetrieu’s tenure, while his own compensation has risen by over 200%.
As the 2011 season came to a close, the players were determined to get a bigger piece of the pie. Inspired by the revenue-sharing models used in America’s National Football League (NFL), the AFL Players Association (AFLPA) asked for their wages to be pegged to the league’s fast-growing revenues. They also requested higher salaries for rookies, who previously earned less than university graduates; a shorter contract period with a review after three years instead of five; and travel conditions most professional athletes would take for granted, such as business-class flights and not having to share hotel rooms.
Yet the timing of the end of the season and start of negotiations in October hurt the players. Fans were glued to their televisions watching the next generation of teenage hopefuls demonstrate their skills during the annual draft combine. The AFL cleverly agreed to raise rookie salaries immediately during the spectacle to capitalise on interest in the youngsters. But it gave no ground on the broader issues. It argued that its broadcasting deal lasts for five years, and that pegging salaries to revenue reduces clubs’ incentives to invest. Its counterproposal was a fixed wage increase of 27%, broken into staggered increments over the next five years.
With talks at a standstill and the CBA already renewed, the players are running out of options. Australia was recently given a blunt lesson in labour law, when Qantas, the national airline, shut down its entire fleet to force Fair Work Australia (FWA), the country’s workplace-relations tribunal, to order negotiations with the company’s labour union to resume. In America’s NFL, which like the AFL has high revenue sharing and does not face competition from foreign leagues, players were also underpaid until they won an antitrust claim against the league. The AFLPA’s best hope is to lure FWA into a similiar intervention.
If such help is not forthcoming, the players will either have to accept the current CBA or go on strike—perhaps just for a handful of pre-season “friendly” matches early next year to start, and longer if their demands are not met. A work stoppage would run the risk of alienating the fans the players need to maintain their livelihoods. And unlike athletes in other professional sports, who have enough money saved up to weather a long strike, Australia’s merely upper-middle-class footballers cannot afford to miss too many paychecks. But they may have to tough it out if they hope to reap the full fruits of their labour someday.
http://www.economist.com/blogs/gametheory/2011/11/labour-relations-australian-football
