Statement – AFL, 13 August 2021
AFL statement on findings of the Colin Carter report
The AFL wishes to advise the following correspondence from AFL CEO Gillon McLachlan to AFL Club Presidents summarising the Colin Carter Review of the Tasmanian Taskforce submission for a team for Tasmania.
Mr Carter presented his Review to the AFL Commission last week after spending several months reviewing the submission for a Tasmanian team and speaking to dozens of people across football, Government, business and community in both Tasmania and across the rest of Australia.
This summary has been provided to Club Presidents along with a copy of Colin’s Review which is attached.
Major findings of the review include:
- The case for Tasmania is strong, particularly with the deep historical links to our game and there should be a team representing Tasmania in the AFL/AFLW national competitions – however the best form of that team is less clear-cut.
- The case can be made for a 19th Licence but re-location of an existing team if a club is prepared to take that path, or a joint venture between Tasmanian stakeholders and a Victorian team that secures strong support in two markets from the outset, would arguably produce a more sustainable outcome and therefore should be considered before a 19th licence.
- Reaching a decision on a team to represent Tasmania should not be impacted by Covid but the decision around timing should. The AFL and the clubs will reasonably minimise new financial risks and the clubs should not be expected to make a final decision at a time when AFL industry finances are under stress.
- Any outcome is dependent on locking in State Government funding guarantees and provision of appropriate stadia and related facilities in Tasmania and these should be finalised ahead of any decision.
- Tasmania is deserving of a team to represent the state on historic and fairness grounds and most economic arguments can be overcome as long as Government funding is secured.
- A 19th team would be positioned in the middle of the bottom third of the wealth ladder of our industry, but a combined Tasmanian and Victorian support base would position the new club in the middle wealth ranks of AFL clubs, a formidable competitor on and off the field.
- The Taskforce submitted that a 19th team would be net accretive because of incremental media rights but this review notes that AFL and industry advice is that broadcast rights are unlikely to reach the levels forecast by the Taskforce
- Many of the risks of starting a new team in Tasmania can be managed regardless of which pathway is chosen and key concerns raised in opposition to a team such as the size of the Tasmanian population, the north-south rivalry, player retention, dilution of talent, fixture complications and the state of the Tasmanian economy are all issues that can be managed and should not influence the decision on a team, whatever the eventual model.
- Tasmania is a football state and the cost of securing a football state are reasonable, fulfils the purpose of the AFL and is the right thing to do.
On behalf of the AFL Commission, I want to thank Colin for his work and his time and energy in investigating the case for a team for Tasmania. Colin, as a former AFL Commissioner and long-time President at the Geelong Cats, has brought his integrity, his experience in the game, his intellect and his analysis to independently assessing the case for a team for Tasmania. I also want to thank Colin for his time in addressing the Commission and answering questions.
NEXT STEPS:
The AFL Commission welcomes the Carter Review and supports Colin’s findings that Tasmania has a strong football history and a clear passion for our game.
Given the current “financial situation” the Commission acknowledges the Carter Review finding that the AFL Clubs should not be asked for a final decision at a time when AFL industry finances remain under serious stress from the Covid pandemic.
The recommendation that all models should be investigated before clubs are asked to decide on a team for Tasmania and that a relocation or joint venture capturing the Melbourne and Tasmanian supporters would provide a more successful and sustainable model should also be considered. This review makes clear that the best chance of success is a team that captures both the Tasmanian and Melbourne markets.
While the AFL Commission acknowledges that any decision to relocate or joint venture rests with the directors and members of individual clubs it accepts the Review’s finding that “a combined Tasmanian and Victorian support base would position the new club in the middle wealth ranks of AFL clubs, a formidable competitor on and off the field.”
We are thankful to the Tasmanian Government’s support for its proposed investment for a team to represent Tasmania and investment in stadia to ensure the team was successful and sustainable and agrees with the Review that these issues should be pursued ahead of any decision by clubs.
We will work with the Tasmanian Government to see what a potential model might look like.
We also accept that this is not a decision for clubs right now as we continue to navigate a Covid pandemic. This pandemic has contributed to a collective loss of revenue of more than $700m and is currently costing up to $6m a week to continue to keep the competition going.
We will work with the Tasmanian Government and work through a number of the steps outlined by Colin that are important to lock in ahead of any decision by clubs.
We support the view that a team representing Tasmania is the right thing to do and ensuring it has the best possible chance of long-term success is also the right thing to do.
We will also have time to discuss that in more depth at our next meeting but – again – we are not asking clubs to decide at that meeting on any direction.
Read the full Carter report here.
Media release – Peter Gutwein, Premier, 13 August 2021
Carter report backs Tasmanian AFL and AFLW teams
In a landmark day for Tasmania, Colin Carter in his report has unequivocally stated that Tasmania deserves and should have its own AFL and AFLW teams.
The Carter report found – “the case for Tasmania is strong and the recommendation is that Tasmania should be represented by a team in the AFL and AFLW national competitions”.
Tasmanians have been waiting for this moment for decades, and the day has finally arrived when the AFL’s own report agrees that we deserve our own team.
We have always said that Tasmania has served its time and deserves its place in the national AFL competition. The report backs this up – confirming that Tasmania is a football State and the cost of securing a team is reasonable, fulfils the purpose of the AFL, and is the right thing to do.
Importantly, the report also found that any economic arguments can be overcome provided Government funding is secured, and that many of the key concerns raised can all be managed, and should not influence the final decision.
The report states that three options are viable – a 19th team, a relocated team, or a 50/50 joint venture in partnership with a Victorian team.
While our preference is for a licence for a 19th standalone Tasmanian team, we would also consider a relocated team.
However, we do not support the proposal of a joint venture.
Tasmania deserves its own team – We don’t want to rent one.
This option would effectively be the same arrangement as we have had in place for 20 years and not our own Tasmanian license, which is what our State has deserved and fought for over many years.
Our focus remains fully on securing a team based fully in Tasmania, as outlined in the Tasmanian AFL Licence Taskforce report, either through our preferred approach of a 19th licence or the relocation of an existing team.
With regard to timing, Mr Carter states that reaching a ‘yes’ decision should not be influenced by COVID, but the implementation timetable should, which we absolutely agree with noting that our business case was based on a team entering the competition in 5-6 years time.
In this regard, I am very disappointed with the AFL, who have once again tried to kick the can down the road by using COVID as an excuse – the exact opposite of what Mr Carter proposes.
This is just another stalling tactic and we do not accept it, and nor will Tasmanians.
We stand ready to work with the AFL right now on what the best model for a Tasmanian team would look like, along with any other matters raised in the report that may need addressing ahead of a final decision by the other 18 clubs which we have always understood would be towards the end of this year.
The onus is on the AFL to clarify why they now want to once again defer providing Tasmania with a decision and I would hope that they would reaffirm that there will be a decision point later this year, as we had previously understood it would be.
If they do not, we will not sign new contracts with Hawthorn and North Melbourne.
I would like to thank Mr Carter for the openness he has brought to all his meetings with the taskforce and stakeholders in recent times and for the many hours he has spent preparing this report in the last few months.
His report is clear, the case has been made.
It is now time for action from the AFL and I have expressed this view directly to Mr McLachlan.
The ball is firmly in the AFL’s hands, only they can end more than 30 years of uncertainty, and allow the national competition to become just that with the entry of Tasmania.
Carter Report
SUMMARY OF FINDINGS
The case for Tasmania is strong, and the recommendation is that Tasmania should be represented by a team in the AFL/AFLW national competitions – but the best form of that team is less clear-cut. It could take the form of a 19th licence and that case can be made. But re-location of an existing team if a club is keen to take that path, or a joint venture between Tasmanian stakeholders and a Victorian team that secures strong support in two markets from the outset, would arguably produce a more sustainable outcome.
Whatever form a team for Tasmania takes, it will remain dependent on State Government funding until the team achieves a minimum level of financial sustainability and it is important that this funding be secured ahead of any decision. Agreement must also be reached around provision of appropriate stadia and related facilities.
Reaching a ’yes’ decision should not be influenced by COVID, but the implementation timetable should. The AFL and the clubs will reasonably minimise new financial risks and the clubs should not be asked for a final decision at a time when AFL industry finances are under stress. In the 4 interim, effort can go into agreeing matters such as the Tasmanian Government contribution as well as the possibility of relocation or joint venture arrangements. We note that the Task Force presented its report in 2019 and proposed the entry of a Tasmanian team six years later in 2025. The AFL can and should take time to get this right.
The AFL’s ‘purpose’ is expressed as: “Progress the game, so that everyone can share in its heritage and possibilities”. The AFL’s vision is to be Australia’s national sport and a unifying social force, and presumably this applies to Tasmania which has been part of our heartland since the game’s earliest years. But Tasmania is the only state excluded from our national competition, and football’s position in that state is under threat.
Tasmanians feel let down by the AFL and lack of their team is the obvious sore point. There are obvious problems in Tasmanian football – less growth in participation, the failure of famous clubs, an unsuccessful State League and apparent decline in the number of players drafted. The absence of a player pathway to the top and the absence of their ‘own’ AFL team don’t help.
The case for Tasmania rests on two propositions: that the case is ‘deserving’ and the financial numbers stack up. That Tasmania ‘deserves’ an AFL team because of football’s history in that state is a widely held view. But the financial case is more complex.
The Task Force’s estimates of the new club’s revenues and costs were pre-COVID and three numbers in the profit forecast stand out. The club will be profitable if it receives an AFL Distribution of $17 million per year as well as a Tasmanian Government contribution of between $7 and $11 million per year. And no existing AFL club will be worse off because the AFL Distribution will be offset by the increase in media revenues arising from the eleven extra games.
In the past 12 months, AFL industry economics have changed significantly. Costs are scaled back, and AFL Distributions reduced. A pre-COVID Distribution of $17 million will now be closer to $15 million. But the conclusion does not change. An AFL Distribution of that size indicates that the new club will be one of our smaller clubs, in the middle of the bottom third of AFL clubs when it comes to wealth. However, it won’t be our smallest team. Tasmania’s population of 540,000 can support a team, but one positioned in the middle of the bottom third of the wealth ladder of our industry.
The main difference with the Task Force concerns its view that incremental media revenues will offset the AFL Distribution such that our industry is not worse off. The AFL doesn’t accept this although it should be acknowledged that the Task Force and its media advisors have reiterated this position. But taking the more conservative view, the AFL will need to find around $11 million per year – the Distribution of $15 million less a possible media uptake of around $4 million.
Some will take the view that if the new team requires AFL distributions larger than the base Distribution (currently around $10 million), the case should be turned down. They seem to believe it possible to have a competition made up of teams that are all competitive and none requiring extra financial support. But competitions like that don’t exist in the real world. Professional sporting competitions such as those in Europe and the USA commonly have large and small revenue teams which co-exist for very long times. The case for Tasmania looks much stronger when viewed from this perspective.
Our AFL strategy is based on ‘competitive balance’ or ‘equalisation’ principles which, by definition, involves clubs receiving different AFL Distributions. If we approached ‘competitive balance’ as does the NFL in the US, support for a Tasmanian team becomes more obvious.
The AFL’s financial support required for a Tasmanian team will be comparable to that already received by some existing AFL teams. Further, this document also points to several opportunities that could largely close the funding gap. The AFL’s ‘equalisation’ levers can be adjusted and a small contribution from the players – achieved in ways that don’t reduce player incomes – can be explored.
To some, if the net cost of $11 million per year persists, the funds are better spent on other priorities such as the AFLW. But to others, this is an obviously good investment. It ‘automatically’ leads to a further $25 million or so being raised in Tasmania from match attendees, members, sponsors and government. This will be invested in Tasmania, helping to secure football’s future.
A 19th licence is one option and is favoured by most who support the Tasmanian case. But it may not be the best option for Tasmanian football and achieving the required two-thirds support of the 18 AFL clubs may also be a challenge.
Attention has mostly focussed on obtaining a licence and less on the team’s longer-term prospects. The new team will be one of our smaller clubs, reliant on substantial Government funding and relatively large AFL Distributions which is never a very comfortable place to be. Furthermore, the new club will face tough early years on-field as have our recent expansion teams and it is not the preferred option to have a new team struggle on field.
In this report, the usual arguments against a Tasmanian team are mostly refuted or the risks mitigated – the poor economy, player dilution, north/south rivalry and player attraction and retention. But ‘retention’ is hard to ignore. If the club is successful, the ‘retention’ argument fades because the evidence is that players will stay at a good club. But it becomes an issue if the club has too many poor years after start-up. On a population basis, there will be fewer Tasmanians in the team than there are locals in most AFL teams. This is when the ‘go home’ problem can arise.
Relocation of a Victorian team – if any team views that as an option – would substantially address start-up challenges and bring a strong membership component. A combined Tasmanian and Victorian support base would position the new club in the middle wealth ranks of AFL clubs, a formidable competitor on and off the field.
Relocation will be difficult to achieve because the decision will be made by club members but the notion of a ‘joint venture’ has been raised and should be considered. This might involve a Victorian team committing to a ‘two market’ strategy, playing most of its ‘home’ games in Tasmania (wearing the Tasmanian jumper) and playing most of its ‘away’ games in Melbourne where its Melbourne-based members have ‘home game’ privileges. Ownership would be structured 50/50 between an existing club and Tasmanian interests. The club would have priority for recruiting Tasmanian talent. If done well, this club would immediately sit in the middle ranks of the AFL club wealth ladder. While not their current preference -which reasonably is for a 19th licence – Tasmanian football people should consider this option carefully. A team that is highly reliant on government funding as well as requiring one of the higher AFL Distributions, will be in a more vulnerable place. A joint venture would avoid many of the issues faced by the addition of a new team.
The risk of starting a new team in Tasmania can be managed regardless of which pathway is chosen. The Tasmanian Government’s financial support must be confirmed in advance. The appetite for buying memberships can also be tested in advance. And the problems commonly raised – such as player retention, talent dilution and intrastate rivalries – mostly can be managed. Agreed, a 19- team competition with its odd number of teams is not perfect, but the case for it still stands. That said, a relocation or joint venture which has strong support for the team outside Tasmania would be even better.
Taking the long view, football in Tasmania is now at risk but the costs of securing it are reasonable. We can secure leadership in one of our heartland states and, in so doing, make an appreciable social and economic contribution to Tasmania – which is what AFL clubs are doing in all other states. Creating Tasmania’s space in our national competition helps to fulfill the AFL’s ‘purpose’ and vision.
This document sets out the case and for ease of reading, the supporting analyses are referred to in the text but contained at the back of this document.
Read the full Carter report here.