Next Generation SECURING THE FUTURE OF AUSTRALIAN FOOTBALL 2007-11 : Next Generation SECURING THE FUTURE OF AUSTRALIAN FOOTBALL 2007-11 Presentation for Media September 2006


A UNIQUE OPPORTUNITY : A UNIQUE OPPORTUNITY $1.4b revenue Debt free Strong clubs Record interest and participation levels Collaborative industry (AFL, clubs, players, states) Increasing competition from other codes Some clubs financially challenged NSW and QLD Continuing to improve key indicators What unforseen challenges? STRENGTHS CHALLENGES Spend for today and Invest for the future To clearly establish ourselves as the pre-eminent sporting code in Australia for the long term Secure the future


A RIGOROUS PROCESS: A RIGOROUS PROCESS Over the last 12 months we have successfully secured key revenues for coming 5 year periods December 2005: FTA and PAY TV July 2006: New Media September 2006: Radio Secured Key Corporate Partnerships: including Toyota, NAB, Medibank and Sony January to September 2006 - An 8 month process of broad consultation: AFL Commission AFL Club CEO’s AFL Club Presidents State Football Associations AFLPA August 2006: Finalised new Collective Bargaining agreement with players (2007-11) September 2006: Commission approved final Financial strategy for 2007-11


CORE PRINCIPLES: CORE PRINCIPLES Secure the future of the 16 existing AFL clubs Fairly reward the players Provide the best possible benefits to enhance the attractiveness of an AFL playing career and drive the next generation of elite athletes to choose our game Reinforce our leadership position in Game Development and community activity Increase participation opportunities, protect core markets and accelerate growth in NSW and QLD Continue to expand the national footprint of the competition Provide the best facilities at AFL stadiums, elite, state and grassroots levels Advance the economic strength of the industry through making investments for the future Ensure our game remains the most exciting in Australian sport Build stronger relationships with our supporters by providing the best sports entertainment experience Improve the performance of the industry - capacity, efficiency, effectiveness


CORE OUTCOMES: CORE OUTCOMES Our largest ever funding commitment and support program to secure the future of the existing 16 AFL clubs An innovative package that provides the combination of benefits required to fairly reward our players and to clearly position AFL as the most attractive professional sports career in Australia A significant increase in investment in grass roots and community football To provide more support for Auskick, schools, community leagues and clubs To reinforce our leadership position in Vic / SA / WA / Tas & NT And to maintain rapid growth in NSW and Queensland A New Market development initiative to accelerate the national expansion of the competition A significant commitment to invest in providing the best possible stadium experiences for supporters, elite training facilities for AFL players and quality facilities at community level for participants Allocation of funds to invest in the game itself, the performance of the industry and improving the customer experience A Responsible policy to not spend all of the money today, but to set aside a significant sum to protect against unforseen circumstances and make further investments for the future benefit of all football Combined effect of this investment plan delivers significant benefits to our supporters Leverage our strengths to deliver generational change and secure the future of the code


TOTAL AFL REVENUE OF $1.4b OVER 2007-11 WILL BE ALLOCATED IN THE FOLLOWING FASHION: : Game Development & New Markets AFL Clubs Competition management TOTAL AFL REVENUE OF $1.4b OVER 2007-11 WILL BE ALLOCATED IN THE FOLLOWING FASHION: $650m $208m $334m 46% 15% 24% 6% AFLPA Grants $59m Part of overall deal to players worth $794m Future Fund $82m $59m 4% $65m 5% Facilities


SECURING THE FUTURE OF THE EXISTING 16 AFL CLUBS: SECURING THE FUTURE OF THE EXISTING 16 AFL CLUBS


A CORE OBJECTIVE HAS BEEN TO SECURE THE FUTURE OF THE EXISTING 16 CLUBS: A CORE OBJECTIVE HAS BEEN TO SECURE THE FUTURE OF THE EXISTING 16 CLUBS Provide Clubs with the best opportunity to: Become financially viable (profitable, positive net assets) Be competitive on and off the field Reduce structural disadvantage Operate out of competitive, world class training and administration facilities Deliver a broad support package Not just about additional distributions A combination of initiatives across funding, stadiums, joint projects, facilities, delivering cost savings and revenue growth Increase support for disadvantaged clubs but without restricting growth opportunities for larger clubs Strengthen our Partnership with clubs to deliver the future of the game: Game Development New growth markets New business


CLUBS WILL DIRECTLY RECEIVE MORE THAN $650M IN DISTRIBUTIONS: CLUBS WILL DIRECTLY RECEIVE MORE THAN $650M IN DISTRIBUTIONS Increases in Base Distribution to fully fund increases in TPP (5 year commitment, 7.3%, 7%, 3.5%, 3.3% and 3.3%) An additional $6m in Non-TPP Distribution to each club over 5 years ($1.2m pa per club) Increase Annual Special Distribution from $5.4m to $6.2m pa and apply to a broader group of disadvantaged clubs Increase Prize-money for the Premiership Season by $1m p.a Premiership season prize-pool of $2.6m and NAB Cup of $0.6m Continue Other payments to clubs for AFL membership, Licensing, signage, travel support and other club deals Continue the Strategic Partnership Fund at $1m p.a, plus around $1.8m in carry over from 2005/06 Plus a broader support program, including Over $10m in funding from the Facilities Development Reserve to help improve club facility developments Further funding for stadium developments at Subiaco, AAMI, Carrara, SCG that will benefit participating clubs Over $4.1m pa in club travel and accommodation subsidies Improvements in match returns/ economics at key stadiums Expansion of Shared Services – Delivers savings and growth to Clubs Support for second/ new markets strategies Collectively benefit from over $5m pa (or $25m over 5 years) in media contra $449m $96m $31m $16m $53m $5m 5 yr total $650m AFL funding complements ongoing strong support from members and sponsors to deliver strong successful clubs


KEY ELEMENTS OF SUPPORT PLAN TAILORED FOR EACH CLUB: KEY ELEMENTS OF SUPPORT PLAN TAILORED FOR EACH CLUB In 2007, every Club will receive $4.9m in base distribution and $1.2m in non TPP Distribution


Slide11: 1. Base Distribution 2. Club Support Direct AFL Financial Support to each Club, 2007 ($m) $9.7m $9.2m $8.0m $8.0m $7.7m $7.3m $7.2m $6.5m $6.4m 3.Revenue / Cost Upside $6.4m West Coast Fremantle Adelaide Collingwood Brisbane $6.2m 3.2 1.8 0.9 2.7 1.7 1.0 1.0 0.4 0.4 0.4 0.6 Note: Clubs will also benefit from $5m pa in television advertising contra and other non financial support SIGNIFICANT ADDITIONAL SUPPORT FOR DISADVANTAGED CLUBS 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1 6.1 0.3 0.3


TRANSPARENCY IN ARRANGEMENTS : TRANSPARENCY IN ARRANGEMENTS Expanded Annual Special Distributions: 3 year commitments (2007 to 2009). Ongoing support for 2010 and 2011 will be subject to a further review Conditions will be attached to each arrangement Transparent ASD funding schedule (2007-09) Debt reduction opportunity: Only available to Clubs identified as in need of such financial support by the AFL (ie: clubs on re-direction orders or with poor balance sheets) These clubs will have the option of taking up to $3m upfront to pay down debt A commercial interest rate or Net Present Value consideration will be applied Partnership with clubs for Game Development: A new rule will be introduced that requires all Clubs to field a minimum of 4 rookies Clubs will continue to deliver over 60,000 hours of player appearances to promote game in schools and community clubs Coaches will also participate in a new program for promotion and education of community coaches Guarantees: Entire $6m in non TPP distribution is conditional on full participation in new media agreement and compliance with CBA and game development activity Distributions are subject to AFL meeting revenue forecasts Every Club will know what every Club receives


PARTNERSHIP WITH OUR PLAYERS: PARTNERSHIP WITH OUR PLAYERS


THE AFL PLAYERS WILL RECEIVE A TOTAL PACKAGE WORTH $794m OVER 2007-11: THE AFL PLAYERS WILL RECEIVE A TOTAL PACKAGE WORTH $794m OVER 2007-11 A 5 year deal TPP increases: 7.3%, 7.0%, 3.5%, 3.3% and 3.3% $1.16m pa in funding of Medical Expenses for AFL players (through AFLPA grant) $1.4m pa in additional funding for Players Retirement Fund An average of $0.3m pa in funding for player promotion of New Media network $0.4m increase over 5 years in AFLPA Funding (including existing Retirement Fund, Training Costs, Admin Costs etc) Around $1.1m pa Share of Prizemoney (paid to players from AFL’s distribution to clubs) If AFL exceeds revenue forecasts, additional contributions can be made to the retirement fund No direct distributions from the Future Fund 9. Players will forego TPP increases to contribute $1.1m over 5 years to a Hardship fund for ex-Players (creating a total fund of $1.36m) 10. Slight variations to other Players rules and regulations (still in negotiation) A partnership with our players and strong support for broad financial strategy (game development, future fund etc)


INCREASING OUR INVESTMENT IN GAME DEVELOPMENT : INCREASING OUR INVESTMENT IN GAME DEVELOPMENT


A SIGNIFICANT INCREASE IN SUPPORT FOR COMMUNITY FOOTBALL: TOTAL INVESTMENT IN GAME DEVELOPMENT AND NEW MARKETS WILL EXCEED $208M: 706,000 564,000 $130m A SIGNIFICANT INCREASE IN SUPPORT FOR COMMUNITY FOOTBALL: TOTAL INVESTMENT IN GAME DEVELOPMENT AND NEW MARKETS WILL EXCEED $208M VIC Y’Axis’Label $208m WA/ SA NSW/QLD TAS/NT NSW/ QLD 30% of total and 56% of growth Plus an additional $12.5m committed to Community Facilities from the FDR +9K +80K +25K +26K


TOTAL INVESTMENT IN GAME DEVELOPMENT AND NEW MARKETS WILL EXCEED $208M: TOTAL INVESTMENT IN GAME DEVELOPMENT AND NEW MARKETS WILL EXCEED $208M


INVESTING IN OUR FACILITIES : INVESTING IN OUR FACILITIES


WE ARE MAKING A SIGNIFICANT COMMITMENT TO IMPROVE FACILITIES AT ALL LEVELS: WE ARE MAKING A SIGNIFICANT COMMITMENT TO IMPROVE FACILITIES AT ALL LEVELS Note: separate to the FDR, the AFL will continue to make $5.7m pa in contracted ground improvements payments- ($28.4m over 5 years) – including MCG Northern and Southern Stands, AAMI Stadium, Skilled Stadium and Telstra Stadium Ongoing support from and partnership with Federal, State and local governments is vital


MANAGING THE COMPETITION : MANAGING THE COMPETITION


COMPETITION MANAGEMENT COSTS ARE FORECAST TO INCREASE BY ONLY 4% pa: COMPETITION MANAGEMENT COSTS ARE FORECAST TO INCREASE BY ONLY 4% pa Competition operating costs as % of revenue will decrease from 28% to 24% Central costs are being tightly controlled to generate increased distributions to clubs, players, game development, facilities and to finance the Future Fund


THE FUTURE : THE FUTURE


THE ESTABLISHMENT OF A FUTURE FUND IS FINANCIALLY RESPONSIBLE AND PROVIDES CAPACITY TO MAKE INVESTMENTS FOR THE FUTURE: THE ESTABLISHMENT OF A FUTURE FUND IS FINANCIALLY RESPONSIBLE AND PROVIDES CAPACITY TO MAKE INVESTMENTS FOR THE FUTURE Depending on cash flow status, average contributions of $16.4m pa for 5 years ($16m/$33m/$49m/$66m/$82m)


OUR SUPPORTERS : OUR SUPPORTERS


IMPORTANTLY, OUR SUPPORTERS ARE KEY BENEFICIARIES OF THE INITIATIVES IN THIS INVESTMENT PLAN: IMPORTANTLY, OUR SUPPORTERS ARE KEY BENEFICIARIES OF THE INITIATIVES IN THIS INVESTMENT PLAN Securing the future of all 16 AFL Clubs Financial viability World class facilities Competitive on and off the field Improved facilities for supporters at stadiums Increased support for Community football Auskick Community clubs and leagues Facilities Schools Volunteers Pricing – Freeze General Admission prices for 2007 Improved media coverage and accessibility TV, radio and new media coverage A stronger relationship between supporters and their clubs Investment in customer relationship management


BY 2011 WE AIM TO HAVE ACHIEVED:: BY 2011 WE AIM TO HAVE ACHIEVED: Existing 16 clubs financially secure Profitable, with positive net asset bases (possibly over $100m in investments/cash reserves) Reduced structural disadvantage Operating out of competitive, world class training and administration facilities for all clubs Maintained labour harmony with players Expanded the national competition Established strong foothold into Gold Coast to lay foundations for more games in the future/ possible next step Begun laying foundations in Western Sydney Increased national participation from 560,000 to over 700,000 Held share in Vic / SA / WA / Tas & NT Secured strong position in priority growth regions Strong growth in NSW and Queensland Secured major stadium upgrades at Subiaco, AAMI, SCG, Carrara, MCG Investment in the game itself to continue to improve the product and the experience Stronger relationship with our fans, and higher levels of interest, satisfaction and involvement The establishment of a Future fund (with over $82m in investments) Increased strength leaves the code well positioned to achieve further growth post 2011