FFA’s financial woes are are well documented with the governing bodies $57M per year Foxtel TV deal looking shaky and major sponsors Hyundai, Caltex and Aldi already walking away. Their biggest problem may well be from within though with the A-League’s two newest clubs Western United and Macarthur FC, being two of the creditors on their not-so-healthy looking balance sheet.
As part of their licencing agreements, both clubs were to be repaid part of their licence fees over the course of the current TV deal in lieu of not receiving any share of the current $57M annual TV revenue.
Western United paid their $18M fee up front, with $14M to be paid back over the course of four years ending in 2022. Macarthur FC signed up for a $12.5M licence fee which they were able to pay, for reasons unclear, in instalments.
The Bulls have so far paid $2M with the remaining $10.5M to be paid in annual instalments of $3.5M, the next of which is due in July. The amount to be paid back to them by 2022 is $9.75M.
The debt initially owed to Western United and Macarthur is $20.75M with United so far paid back around $3M. Total FFA liabilities as of 2019 was $58M.
The interesting thing with the Bulls is their licence fee will be paid in instalments with FFA paying them back in instalments. There is growing doubt over whether the Bulls will pay the July instalment with the club understandably questioning how FFA can fund their end of the bargain, with the governing body's cash flow taking a major hit.
When Western United and Macarthur FC agreed to pay such large fees in December 2018, the A-League and FFA was in a much better financial position. There was a stronger partnership with Foxtel, Hyundai was still a major sponsor and there were plenty of untapped fans looking forward to expansion.
The FFA’s 2019 financial report shows that $97M of their $132M in total revenue came from broadcasting, sponsorships and gate receipts. A big chunk of that $97M is now in serious doubt especially considering COVID19 and it’s impact.
In the past 18 months, naturally the value of the licences has dropped significantly.
The owners of both clubs have remained silent publicly about how they feel but they will undoubtedly want value for their money, or at least their money back.
Western United have struggled in their debut season with crowds very low in Geelong and Ballarat. The club even moved games to the Whitten Oval later in the season. Their brand new stadium at Tarneit was promised to be delivered by 2021 but this is now unlikely.
Macarthur FC have an excellent stadium deal at Campbelltown Stadium and sponsors who are still committed. The Bulls appear to have the upper hand with FFA considering they haven’t paid their full licence fee yet.
It it believed that neither Western United nor Macarthur FC were given bank guarantees by FFA when they initially signed their agreements in December 2018.
There is growing fear among A-League insiders about whether the 2020/21 will actually even begin later this year in October as planned. If it doesn’t, Western United and Macarthur FC will understandably be questioning what they paid for, and whether they will get what is owed to them.
FFA may well find their biggest issue is from within.