So here’s something you don’t see every day. A major men’s professional sports league announcing it took a loss for the fiscal year because it bought a stadium and launched a highly successful women’s league.
On what continent could that possibly happen?
Why Australia, of course … where the biggest league (Australian Football League) announced in late February it took losses of nearly $14 million in order to broaden the game’s appeal and to purchase/protect critical real estate in Melbourne, the league’s most valuable city.
Melbourne has 10 AFL teams playing in its metropolitan area. That would be like New York City housing the Giants, Jets, Patriots, Ravens, Eagles, Steelers, Browns, Bills, Bengals and Redskins. And playing 25 percent of the league’s games in one stadium.
OK, so that wouldn’t work in the U.S. where private owners aren’t big on sharing stadiums (except in New York and Los Angeles) largely because the privatization of sport in America allows each owner to essentially “own” their stadium (except in Oakland) and monopolize a city or region (think the New England Patriots).
But they do things differently in Australia and sometimes pretty efficiently.
As the top professional sports league in Australia, the AFL (arguably taking a page out of the NBA’s playbook) wanted to launch a league of its own for female players. This is probably akin to how the NBA thought about launching the WNBA. However, where the WNBA originally featured ownership of teams by NBA owners, the AFL didn’t hand off the day-to-day incubation responsibilities to parent clubs preoccupied with winning championships and wealth maximization.
Let’s also note the impressive fact that the AFL, which gets $2.5 billion for its broadcast rights, secured a bevy of sponsors that included Gatorade, apparel company/fashion brand The Cotton On Group, headwear producer New Era and NAB, one of the biggest banks in Australia.
Why is all of this interesting to us?
First, despite popular wisdom that sports leagues never die, the world is littered with failed leagues that tried. Yes, hundreds of them.
Specific to women’s sports, the “graveyard” is far from empty with tombstones tilting out of the ground for the CWHL (Canadian Women’s Hockey League), the ABL of 1996 (American Basketball League III) and various soccer leagues like the WUSA and WPS.
So, why launch yet another women’s league? Are the Aussies crazy?
We think the AFL’s logic works on a number of fronts and not all of them are obvious. The first is recognizing the AFL was facing significant competition from cricket, netball, soccer and basketball and likely wanted to shore up its participant base in a sport where the fan base features a relatively even balance of men and women.
The second, and perhaps more familiar to North American readers, is acknowledging that if sport is merely a “real estate play,” then the AFL was thinking not only about how to protect its turf but how to leverage it.
In the U.S., most indoor arenas need to guarantee at least 200 nights of use a year (probably more) and that means 40-plus home games for basketball and hockey, plus concerts, boat shows, conventions, fights, etc. A women’s league (like the WNBA) can represent valuable inventory to counter the costly overhead of big facilities.
With outdoor sports, like the NFL (eight regular-season home games) or MLB (81), if there are no playoffs, those buildings often sit empty too many months of the year (notwithstanding the NHL’s heroic efforts to play outdoor hockey). But until this AFLW idea, there was no significantly equivalent female outdoor sport in Oz that could generate constant stadium usage.
So back to Real Estate 101 and the second part of our fascination. When the AFL bought Melbourne’s Etihad Stadium for a reported $200 million last October it did so nine years ahead of a point in time (2025) when it would’ve contractually received the stadium for just $30.
The concept in Australia is called BOOT, which stands for Build, Own, Operate and Transfer, and for the AFL to get this 53,353-seat building meant the league could gain greater fiscal control of its holdings.
According to Robert Macdonald, a senior fellow in the sports law program at the University of Melbourne, “the acquisition of Etihad Stadium is likely as much to do with the AFL’s long-standing ‘equalization’ strategy. That’s where many AFL clubs faced unviable stadium hire (rental) agreements. With 2016 revenues of AUD $517 million, the AFL has the capacity to purchase the stadium, eventually undo those arrangements, while implementing unequal revenue-sharing payments to clubs disadvantaged by those deals.”
And the addition of a women’s league?
“The AFLW competition is certainly not designed to be a revenue driver for the AFL,” said John Tripodi, CEO of Twenty3 Group, a leading sport management group in Australia. “What’s notable is that it’s another strategic initiative in the battle amongst rival sporting codes to ‘win’ the hearts and minds of those watching and participating at the grassroots level. The introduction of the AFLW further strengthens the AFL’s overall market position … which is logical because it already has a substantial female audience compared to other Australian sport leagues.”
Still, to be objective, not every initiative is without challenges.
“With any kind of success comes various inquiries,” Tripodi said. “While the AFLW successfully generated buzz, interest and strong TV viewership on Fox, the AFL (and other like-minded sports codes) are being scrutinized by stakeholders on topical issues such as concussion and equal pay for female players.”
In previous columns, we’ve told U.S. readers to look north to Canada on issues like adaptive inclusion and racial diversity. Maybe it is also time to peer southward and see how many ideas the folks Down Under have created that could drive our globalized pro sports economy.
Rick Burton (rhburton@syr.edu) is the David Falk Professor of Sport Management at Syracuse University. Norm O’Reilly (oreillyn@ohio.edu) is the Richard P. & Joan S. Fox Professor of Business and chair of the Department of Sports Administration at Ohio University.
