The AFL has confirmed on Friday that they have agreed to buy Etihad Stadium with immediate effect in a deal said to be worth in the realm of $200 million.
Clearly, it is a big deal for the AFL to have ownership of the stadium, which it was set to take control of in 2025 for the meagre amount of $30.
Instead it has bought into ownership of the 16-year old stadium, which was constructed for a budget of $460 million. It is expected to take control of operations next month. Etihad Stadium will still have the same management structure, led by chief executive Michael Green, and will remain with the same name until at least 2019/
So what exactly does it mean for your club? While each club will be impacted differently by the decision to buy the stadium, they can be lumped into four different groups.
Group 1 – Tenant Clubs – Western Bulldogs, St Kilda and North Melbourne
These three clubs are the ones who stand to benefit most from the deal. These clubs have battled over the past 16 years to secure an equitable stadium deal where they weren’t forced to pay for hosting games which didn’t attract crowd of more than 25,000. North Melbourne and St Kilda have previously sold matches interstate/internationally, because playing all their home games at Etihad was too big a financial risk. The AFL have not indicated how the stadium deals will change, but there is no doubt the clubs will have more negotiating clout in terms of financial returns.
The imponderable is if the AFL decide to invest in redevelopment of the ground which would offer clubs, players and fans better facilities.
Group 2 – Semi-Tenant Clubs – Carlton and Essendon
Carlton and Essendon are traditional powerhouses with larger fan bases. Frustrated by the stadium deals in place at Etihad, Carlton signed a five-year deal in 2014 to play five home games at the MCG a season. It means that they play six home games year at Etihad. The Bombers have signed a deal which runs until 2025 to play their home games as a 7-4 Etihad/MCG split in Etihad’s favour. Their long-term deal is said to be the best of the ‘tenant’ clubs.
Nothing changes for these clubs, but given the AFL are their new landlords at Etihad, they will have much more scope to increase their returns from their Etihad games, while using those returns to leverage the MCG on any future deal. Again, they would benefit from any updating of players/club/fan facilities.
Group 3 – Other Victorian Clubs – Collingwood, Hawthorn, Geelong, Melbourne, Richmond
These teams all play 1-2 home games a year at Etihad and all would benefit from negotiating with the AFL over stadium returns rather than a third party. For a team like Hawthorn, it will give them leverage in their deal to play in Tasmania, while Melbourne and Richmond will have an opportunity to play lower drawing games away from the MCG, giving them a negotiating point as well. Importantly for the AFL, they can lure clubs to move some games away from the MCG and arrange the fixture more to its liking.
Collingwood president Eddie McGuire has suggested the AFL bulldoze Etihad and start again, but that seems unlikely to happen given they just paid $200 million for it. It also seems unlikely that Collingwood would want to play more games there.
Geelong have played home games sporadically at Etihad, but with the expansion of Simonds Stadium, they will likely play fewer home games in Melbourne.
Group 4 – Interstate clubs – Sydney, GWS, Brisbane, Gold Coast, Adelaide, Port Adelaide, Fremantle, West Coast
There is unlikely to be any financial upside for the interstate clubs, apart from the fact they are part of the AFL, which now controls its own asset. However, it’s worth remembering that a lot of these teams do tend to play Melbourne-based clubs at Etihad. They would benefit from any improvement in fan/player facilities. It could also make travel more straight forward if they are less likely to play Victorian team in places like Tasmania, which often required multiple flights.
There are a myriad of upsides for the AFL, including a greater control of when and where they play their games, better quality control over playing surfaces and more control over fan experience. The other aspect is given the League’s aspirations in the media space, whether they look to embed the administration and operations of the League within the stadium, rather than alongside.
So what now?
The AFL has said it intends to operate Etihad Stadium in the same manner as the previous owners, that is a multi-purpose and multi-sport venue. That means that it will fulfil current contracts with concerts, other sports and other events.
The AFL is said to have had discussions with the Victorian Government over refurbishing the venue, although an expansion of the current capacity of around 54,000 is said to be unlikely.
Exactly how other sports, such as soccer, rugby and cricket might feel about dealing with a rival code directly on stadium deals is yet to be determined.
More is expected to be known once the AFL takes over the stadium next month.
In other news on Friday, Western Bulldogs midfielder Lin Jong has signed a new two-year-deal with the premiers putting an end to speculation he would seek a trade to Collingwood or the Gold Coast.