Top AFL clubs fear extra tax
Equalisation debate. Some clubs are concerned about discussions relating to a tax on overall income. Digitally altered image by Angela Wylie
The AFL’s equalisation debate has taken a new twist, with power clubs fearing the league could introduce a tax on overall club income on top of a cap on football-department spending as part of a plan to end the competition’s great divide.
Several club chiefs questioned whether an expected cap on football department spending, with a tax on those who exceed what could be a ceiling of $20 million-$25 million, would generate enough to make a difference when distributed equally between clubs or to the less affluent, particularly if many remain below the cap.
A cap, however, would help bring about a more even spend in football departments.
What has emerged is that some clubs are concerned about discussions relating to a tax on overall income, with wealthy clubs to be hit hardest under the model.
One club chief executive said he expected any income tax to initially be low.
It is understood that equalisation measures are still at a modelling point in terms of how many cents in the dollar would make up the tax and when it would cut in.
A tax of this type would require a debate on what constitutes club revenue, with one club questioning, for instance, whether money raised from special foundation-type programs should be included.
Another suggestion has been to introduce an overall set percentage of income that each club would contribute into a fund, with the money to either be distributed evenly to all clubs or more to those in need.
Another discussion point has been whether to just tax club profits.
”At the moment five per cent of AFL gross revenues are shared among clubs. That’s not a lot, really, when you consider the NFL in the USA has up to 30 per cent of [revenue of] each franchise shared equally by all clubs,” one club chief said.
”I think it has to be a tax on all income and shared equally among all clubs … the reality is some clubs will be better off and others not so,” he said.
Collingwood generated more than $75 million in revenue last season, while Hawthorn produced $64 million. Geelong and West Coast had revenue of more than $56 million. By comparison, the Western Bulldogs pocketed $34 million and would particularly benefit if a tax is redirected to the less wealthy clubs.
It is understood the Eagles and Fremantle would want their annual royalty payment to the West Australian Football League, of which the Eagles paid almost $3million last year, taken into account.
The AFL would not comment when contacted on Wednesday.
Clubs also want to know the figure at which a tax on football-department spending kicks in, as they look to make preparations for the 2015 season.
They hope to be told at a meeting of club chief executives on the eve of the season in Adelaide. Some clubs have already begun informing their football departments to expect change, whether immediate or gradual, and what implications there would be in terms of cutting resources.
This comes as the AFL Players Association calls for a ”single” cap on football department spending, which would place no limit on the amount spent on player payments.
As it stands, the average football department costs about $19 million, of which about $10 million is spent on players.
While clubs believe the equalisation debate would be eased if the AFL bought Etihad Stadium ahead of schedule and, in theory, improved the returns of tenants the Western Bulldogs, North Melbourne and St Kilda, it’s a more complicated matter.
Some clubs are not yet convinced the AFL could manage the stadium profitably, and question what ramifications there would be from having to repay what could be a purchase price of about $250 million.
It is understood Melbourne Stadiums Ltd, acting on behalf of the five superannuation stakeholders in Etihad, and the AFL are between $10 million and $20 million off an agreed price.
The AFL will automatically take ownership of the stadium on March 8, 2025, for $1.
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