Issue No 22
A National Public as a Marketing Channel – How the AFL is adopting American Sports Marketing Model
In 1995, Eric Leifer, a sports fan and a past Professor of Sociology at Columbia University, wrote “Making the Majors” which traces the growth and developments of professional sports in the United States since such teams first appeared there in 1871.
In the book’s preface, Leifer says, “The protagonists of this book are the organisers who transformed children’s games into the stable industry of major leaguer sports”. The tool used to make the American major league sports the giants they are today was the creation of a national public – a specialist marketing channel for professional sports.
Today’s sports fans are aware of the amounts of up to $US200,000,000 paid for professional sporting teams and the $US100,000,000 packages paid to a few of the greatest stars of these teams. Contrast these numbers with Australian Rules Football, where 30 years ago a player gave his all for the right to wear the guernsey.
But, Australian Rules is changing, the dollar has replaced the honour of the guernsey. While American professional sports have a history of over a century, Australian professionalism is relatively new, maybe 15 years old.
American sports, however, only really became big time over the last 30 years and they did so with the same catalyst that is driving Aussie Rules football – television and its enormous audiences and revenues.
The logic is simple – the more people who watch an event, the higher the network’s advertising rates. The higher the advertising rates, the more the networks pay the major leagues which, in most cases have a revenue sharing formula with players, and the more teams are worth.
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But, for sporting events featuring local teams to attract viewers, the parochialism of local followings has to be minimised to be replaced with a national public. Early in Australian Rules’ history, teams were from inner Melbourne suburbs and offered the battlers in these suburbs a weekly respite from their hard lives. Supporters were fervid, the Aussie Rules was restricted to Melbourne and Geelong and, players played for the honour.
Grounds and their facilities were appalling, equipment was marginal and a professional approach to physical conditioning (often due to lack of funds) was lacking. Television, an awareness of what was happening with professional sports in the US and the competitive challenge of other sports and football codes galvanised the then VFL into action.
National public marketing channels need national publics to follow them so South Melbourne became the Sydney Swans; teams were started in Perth, Brisbane and Adelaide and, the best break of all, the West Coast Eagles became a Premiership team and attracted a national public – people who didn’t live in Western Australia became Eagle supporters. Similarly, the other interstate teams attracted followers outside of their home bases and national public emerged.
The larger the national public, the more the TV rights were worth. More supporters buy ore AFL merchandise – with substantial royalties flowing into to the AFL. Merchandise royalties in the United States are measured in billions of dollars annually.
The development of a national public created problems for the AFL. There are too many teams in the competition, still not enough interstate and too many teams that will, forever, remain uncompetitive because of a low supporter base and low revenues.
The ultimate formula is the one that brought the American National Football League its overwhelming success and profitability – equal sharing of TV revenues. Equal revenue sharing only works where teams have a reasonably equal opportunity to attract viewers. The NFL’s draft system which allows the teams with the worst records to draft players first helps, but teams need revenues to pay players.
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We at IF Consulting think that the AFL committee fully understands the benefits a national public can bring. Because of Australia’s limited population base, the AFL can never generate American type sports revenues. But, through the elimination of financially unviable and uncompetitive teams and the addition of more interstate teams, not necessarily in large population centres, the AFL will develop and benefit from a strong national public.
American professional basketball, baseball and football ahs expanded internationally. There are baseball and basketball teams in Canada and an offshoot of the NFL in Europe. The NFL Super Bowl regularly attracts one of the largest worldwide TV audiences of the year.
The AFL’s challenge is to create and sustain a marketing channel that results in an international public clamouring to watch its games on TV and scrambling to buy more and more AFL merchandise. The result; more professional teams and management, higher value teams, better paid players and coaches, a more enjoyable spectator event and better facilities for fans.
The AFL’s ultimate challenge is to replace emotional traditionalism with forward looking professionalism and to convince emotional supporters that the overall good of football is more important than their individual teams.