Off the Wall

Recent events, in our code and others, have certainly shone a light on the issue of private ownership of football clubs.

The days when private ownership was the answer to everyone's prayers - and especially the prayers of cash strapped clubs, and their officials - are probably over.

As Geoff Stevenson reported, the Newcastle Knights are having second thoughts about private ownership of the club.

Perhaps they have been watching the ownership crisis that has really brought the Gold Coast A-League soccer team to its knees?

Whatever problems private ownership has brought to rugby league - and I believe the positives outweigh the negatives - they pale into insignificance compared with those of the A League.

Rugby union is considering moving further down the private ownership path - driven by the shortage of funds for the Australian teams - soon to be five - in the Super 15 competition.

The Melbourne team is private owned, and the Queensland Reds may have to look at a form of private sector ownership given the multimillion dollar losses incurred by the QRU.

The AFL remains predominately member-owned which has advantages, and disadvantages when club members revolt!

But the key factor which impacts on private ownership of any sporting team is that it is generally not a very profitable business - and can in fact be a very unprofitable one!

Russell Crowe has undoubtedly spent millions on the Rabbitohs - and there is little prospect of a financial return in the immediate future. The Brisbane Broncos are profitable - but the return on investment is hardly a massive one for shareholders.

The most successful team in recent years - the Melbourne Storm - continues to run up massive annual losses. As it is wholly owned by News Limited its true financial state is not publicly available...but it is known that just about all the $8 million News takes by way of dividend goes straight to the Melbourne Storm.

Is it any wonder News is keen to exit both the NRL and The Storm?

What many fans don't appreciate is just how costly running an NRL premiership team is.

Meeting contract payments to 36 or so players - to the maximum "allowed" by the salary cap probably represents only a quarter of the total financial outlay of most clubs.

One club whose details are fully publicly available are the Broncos...owned by a public company, Brisbane Broncos Limited. Their financials make interesting reading.

The club's total turnover in 2009 was around $23 million. The direct spend on players would be around the salary cap of $4.6 million - principally funded by the NRL through profit distributions to all clubs.

The rest of the Broncos spending is on its large administration structure, trainers, other professional staff, travel and so on.

But even on a comparatively high turnover of $23 million (helped significantly by average home crowds of 32,200 - something most clubs can only dream about - the clubs profit for the year was just $867,000. One can imagine how another club with home crowds less than half that struggles to make any profit at all.

One needs to be rich, have rich backers, or a kind banker, to own any football club these days.

And even the "rich" find it a struggle...the alleged "billionaire mining magnate" Clive Palmer is threatening to hand in his Gold Coast A League licence - or find a generous Chinese backer to take up a half share!

The Knights cannot be blamed for being hesitant. Private ownership might be here to stay - but it is not without its downside!