A-League Civil War: Why The APL’s Decision To Move The A-League Grand Finals To Sydney Has Put Fans Offside, And The Legal Issues Surrounding It.
Introduction
The Australian Premier Leagues (‘APL’) has made a decision to move both the men and women’s A-League Grand Finals to Sydney for the next three years after signing a contract with Destination New South Wales (DNSW).[1] This piece explains the motivation behind the APL doing so and why fans have been protesting the decision. It will also examine the structure of the APL Board and the voting incentives behind its members, whilst addressing the consequences for the A-Leagues should the board renege on its contract.
The Decision
The decision of the Australian Premier League (‘APL’) to move both the men and women’s A-League Grand Finals to Sydney for the next three years has caused a considerable uproar amongst fans on social media.[2]
On Monday, the APL confirmed a 3 year deal with Destination New South Wales (‘DNSW’) for an eight figure sum. Per reports, this seems to be worth in the region between $12m-15m.[3] In a bold decision, the APL has decided to move away from the previous approach, where hosting rights where awarded to the team finishing highest during the regular season.
APL CEO Danny Townsend stated that the main reason for this decision was to build a ‘new tradition’ echoing how other football leagues across the world have finals at the same venue each season, such as how the FA Cup is held at Wembley Stadium each year. Townsend also stated that the APL intends to create a ‘Festival of Football’ the week prior to the Grand Final with events such as the Dolan Warren Awards and the A-League All Stars Game to occur during the same week.
Why the Decision has been Criticised
The decision has been strongly critiqued on social media by fans. For most fans, the appeal of the A-League Grand Final has been that idea that any club could host it. Unlike the AFL and NRL where the Grand Finals are always held in Melbourne and Sydney respectively, A-League Grand Finals have been held all across the country including Perth, Brisbane, Adelaide and even in Newcastle which was the first time a Grand Final of any sporting code in Australia had been held in a regional city.
The top 7 most attended Grand Finals in the A-League have all taken place outside of Sydney.[4] Fans have also highlighted the excessive costs associated with travelling interstate. Although the APL has suggested that they will support fans travelling, they have not yet disclosed details on how they plan to do this and it is difficult to imagine that casual fans from interstate would travel to see the Grand Final.
The A-Leagues have also struggled in terms of crowd numbers in recent seasons, it would be difficult to see a packed stadium if two non NSW teams where playing in the Grand Final (such as an all Melbourne final like last season, or Brisbane Roar v Perth Glory) as opposed to what occurs with the AFL or NRL. Conversely, if those Grand Finals where hosted by one of the respective finalists, past history has supported the conclusion that these games would get both hardcore and casual fans attending.
Incentives and Voting Structures: The Governance Mechanisms Behind the Decision
Further controversy occurred in the days following the announcement when several clubs announced that they had no knowledge of the decision being made and would not have supported this decision. Perth Glory, Adelaide United,[5]Central Coast Mariners,[6] Wellington Phoenix[7] and Western United[8] are some of the clubs that put out statements. The outsider to A-Leagues may question how a decision of this magnitude could be made without consultation of at least half of the clubs in the league, however it is entirely possible when looking at the structure of the APL.
The APL Board
The APL forms the board for the A-Leagues. Unlike the AFL or NRL, not all clubs have a voice on the board. The board consists of the CEO (Danny Townsend) and representatives from only five of the clubs of the league: Sydney FC, Western Sydney Wanderers, Melbourne Victory, Melbourne City and Brisbane Roar. The board also consists of a representative from Football Australia (‘FA’) (the national governing body for football in Australia), and a representative from private equity firm Silver Lake who purchased 33% of the A-Leagues last year in a $140m deal. Townsend confirmed to media that the decision of the board was unanimous in favour of moving the Grand Final to Sydney.
Voting Incentives
For Sydney FC and Western Sydney Wanderers, the decision to enter the deal made financial sense and there was very little risk with it. A share of $12-15m plus a guaranteed home Grand Final is a no brainer. Both Townsend, the FA and Silver Lake have an interest in maximising revenues and as such do not really care who hosts the Grand Final so long as it is profitable. Melbourne City are owned by City Football Group, whom Silver Lake has purchased a stake in as such would be voting alongside them.
For Brisbane Roar, it is a little less clear why they would have signed the deal but it should be said that they are struggling financially (as are the majority of A-League clubs currently). In addition Brisbane are unlikely to be hosting Grand Finals in the next three years. Brisbane have not finished higher than 4th since 2016, and finished 11th last season. It can be said that the owners have essentially betted against the club in this situation, believing that Brisbane would not be in a position to host a Grand Final anyway, so it makes sense to take the money.
Melbourne Victory are in a different situation however which makes their decision the most interesting. They could realistically expect to host a Grand Final in the next three years given their performance last season making the semi-finals. They are also one of the wealthier clubs in the league, recently signing former Manchester United player Nani as this season’s Marquee. It is possible that the owners of Melbourne Victory made a similar analysis to Brisbane Roar, or just determined that giving up the Grand Final was worth a share of the money in question.
The Response from Fans
What is clear from the backlash surrounding Monday’s decision was that the board severely underestimated the extent to which fans disliked the decision. Every social media post put out any A-League club or the A-Leagues page itself has been bombarded with negative comments surrounding the decision. Most supporter groups are planning walk outs at this weeks games. This is particularly concerning given that there is a Melbourne Derby set for this weekend which traditionally draws high crowds.[9] The absence of both active supporter groups will severely impact the atmosphere of the game as the active support is one of the key differentiators of the A-League to sports such as the AFL or NRL.
Whilst the fans have criticised the decision, it is important to recognise that members of A-League clubs do not have any voting rights for club decisions. In effect, A-League ‘members’ are just season ticket holders and hold no decision making power or ability to influence the composition of their own club’s board.
Despite this, the club owners do have a veto option for a decision made by the board with each club having an equal vote. However, for some clubs the circumstances meant that there was no option but to continue with the deal. A meeting was held on Tuesday between the club owners where according to Central Coast Mariners Chairman Richard Peil the clubs were told that there was two options, either continue with the deal or try and exit the contract.[10]
Contract Law and Damages for Termination: Why the APL is Doubling Down
The contract was negotiated by the APL between DNSW and without consultation from other states such as Victoria.[11] If the clubs tried to exit the contract, it is almost certainly a breach of contract. It is clear from the language surrounding the announcement that Sydney hosting the Grand Final is an essential term of the contract. The fact that the APL is promising a “Festival of Football” to be held in Sydney alongside it (including hosting award nights and preseason friendlies with European clubs) seems largely an afterthought by the APL and considering Sydney already hosted some of these events last year, it is clear that DNSW would not have entered into the contract unless being promised the Grand Final.
Because hosting the A-League Grand Final is an essential term of the contract, DNSW would be entitled to seek damages for the breach. This would likely involve at least repayment of a significant proportion of the $12m spent by DNSW but could also involve loss of tourism revenue that would have been promised should the Grand Final have been held in Sydney.
In the unlikely alternative that this is an intermediate term of the contract, DNSW would still have the right to terminate. This is because the lack of the Grand Final substantially deprives DNSW of the benefit it hoped to receive when paying for the Grand Final (hosting rights and tourism revenue).
It is also worth noting that if the APL decide to renege on the contract, it could affect their ability to get support from the NSW Government in the future. Central Coast Mariners Chairman Richard Peil echoed this in a statement when he stated that although he did not support the decision to host the Grand Final in Sydney, not only would there be significant legal costs but experts also informed him that Governments would be less likely to invest in the sport in future. Considering most of the A-League clubs are losing money following COVID, the loss of future government funding is a real and credible threat to the profitability of A-League clubs, and this may yet prove to be a key reason why the APL has doubled down on the deal.
Where to from here
Some clubs have attempted in recent days to justify their positions for voting in favour. Sydney FC[12], Western Sydney Wanderers[13] and Melbourne City[14] all put out statements over the past few days highlighting how the league is struggling financially and as such they needed this government investment, a noticeable change in direction from the idea of a ‘new tradition’ mentioned at the beginning of this article. Recent reports also suggested that the main reason the APL entered into the deal with DNSW was because they were failing to meet broadcast metrics in their $40m television deal with Paramount+ which would have reduced the value of this deal and as such where required to find additional revenue.[15] The A-Leagues are also struggling financially with low crowds and high expenditures such as a reported $30m on its new website “KEEPUP”.[16]
Given the league’s financial challenges, it seems most likely that the deal will remain in place, although the APL faces an ongoing challenge to bring supporters onside, as should fan protests and boycotts continue, this may yet provide further financial harm to the clubs and the A-League as a whole.
Conclusion
The situation the APL finds itself in demonstrates the consequences of incentives and governance structures in professional sport. In a situation where the sport is financially struggling, decisions may be taken by the League which will be the most commercially viable, although one that may not be in the best interests of the fans of clubs, who are a key stakeholder in professional sport.
This situation also shows the implications of large scale binding contracts and how even though fans may be unhappy with the situation, the contract itself is very difficult to escape without the APL having to pay significant amounts of damages. Because of this contract, the APL is essentially trapped in a lose-lose situation. Either they attempt to get out of the contract and pay the damages, or they remain in the contract and risk alienating the supporters further. It is from this starting point that the APL has a busy few months ahead, as they try to balance supporter concerns, with their three year contractual commitment with the DNSW.
[1] https://keepup.com.au/news/lock-it-in-sydney-to-host-a-leagues-grand-finals-for-next-three-seasons
[4]https://www.reddit.com/r/Aleague/comments/zjgkud/highest_aleague_grand_final_attendance_records/
[6] https://twitter.com/Boycey1105/status/1602920785676763136?s=20&t=uDWREPRaleQTbn2bp5FPhQ
[7] https://wellingtonphoenix.com/news/a-statement-to-our-fans
[8] https://wufc.com.au/news/club-statement-13-12-22
[10] https://twitter.com/Boycey1105/status/1602920785676763136?s=20&t=uDWREPRaleQTbn2bp5FPhQ
[12] https://sydneyfc.com/news/statement-regarding-apl-decision-to-bring-grand-finals-to-sydney
[13] https://wswanderersfc.com.au/news/wanderers-statement-2
[14] https://melbournecityfc.com.au/news/club-statement-on-a-leagues-grand-finals