Sport can be a tough business, both on and off the field. Despite WA’s strong economy and penchant to spend, corporate sponsorship is as hard as ever for some sporting codes to score.
An AFL grand final victory, national team of the year award, more than 40,000 members, corporate types tripping over themselves to get a box at your home games – the West Coast Eagles are cashed up and life is good.
But where to from here?
Chief executive Trevor Nisbett says West Coast have probably peaked financially, with an estimated record turnover of $40 million last year, up 9 per cent from $36.4 million in 2005.
In take-home terms, the team’s profit has more than doubled this year to $4.7 million, from $1.9 million in 2005.
“It’s obviously our best year financially. Most divisions ran to budget and we’re as tight as we need to be,” Mr Nisbett said.
“We’ve certainly got the ability to overspend, but we don’t need to.”
For West Coast, it seems success on the field has mirrored success on the balance sheet, but Mr Nisbett is not starry eyed and knows the money can be just as easily lost as made.
“This year, sustainability is the key for us. We’d like to improve our turnover as quickly as we can but there are restrictions with the stadium. We’ll have to be fairly innovative and find different investment approaches,” he told WA Business News.
Mr Nisbett said the club had been fortunate enough to attract an “excellent list of sponsors”, including SGIO and Hungry Jack’s, and other corporate partners.
Surprisingly, potential corporate sponsors still have a chance to join West Coast for season 2007 with Chairman’s Club memberships available for between $100,000 and $300,000.
“It’s not difficult to attract support; that’s the upside to the economy,” Mr Nisbett said.
“All businesses are really circumspect and ensure their sponsorship dollar goes as far as it can.”
On the other side of town, the Fremantle Dockers’ strong 2006 season on field has an echo in the off-field figures.
Fremantle increased its revenue by 15 per cent to an estimated $30 million in 2006, compared with the previous season, and is expected to deliver its fourth profit of $4 million, an increase of almost 400 per cent and approaching Eagles territory.
Chief executive Cameron Schwab told WA Business News it had been a good few years for the team financially, and its anticipated membership of 40,000 this year would underpin its continued success.
Fremantle’s source of revenue was equally divided by corporate sponsorship, member-based revenue and AFL-related revenue such as television royalties.
“From a time when we were quite clearly struggling with an $80,000 debt at the start of 2002, we’ve cleared that and have completely re-built the financial base of the club,” Mr Schwab said.
“The sponsors looked away for a period of time, so it’s been tough, but we’ve come through.”
While player injuries can affect the team’s on-field fortunes, they also impact on the bottom line, as injured players still get paid regardless, with the club shouldering replacement player match fees.
Mr Schwab said with an annual player salary spend of $8 million and an average of six to 10 players out injured in any one week, the financial cost to the club quickly approached $1 million.
The challenge ahead for Fremantle would be to keep improving and retain the sense of hope among players and supporters, he said.
Playing in only its second season of the Super 14 rugby union competition, the Western Force is believed to have posted significant revenue of $20.1 million in 2006.
An audit of the team’s accounts is under way and the club will reveal its inaugural profit within days.
The Force’s membership has reached 17,000, a target the team set for itself at the beginning of last season.
Chief executive Peter O’Meara said that, taking into account the team’s placing at the bottom of the ladder last season and dissatisfaction among some members with Subiaco Oval as a rugby venue, the Force did well to reach its target.
It also surpassed last year’s hospitality commitment, with more than 270 companies signing on to take corporate boxes, representing a near sell-out.
“Most of our sponsors are on three-year commitments and we will be working hard to ensure they renew their involvement with us,” Mr O’Meara said.
“Companies are careful with their money these days, as they should be, and want a return on their investment. Rugby is a game played all over the globe, and if a business is looking to expand its horizons, our game is the perfect platform.”
The biggest issue for the Force remains its need to play in a rectangular stadium and Mr O’Meara said the team could not expect to grow without a change of venue.
“Half of the 4,000 people who did not renew their membership this year cited the Subiaco Oval viewing experience as the reason. This cannot go on,” he said.
Facing serious problems of its own, national basketball team the Perth Wildcats is still without a naming rights sponsor after a relatively successful 2006 season during which the club lost just one home game.
Despite merchandise sales of more than $100,000, and a projected revenue increase of 15 per cent, the Wildcats still posted a profit loss this year, and chief executive Nick Marvin is not happy.
Final accounts are due in August.
Without the tremendous generosity of new majority owner and businessman Jack Bendat, who underwrote the team’s loss, Mr Marvin said the Wildcats would be in a difficult predicament.
“We’ve had our major sponsors resign, but the top sponsorship is still open,” he said.
“I think we overpriced the sponsorship package last year based on the strength of the team but we’re a bit more realistic these days. We’ve made some adjustments and I’m confident we’ll have a sponsor signed before the next season begins in five months.”
On a positive note, the Wildcats reported a 35 per cent increase in membership to 2,370 season members, which is further boosted by a corporate membership of 350.
It sold out every home game at the 4,200-seat capacity Challenge Stadium, bar the first two.
The team expects 90 per cent of its corporate members to return for the 2007 season, and is preparing to release additional boxes to cater to forecast demand.
Another positive revenue stream has been the Wildcats’ Youth Camp, which has grown its revenue by 30 per cent over last season and has more applications that it can handle.
Mr Marvin said the Wildcats had turned away up to 80 children from the camps and had no choice but to run more this year.
“Basketball is definitely back in a big way, but the challenge remains to convert that into dollars. You can take a product to market, but you can’t make them buy,” he said.
Relief is expected to come from a deal between the NBL and television broadcaster Fox Sports in mid-2008, with royalties to filter through thereafter.
Come 2009-10, the completion of the Perth Arena indoor sports and entertainment venue next to the former Entertainment Centre could deliver the Wildcats a potential capacity crowd of 12,000.
Mr Marvin said the Wildcats were very excited about the move and, based on ticket sales alone, the team was in a solid position to make a profit.
If making money in the top ranks of WA sport seems difficult, spare a thought for the third-tier sports that are currently surviving primarily on the contributions of the state government health funding arm, Healthway.
The group received 460 new sport sponsorship applications during 2005-06 and, of these, 25 per cent were from organisations applying to Healthway for the first time.
Around 85 per cent or 390 applications were approved during the year.
Healthway spokesperson Joanne Fowler said total funds committed by the sports sponsorship program in 2005-06 amounted to $5.64 million, to about 450 projects, while sport participation and development activities received the largest proportion of sponsorship funds at around 85 per cent.
The Perth Lynx women’s basketball team has operating costs of $150,000, however its primary support is from Healthway.
Spokesman John Gardner said the team was involved in one of the best female competitions in the world but had tried unsuccessfully to garner significant support from the business community.
“We’ve tried for some time to secure sponsorship from the business community to no avail, or not to the extent that we would like,” Mr Gardner said. “Some community businesses do offer some kind of sponsorship donation but we really need larger businesses to get on board.”
Also sponsored by Healthway, WA Hockey has managed to secure additional sponsors, including Smokefree WA, Kombat clothing, Wizard Home Loans, Just Hockey, Willowbridge Wines and CBH.
Its two main teams, the men’s WA Thundersticks and the women’s WA Diamonds contributed to a healthy revenue of $3.5 million last year.
Hocky WA profile and branding manager Kate Main said the Diamonds used to struggle to attract sponsorship, but this was no longer the case.
“We’ve got the sponsorship but the amount is not as high as we’d like,” she said. “It’s an interesting situation when it comes to attendance, because more people come to watch the men because we have a few Olympians in our squad, but the women receive more publicity.”
WA Athletics chief executive Wayne Loxley said the current economic boom had not made the search for sponsorship any easier.
Companies were keen to sponsor if it was the right environment for them but it was a battle to convince them to have faith, he said.
“It’s not like it used to be 20 years ago when companies would be keen to give out donations here and there. Companies now are more interested in assessing their sponsorship to ensure that it has a positive financial benefit at the end of the day,” Mr Loxley said.