The West Coast Eagles and Fremantle Dockers produced strong profit results last year but a close analysis of their annual accounts shows that West Coast is much stronger financially than its cross-town rival.
The West Coast Eagles and Fremantle Dockers produced strong profit results last year but a close analysis of their annual accounts shows that West Coast is much stronger financially than its cross-town rival.
West Coast’s parent company Indian Pacific Ltd generated substantially higher revenue than Fremantle Football Club Ltd and is also the big spender, according to accounts for the year to 31 October 2005. The accounts also highlighted the scale of AFL football as a business, with both clubs having multi-million dollar turnover and more than 100 employees, including their 44 players.
The Indian Pacific accounts, lodged with the Australian Securities and Investments Commission, confirm West Coast’s status as one of the financial powerhouses of the AFL alongside Collingwood and Adelaide.
On nearly every off-field measure West Coast out-pointed Fremantle, itself regarded as one of the stronger and more secure AFL clubs.
West Coast increased total revenue by 20 per cent to $36.4 million, helped by its appearance in the 2005 AFL grand final. This enabled the club to produce its 16th successive net profit, of $1.9 million.
Fremantle increased total revenue by seven per cent to $25.5 million, despite not making the finals, and delivered its third profit, just over $1 million, which club president Rick Hart described as “another fantastic result”.
Both club’s main source of revenue is its membership.
West Coast generated $10.2 million in revenue from its 43,000-strong membership base, which is restricted by the seating capacity at Subiaco Oval.
The club has about 3,000 people on its waiting list, and charges them $45 for the privilege, so it is hardly surprising the Eagles strongly support plans to expand the capacity of Subiaco to 60,000 seats.
Fremantle has about 34,000 members and was able to increase membership revenue by 13 per cent to $6.1 million.
Its membership is already higher than most other AFL clubs, with the Dockers aiming for 38,000 members in the long run.
The corporate sector put a lot more money into the Eagles coffers.
The club generated $4.5 million from sales of corporate boxes and $3.9 million from its sponsors, which are led by long-standing supporters Hungry Jacks and SGIO.
By comparison, the Dockers generated $4 million from corporate boxes and $2.3 million from sponsorship.
The main contributor last year would have been BankWest, which announced mid-season that it was terminating its sponsorship.
Its place was taken by LG Electronics, which signed a three-year deal last November.
While the Eagles generated much higher revenue from sponsors, it spent a lot more on its sponsorships.
Its sponsorship expenses totalled $791,000 – almost four times Fremantle’s sponsorship expenses.
West Coast chairman Dalton Gooding said the club’s on-field success last year resulted in major increases in merchandise sales, event sales and prizemoney.
Income from functions and special events increased by 264 per cent to $5.8 million, while income from merchandise sales increased by 67 per cent to $2.7 million.
On the expenses side of the ledger, West Coast is the big-spending club.
It spends substantially more than Fremantle on football and admini-stration and, despite its on-field success, spends twice as much on marketing.
Another big expense for the Eagles was its royalty payment to the WA Football Commission, totalling $2.3 million.
The club negotiated a new royalty agreement with the commission, which means West Coast will keep a bigger share of its profits.
This will help the club build its balance sheet, which already boasts net assets of $8.8 million.
Fremantle has been exempt from making royalty payments since 2002, when its debt was in excess of $8.1 million and it suffered trading losses in excess of $4 million over two years. With its poor off-field history, Fremantle has net assets of just $0.4 million.
One area of spending that is the same at both clubs is their player payments.
Fremantle and West Coast, like all AFL clubs, are subject to a strict salary cap of $6.47 million, which is designed to control costs and help equalise the competition.
