Tasmania United FC a League Team Business Case Sc1423_Final_Report_v4_-_Public_Release

8/6/2019 Tasmania United FC a League Team Business Case Sc1423_Final_Report_v4_-_Public_Release

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TASMANIA UNITED FC A-LEAGUE TEAM

BUSINESS CASE

FINAL REPORT APRIL 2011

PUBLIC RELEASE


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Coffey Commercial Advisory Pty Ltd ABN 21 126 101 826Level 7, 1 Southbank Boulevard Southbank VIC 3006 AustraliaT (+61) (3) 8866 2600 F (+61) (3) 8866 2688 sport.coffey.com


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CONTENTS

Page i

1 Executive Summary ............................................................................ 1

2

Introduction ......................................................................................... 6

2.1 Project Overview ................................................................................................... 6

2.2 Context and Purpose ............................................................................................ 6

2.3 Business Case Objectives ................................................................................... 7

2.4 Acknowledgements .............................................................................................. 7

3 Strategy, Policy and Planning Context ............................................. 9

3.1 Relevant Policy and Strategy ............................................................................... 9

3.1.1 Federal Government Policy and Strategy ...................................................................................... 9

3.1.2 State Government Strategy and Policy ........................................................................................ 10

3.1.3 Football Federation Australia ........................................................................................................ 13

3.1.4 Football Federation Tasmania ....................................................................................................... 14

3.1.5 Summary.......................................................................................................................................... 14

3.2 Demographic Analysis ....................................................................................... 15

3.2.1 Population ....................................................................................................................................... 15

3.2.2 Age Profile ....................................................................................................................................... 16

3.2.3 Country of Birth .............................................................................................................................. 16

3.2.4 Income ............................................................................................................................................. 16

3.3 Review of Relevant Studies or Reports ............................................................ 17

3.3.1 Tasmania United FC A-League Team Feasibility Study 2009 ................................................. 17

3.3.2 Hawthorn Football Club Sponsorship Analysis Repucom International ............................... 17

3.3.3 Football Federation Australia A-League Expansion Market Research .................................. 18

3.3.4 Cricket Tasmania Economic Impact of AFL Games at Bellerive Oval ................................... 21

3.4 Summary of Relevant Studies and Reports ..................................................... 22

4 Situational Analysis .......................................................................... 23

4.1 Football in Australia ........................................................................................... 23

4.1.1 Football Federation Australia ........................................................................................................ 23

4.1.2 Hyundai A-League .......................................................................................................................... 23

4.2 Football Participation Trends ............................................................................ 25

4.2.1 National and State Participation ................................................................................................... 25

4.2.2 Team Sport Participation Trends in Tasmania ............................................................................ 26

4.2.3 Player Registrations in Tasmania ................................................................................................. 27

4.2.4 Football Development in Tasmania .............................................................................................. 27


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4.3 Conclusions ........................................................................................................ 27

5 Market Research ............................................................................... 29

5.1 Enterprise Marketing and Research Services (EMRS) .................................... 29

5.1.1 Community Views on a Tasmanian A-League Team .................................................................. 29

5.1.2 Melbourne Victory versus Central Coast Mariners Aurora Stadium ...................................... 30

5.1.3 General Public Survey .................................................................................................................... 32

5.1.4 Corporate Survey ............................................................................................................................ 34

5.2 Conclusion .......................................................................................................... 36

6 Organisational Structure .................................................................. 37

6.1

Background ......................................................................................................... 37

6.1.1 Tasmania Untitled FC Organisational Structure ......................................................................... 37

6.1.2 Football Federation Tasmania Organisational Structure ........................................................... 38

6.1.3 Combined Tasmania Untitled FC and FFT Organisational Structure ........................................ 39

7 Ownership and Investment .............................................................. 41

7.1 FFA and A-League Requirements ..................................................................... 41

7.2 Ownership and Investment Options .................................................................. 41

7.2.1 Combined Ownership Model ......................................................................................................... 41

7.2.2 Independent Ownership Model ..................................................................................................... 42

7.3 Capital Raising Options ..................................................................................... 43

8 Government Funding ........................................................................ 44

8.1 The Role of Government .................................................................................... 44

8.2 Tasmanian Government Funding Options .................................................... 46

8.3 Government Funding Commitment ................................................................... 47

8.3.1 Government Sponsorship.............................................................................................................. 47

8.3.2 Government Grant .......................................................................................................................... 47

9 Match Day Venue .............................................................................. 48

9.1 Introduction ......................................................................................................... 48

9.2 Aurora Stadium ................................................................................................... 49

9.3 Bellerive Oval ...................................................................................................... 50

9.4 Stadium Economics and Match Return ............................................................ 51

9.5 Conclusion .......................................................................................................... 51

10 Demand Assessment ........................................................................ 52

10.1 Hobart and Launceston Catchments ................................................................ 52


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10.2 Overall Research Statistics and Findings ........................................................ 53

10.2.1 Supporter Numbers ........................................................................................................................ 53

10.2.2 Attendance Demand Potential ....................................................................................................... 54

10.2.3 Membership Demand Potential ..................................................................................................... 54

10.2.4 Total Population Calculations ....................................................................................................... 55

11 Attendance and Membership Modelling ......................................... 56

11.1 Introduction ......................................................................................................... 56

11.2 Realistic Model .................................................................................................... 56

11.2.1 Attendance Projections Realistic ............................................................................................... 56

11.2.2 Membership Projections Realistic ............................................................................................. 57

11.2.3 Gate Receipts Realistic ............................................................................................................... 58

11.3 Conservative Model ............................................................................................ 59

11.3.1 Attendance Projections Conservative ....................................................................................... 59

11.3.2 Membership Projections Conservative ..................................................................................... 60

11.3.3 Gate Receipts Conservative ....................................................................................................... 60

11.4 Alternative Conservative Model ......................................................................... 61

11.4.1 Attendance Projections Alternative Conservative ................................................................... 61

11.4.2 Membership Projections Alternative Conservative ................................................................. 62

11.4.3 Gate Receipts Alternative Conservative ................................................................................... 62

11.5 Conclusion .......................................................................................................... 63

12 Business Functions .......................................................................... 64

12.1 Commercial Operations ..................................................................................... 64

12.1.1 Sponsorship/Partnerships ............................................................................................................. 64

12.1.2 Sponsorship Market Testing ......................................................................................................... 65

12.1.3 Sponsorship Packaging ................................................................................................................. 71

12.1.4 Corporate Hospitality ..................................................................................................................... 72

12.1.5 Membership ..................................................................................................................................... 74

12.1.6 Events .............................................................................................................................................. 75

12.1.7 Merchandise .................................................................................................................................... 75

12.1.8 Other Commercial Revenue........................................................................................................... 75

12.2 Corporate Services ............................................................................................. 75

12.3 Marketing and Communications........................................................................ 75

12.4 Community and Game Development ................................................................ 77

12.4.1 School and Community Programming ......................................................................................... 77


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12.4.2 Education and Training .................................................................................................................. 77

12.4.3 Participation and Club Support ..................................................................................................... 77

12.4.4 Game Development ........................................................................................................................ 77

12.5 Football Operations ............................................................................................ 78

12.5.1 State Premier League ..................................................................................................................... 78

12.5.2 Talent ID / Player Development ..................................................................................................... 78

12.5.3 Operations / Administration .......................................................................................................... 78

12.6 A-League Operations .......................................................................................... 78

12.6.1 Coaching Staff ................................................................................................................................ 79

12.6.2 Playing List ...................................................................................................................................... 79

12.6.3 Youth League and Women League ............................................................................................... 79

13 Financial Projections ........................................................................ 80

13.1 Realistic Model .................................................................................................... 80

13.1.1 Income ............................................................................................................................................. 80

13.1.2 Expenditure ..................................................................................................................................... 81

13.2 Conservative Model ............................................................................................ 83

13.2.1 Income ............................................................................................................................................. 83

13.2.2 Expenditure ..................................................................................................................................... 83

13.3 Alternative Conservative Model ......................................................................... 84

13.3.1 Income ............................................................................................................................................. 84

13.3.2 Expenditure ..................................................................................................................................... 84

13.4 Financial Projections Summary......................................................................... 85

13.5 Establishment Year ............................................................................................. 85

13.6 Reduced Expenditure Considerations .............................................................. 86

14 Economic Considerations ................................................................ 87

14.1

Overview .............................................................................................................. 87

14.2 New Business Activity ........................................................................................ 87

14.3 New Tourism Activity ......................................................................................... 87

14.4 Hosting Elite Sporting Teams ............................................................................ 88

14.5 Media Exposure .................................................................................................. 89

15 Multiple Bottom Line Benefit Analysis ............................................ 90

15.1 Financial Outcomes ............................................................................................ 90

15.2 Social Outcomes ................................................................................................. 92

15.3 Sport Outcomes .................................................................................................. 94


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15.4 Environmental Outcomes .................................................................................. 96

16 Conclusion and Recommendations ................................................ 97

17 Next Steps ......................................................................................... 98

Appendix A EMRS Market Research Reports .......................................................... 99


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Tasmania United FC A-League Team

Coffey Commercial Advisory Page 1

1 Executive SummaryFootball Federation Australia (FFA) is the governing body of football in Australia. FFA also

manages the national competition, the Hyundai A-League, which consists of 10 teams fromacross Australia and New Zealand.

In early 2008, a group of Tasmanian business people with a shared interest in football formeda Taskforce to explore the possibility of the State bidding for a license to compete in the A-League competition.

The intent of this business case is to provide the Taskforce, the Tasmanian Government andthe FFA with the appropriate level of detail supporting the notion of a Tasmanian A-Leagueteam if and when expansion of the national competition is considered. It also provides wellconsidered and innovative recommendations for the establishment and operation of aTasmanian based A-League team.

Strategy, Policy and Planning Context

The development of the business case has been informed and influenced by key governmentstrategy, policy and planning documents, as well as closely aligned to respective state andnational football association strategy and policy.

There is strong alignment between State and Federal government policy and a Tasmanian A-League team in the following areas:

Development and success of elite sport in Australia, and building the capacity of nationalsporting organisations.

Community participation in sport, recreation and physical activity, and the building ofcommunity sport.

Provision of community role models and leaders in sport.

Focus on driving economic growth through infrastructure, skill development andinnovation.

Previous studies and reports relevant to the expansion of the A-League competition and theTasmanian sporting landscape indicate that:

A Tasmanian A-League team is a feasible proposition that should be explored further.

Tasmanians having an appetite for sport and attending national level sporting fixtures.

FFA considers the overall attractiveness of the Tasmania market to be Low/Medium.

The economic impact of a team participating in a national competition playing games inTasmania could have lasting economic benefits.

Football Federation Australia and the Hyundai A-League

In the years immediately following its inception, the popularity of the Hyundai A-League grewquickly which was reflected in increased club memberships, crowd numbers and TV ratingsthat the league was attracting, together with increases in sports betting turnover.

However over the past 12 months media outlets have reported that some A-League clubs arestruggling financially due to both dwindling crowd and membership numbers.

In season 2009/10, it is estimated that A-League clubs lost a combined $25 million amiddeclining crowd and membership numbers, which is in contrast to the current trend in AFL andNRL.

The existing situation of many of the A-League clubs has meant a renewed focus from FFA onthe sustainability of the A-League clubs, as well as the credibility of the A-League brand.


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FFA has indicated that any business case for a new A-League team must present a realisticsustainable financial model, with investment that not only demonstrates viability but is wellsupported by detailed market research and demand analysis. Strong government support forany prospective franchise is also considered a very favourable proposition for the FFA.

Although the financial difficulties of A-League clubs have been well documented, the FFA hasstated strongly that the A-League competition will succeed and achieve its objectives. Theimmediate priorities appear to be expansion into western Sydney and to work closely withexisting A-League clubs to meet the existing challenges.

The FFA has also indicated that it is its intention in the short-medium term to investigatefurther expansion of the competition via the introduction of 13

thand 14

thfranchise licenses.

Market Research Statistic and Findings

Market research undertaken in Tasmania by Enterprise Marketing and Research Services(EMRS) prior to and during the business case has indicated strong public and corporatesupport for a Tasmanian A-League team.

The market research was used to build attendance and membership models, and inform theassumptions of the financial projections in Section 13 of the report.

Market research undertaken in November 2010 indicated that 36% of respondents claimedthey definitely would attend games or would be very likely to attend games in the firstseason.

Research also indicated that 17% of respondents claimed that they would definitely become amember or would be very likely to become a member.

These findings indicated very strong support in Tasmania for a Tasmanian A-League teamand are critical to the assumptions of attendance and membership modelling and financialprojections.

Proposed Organisational Structure

The introduction and establishment of a Tasmanian A-League would provide the Tasmanianfootball community with a unique opportunity to not only have a team compete in a nationalcompetition but also grow the game of football in the state.

With this in mind, a combined structure, either through merger or a Memorandum ofUnderstanding, between FFT and Tasmania United FC should be considered.

The model could be based on the successful Cricket Tasmania structure, which combines theadministration and development of the sport as well as the management of a staterepresentative team in the national competition.

Ownership and Investment

A-League franchise investment models across Australia are varied, however the predominantmodel is a shareholder based model.

Based on discussions with FFA and the Head of A-League, it is a requirement of anyprospective franchise to demonstrate that they can guarantee $8 $10 million. This figure isbased on the premise (as advised by FFA) that a new A-League team may operate at a lossof approximately $1 million per annum for the first 5 years, plus start up costs and a one offlicense fee.

In light of recent financial difficulties, FFA suggests that this figure may be closer to 10 million.

The $8 $10 million is comprised of:

$1 million license fee.

$1 million start-up funding.


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$6 $8 million as guarantee to underwrite the first five years of operation.

It is considered important that the bid secure private investment and not rely solely ongovernment support.

Coffey Commercial Advisory has considered a proposed combined Tasmania United FC and

Football Federation Tasmania entity, which is outlined in Section 6. The entity would operateunder a board of management representative of its members, investors, FFT andGovernment.

As an alternative option, a private ownership and investment model has been presented forconsideration and comparison.

Under the private ownership model, it would be proposed that a large component of theinvestment required could be raised as part of the foundation of the club, and that additionalcapital may be raised over a five year period.

This independent model may still include the combined roles of Tasmania United FC and FFTunder some form of formal agreement.

State Government Funding

The role of the Tasmanian Government is considered vital to the success of the bid for aTasmanian A-League team for the following reasons:

The current financial difficulties of existing A-League teams have meant FFA is seekingstrong guarantees from any prospective bid.

A Government supported bit is considered an attractive proposition to the FFA.

Provides security and credibility to the bid, which given recent experience with SydneyRovers, is critical to FFA.

Research suggests that private investment in a Tasmanian team would be limited without

government support. Governments interest and investment in the bid would add creditability to the bid and the

sponsorship proposition. Many of the companies spoken to were waiting for the StateGovernment to take the lead in supporting the bid, as was done with the AFL bid, beforecommitting.

State Government funding could take on many forms including financial guarantee orunderwriting, principal sponsorship or annual grant.

Stadium Economics and Match Day Venues

The 2010-11 A-League fixture consists of 27 weeks of football including mid week matches,with each team playing 30 games excluding finals. For the purpose of the business case the

season is modelled on 15 home games.Based on this assumption, the assessment of match day facilities, and the objective ofcreating a unified support for a Tasmanian A-League team, it is recommended at this pointthat 8 games are played at Aurora Stadium, and 7 games are played at Bellerive Oval.

Both Aurora Stadium and Bellerive Oval are offering Tasmania United FC a clean stadiumand very favourable stadium deal in comparison to other A-League teams and other nationalsporting codes, and therefore a sustainable stadium agreement in the short to medium term.

Attendance and Membership Modelling

Using the market research undertaken by EMRS, the business case details attendance andmembership demand potential. Without applying any conservative measures to the EMRS

research, the findings suggest the following:

Total annual attendance for season home games of 623,385.


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Average home game attendance of 44,223.

Total number of definite members is 41,559.

Although the market research suggests very strong support, the attendance figures modelledin the report have been calculated using a conservative yet realistic approach to the market

research findings.

The business case explores three attendance and membership models (Realistic,Conservative and Alternate Conservative) which are based on assumptions derived from theEMRS statics and findings in Section 5, and the demand assessment in Section 10. Thesefindings are tested against industry benchmarks.

The follow table presents a summary of attendance and membership figures base on thesethree scenarios:

Total Annual

Attendance

Average

Attendance per

Game

Average

Members per

Game

Total Members

Realistic 201,501 13,460 4,099 13,825

Conservative 134,886 8,992 2,668 12,199

AlternativeConservative

144,496 9,633 2,319 10,195

Table 1 Attendance and Membership Summary

Financial Projections

The business case presents financial projections based on the three attendance andmembership scenarios, Realistic, Conservative and Alternative Conservative.

Each model presented indicates operating losses over the first five years of operation, whichis in line with FFA expectations of any new team entering the competition. Whenbenchmarked against existing A-League teams these projected operating losses are generallyless than the A-League average.

Table 2 below present the Tasmania United FC profit and/or loss projections for each of thethree scenarios:

Full

Forecast

Year 1

Forecast $

Year 2

Forecast $

Year 3

Forecast $

Year 4

Forecast $

Year 5

Forecast $

Realistic (482,141) (1,153,598) (686,816) (209,121) (32,132) 95,869

Conservative (749,089) (1,296,792) (937,871) (580,725) (429,835) (333,795)

AlternativeConservative

(675,687) (1,204,878) (844,128) (475,935) (332,497) (245,550)

Table 2 Tasmania United FC Profit & Loss Summary

The average A-League team operating loss in season 2008/09 was $1.5 million, thereforeconsiderably greater than the Tasmania United FC profit and loss projections.

Based on the financial projections presented above, it is assumed likely that the TasmanianA-League team will have a cumulative net operating loss ranging between $2,467,934 and$3,579,019 over the first five years of operation, which is not dissimilar to FFA expectation orthe existing situation in the A-League.


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Economic Value to Tasmanian

In general terms, a team would provide economic benefits in two ways. Firstly, theestablishment of a team would generate direct employment opportunities and its own incomeand expenditure in the local state economy. With approximately 50 permanent full time staff,

an A-League team would have annual turnover of approximately $10 million. This revenuewould represent an economic benefit to the Tasmanian economy by creating businessexpenditure and jobs that would not otherwise exist.

Secondly, the staging of A-League matches i.e. sport and recreational events would alsocontribute to the states economic activity. The introduction of 15 home matches inTasmania would generate a considerable amount of economic activity in the Tasmanianeconomy by encouraging business and consumer spending, including tourism that would nothave otherwise occurred. The impact of these new events must also be considered inrelation to increased revenue for venue operators and higher costs for running andmaintaining the venues. This may also result in increased capital investment at the venues.

Conclusions and Recommendations

The introduction and establishment of a Tasmanian A-League would provide the Tasmanianfootball community with a unique opportunity to not only have a team compete in a nationalcompetition but also grow the game of football in the state.

Each of the financial models presented in the business case, when benchmarked against thecurrent financial performance of existing A-League teams and an average annual loss ofapproximately $1.5 million, demonstrates that the proposed Tasmanian A-League team wouldfinancially outperform many of the existing A-League teams.

This financial performance in underpinned by extremely positive market research thatindicated very strong attendance and membership potential, and backed by very favourablestadium economics.

The role of the Tasmanian Government is considered vital to the success of the bid for aTasmanian A-League team, and the ongoing financial sustainability. The financial difficultiesof existing A-League teams have meant that the FFA is seeking strong guarantees from anyprospective bid, and in turn a government supported bit would be considered an attractiveproposition to FFA. It is believed that without State Government support and funding, aTasmanian A-League side is unlikely to be supported by FFA.

The existing A-League situation may present an opportunity for any prospective license bidthat has strong government support, demonstrated attendance and membership potential,and can present a realistic sustainable financial model.

Based on the findings of the business case, it is recommended that the Taskforce continuewith the development and preparation of an A-League team license bid for presentation toFFA.


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2 Introduction

2.1 Project Overview

In April 2008, a group of Hobart business people with a shared interest in developing an A-League team formed a Taskforce to explore the possibility of the State bidding for the 11th or12th license in the Australian A-League. Later in that year, the group was incorporated underthe name of Tasmania United FC.

In mid August 2008 the group were briefed by Football Federation Australia (FFA) on the A-League licence bidding process and have since worked towards the development of a formalbid document.

In 2009, the Tasmanian Government, in conjunction with the Tasmania United FC Taskforce(Taskforce), commissioned a feasibility study to explore the financial viability of a Tasmanianbased A-League team.

The positive findings of the feasibility study provided the impetuous to proceed with detailedmarket research and the commissioning of a detailed business case.

In summary, the following tasks have been undertaken:

The creation of a suitable entity to pursue the vision of a Tasmanian A-League team.

Procurement of appropriate funding to enable the commissioning and development of aprofessional feasibility study.

Development of a detailed feasibility study to assess the license bid requirements, facilitysuitability, stadium economics, preliminary demand and financial analysis.

Preliminary market research to gauge the community views and levels of support for boththe license bid and for a team if it was to enter the A-League competition.

Procurement of appropriate funding to enable the commissioning and development of adetailed business case.

In March 2010, Coffey Commercial Advisory was engaged by the Tasmanian StateGovernment on behalf of the Taskforce to build on the previous studies and prepare adetailed business case. The preparation of the business case is considered a vital step indetermining viability and key requirements in the process toward gaining a license to competein the national competition.

2.2 Context and Purpose

In 2005, FFA introduced a new national competition known as the Hyundai A-League. At itsinception the competition consisted of 8 teams, however, the competition has since expandedand in season 2010-11 included 11 teams from across Australia and New Zealand.

The expansion of the A-League is a deliberate strategy by FFA to raise the profile of the sport,increase market share and create the opportunity to engage the broad football community.

Throughout this period of expansion, the FFA has sought expressions of interest from acrossAustralia for the release of new licenses to enter the A-League competition.

During the initial license bid process in 2004, 20 submissions were received. Three bidswere received from Melbourne, two each from Sydney and Brisbane, one from each of theremaining preferred cities, plus a bid from the Central Coast of NSW.

In early 2008, the FFA sought submissions from interested parties for the first phase ofexpansion. The FFA received interest from 10 potential franchises. By late 2008 the 9

thand

10th

licenses were granted to two Queensland based teams, Gold Coast and NorthQueensland, to participate in the 2009-10 season of the competition.


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In 2009, Melbourne Heart secured the 11th

license and entered the competition in season2010-11.

With the opportunity of a 12th

license seemingly available, the Task Force pushed for thedevelopment of a feasibility study, business case and bid document for presentation to the

FFA.The Taskforce was pursuing the 12

thlicense; however in September 2009 the FFA awarded

the 12th

license to a consortium out of western Sydney known as the Sydney Rovers, to enterthe competition in 2011-12.

As recently as December 2010, the license was withdrawn on the basis that the consortiumhad failed to provide the necessary capital and financial guarantees required by the FFA. TheFFA has indicated however that they believe that there is enough support in western Sydneyfor a franchise and that it is an important part of the vision for the A-League.

In February 2011, FFA withdrew the license held by the North Queensland Fury due toongoing financial difficulties and the failure to secure the capital investment required tocontinue operation. The team will now no longer compete in the A-League competition,

therefore reducing the competition to 10 teams.The withdrawal of the Sydney Rovers licence, along with that of North Queensland Fury, mayprovide opportunities for alternate consortiums or license bids from across Australia. It doesappear, however, that the FFAs immediate priority is expansion into western Sydney.

Following the introduction of a 12th

team, or what would now be a new 11th

team, it is FFAsintention in the short-medium term to investigate further expansion of the competition via theintroduction of additional franchise licenses.

The intent of the business case is to provide the Tasmanian Government and the FFA withthe appropriate level of detail supporting the notion of a Tasmanian A-League team if andwhen expansion is considered.

2.3 Business Case ObjectivesThe purpose of the business case is to support the preliminary feasibility study and providedetailed assessment of a Tasmania based team in the national A-League competition.

Together with typical components of a business case, specific objectives of the project wereto:

1. Undertake detailed market research, demand and market assessment that supports thefindings of the feasibility study.

2. Test the sponsorship market and the attractiveness of a Tasmanian A-League team as asponsorship proposition.

3. Develop an organisational structure that would support the ongoing sustainability of aTasmanian A-League team.

4. Prepare detailed financial projections based on detailed and specific market researchcombined with existing industry benchmarks.

5. Demonstrate a business case for the introduction of a Tasmanian A-League team.

2.4 Acknowledgements

Coffey Commercial Advisory would like to acknowledge the contribution of the followingpersonnel for their input into the business case for a Tasmanian A-League Team:

John McGirr, Chairman of the Tasmania United FC Taskforce.

Members of the Tasmania United FC Taskforce. Craig Martin, Executive Director of Sport and Recreation Tasmania.


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Ben McKay, Adviser, Office of the Hon Brian Wightman MP.

Lyall Gorman, Head of A-League.

Edward Kemp, Managing Director Alcatera Pty Ltd.

Lucy Millen, Senior Analyst Enterprise Marketing and Research Services (EMRS).


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3 Strategy, Policy and Planning ContextThe study has been carried out with consideration of the following strategy, policy andplanning inputs:

Federal Government Policy and Strategies.

State Government Policy and Strategies.

Football Federation Australia Policy and Strategies.

Football Federation Tasmania Policy and Strategies.

Demographic profile of the region.

Review of Relevant Studies or Reports.

This Section outlines the key information from relevant strategy, policy and planningdocuments and how each impact or align with the development of the business case.

3.1 Relevant Policy and Strategy

3.1.1 Federal Government Policy and Strategy

The following table provides a summary of the key Federal Government policy, strategy andplanning documents relevant to the business case:

Document/Policy Key Issues relevant to the Business Case

The Future of Sport in Australia

Crawford Report

In 2008, an independent expert panel was appointed to

make recommendations that would reform the Australian

sports system to meet future challenges. The Independent

Sport Panel, chaired by David Crawford, published a report

in 2009 which comprised eight recommendations on reform

of the structure and programs of the elite sport system as

well as an increased focus on participation and physical

activity.

The report includes a number of key findings and

recommendations under these eight key areas:

1. Defining our National Sports Vision.

2. Reforming the Australian Sports Commission to Leadthe Sports System.

3. Merging our Institutes of Sport.

4. Building the Capacity of our National SportingOrganisations.

5. Putting Sport and Physical Activity Back into Education.

6. Building Community Sport with People and Places.

7. Ensuring Australias Sports System is Open To All.

8. Sustaining the Funding Base for Sport.

A Tasmanian A-League team has clear relevance to areas1, 4 and 6 of the Crawford Report.

The business case will explore the expansion of a nationalcompetition, building capacity of national sporting

organisations, and building community sport through peopleand places.


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Australian Sport: Emerging

Challenges, New Directions

Discussion Paper

In early 2008 the Government released this Discussion

Paper to set the new vision and direction for Australian

sport. The paper outlines two key areas where the

Government will introduce reform - the way we support elite

sport; and the way sport is used to boost participation andphysical activity to help build a healthier nation.

It also outlines particular projects the Government will

pursue this term including the promotion of the position of

women in sport; improving program delivery of Indigenous

sport and enhancing support and recognition of disabled

sport.

The discussion paper is separated into the following five

themes:

1. Ensuring Australias Continued Success at Elite Level.

2. Increasing Participation Rates and Making Sport Part of

the Preventative Health Agenda.

3. Promoting Women in Sport.

4. Maximising Effectiveness of Indigenous Sport Program.

5. Enhance Support and Recognition of Disabled Sport.

A Tasmanian A-League team would support many themes of

the discussion paper with particular relevance to ensuring

Australias continued success at the elite level and

increasing participation rates.

3.1.2 State Government Strategy and PolicyThe following table provides a summary of the key State Government policy, strategy andplanning documents relevant to the business case:


Sport and Recreation Tasmania

Strategic Plan 2009 2014

Sport and Recreation Tasmania (SRT) goals are to:

1. Develop and support a vibrant, innovative and inclusivesport and recreation sector.

2. Develop Tasmanias elite athletes.

3. Facilitate participation opportunities in sport, recreation

and physical activity.

4. Promote the individual, social, economic, environmentaland health benefits of sport, recreation and physicalactivity to the Tasmanian community.

5. Support the provision of quality facilities andenvironments that meet the sport, recreation andphysical activity needs of the community.

The establishment of an A-League team in Tasmania wouldsupport many of the strategic objectives of SRT.

The business case will have specific relevance to thedevelopment of Tasmanias elite athletes, and thedevelopment and promotion of participation opportunities in

sport, recreation and physical activity.


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Tasmania Physical Activity Plan

2005 2010

The four goals outlined in the plan are:

1. Participation Education, promotion and skills

development that encourage participation in physicalactivity for all members of the community.

2. People Leaders, facilitators and role models workingin community and government.

3. Places Infrastructure, facilities, open spaces andprograms that provide supportive environments forphysical activity.

4. Policy Supportive policy, resources and programs thatencourage physical activity.

The plan highlights key strategies including the developmentof role models, community partnerships and appropriatelevels of dedicated funding, all of which align with an A-

League team.The business case has particular relevance to promotionand skill development that encourages participation inphysical activity, and role models working in the community.

Tasmania Together Revised

2009

The Tasmania Together document is a long-term plan and

vision for Tasmania. It is a key document for government

and sets out the community priorities for the future.

The plan includes 12 key goals including:

1. A reasonable lifestyle and standard of living for allTasmanians Cost of living.

2. Confident, friendly and safe communities Feeling safe.

3. High-quality education and training for lifelong learningand a skilled workforce Literacy and numeracy.

4. Active, healthy Tasmanians with access to quality andaffordable health care services Avoidable mortality.

5. Vibrant, inclusive and growing communities wherepeople feel valued and connected Urban/regionalpopulation.

6. Dynamic, creative and internationally recognised artscommunity and culture Attendance at cultural heritagesites.

7. Acknowledgment of the right of Aboriginal people to

own and preserve their culture and share with non-Aboriginal people the richness and value of that culture Cultural interpretation at visitor centres.

8. Open and accountable government that listens andplans for a shared future Local government elections.

9. Increased work opportunities for all Tasmanians Workforce participation rate.

10. Thriving and innovative industries driven by a high levelof business confidence Investment growth.

11. Built and natural heritage that is valued and protected Land protection.

12. Sustainable management of our natural resources Greenhouse gas emissions.

The establishment of a Tasmanian A-League supports many


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Document/Policy Key Issues relevant to the Business Caseof the principles in this document, specifically vibrant,inclusive and growing communities where people feelconnected.

New Economic Direction

Statement July 2008

In 2008 the Premier of Tasmania, David Bartlett, announced

a New Economic Direction. In that statement the Premier

identified three core strategies to make the most of the

opportunities and challenges over the next ten years. These

were:

1. Infrastructure.

2. Skills.

3. Innovation.

In his address the Premier stated:

I want to see more Tasmanians employed and to see our

economy growing to support families and give them security.I want to see a growing economy grow our participation inthe workforce, the productivity of our industries and thepopulation of our state. In turn, I want to see increasingparticipation, productivity and population grow our economy.

Since that announcement in 2008 the Government hasdeveloped and released the following documents:

Tasmanian Skills Strategy.

Tasmanian Infrastructure Strategy.

Tasmania Innovation Strategy.

The establishment of a Tasmanian A-League team aligns

with the strategic objectives of the New Economic Directionstatement, and has relevance to each of the above strategydocuments.

Specifically the business case will consider economicreturns, skill development and employment opportunities,and the development of new and existing infrastructure.

Economic Development Plan

Discussion Paper December

2010

This document was released in early December 2010 to

engage with and seek the views of key stakeholders on the

Economic Development Plan (EDP).

The document states that the role of the EDP is to support

the Tasmania Together vision. The EDP has an overarching

vision and four goals as detailed below:

To improve the prosperity of all Tasmanians through

development which is economically, socially and

environmentally sustainable.

Goal 1 To support and grow business.

Goal 2 To maximise Tasmanias economic potentialin key sectors.

Goal 3 To improve the environmental and socialsustainability of the economy.

Goal 4 To support and grow communities in regions.

The themes of the discussion paper and EDP would be

supported by a Tasmanian A-League team, specifically


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support and grow business and maximise Tasmanias

economic potential.

Tourism Tasmania Strategic Plan

2010 2013

Tourism Tasmanias five key goals are to:

1. Maximise Tasmanias tourism potential.

2. Drive demand for Tasmania.

3. Foster the supply of tourism products and experiences.

4. Enhance industrys competitive position with market-leading research and analysis.

5. Be a highly effective organisation.

A Tasmanian A-League team would provide strategicopportunities for Tourism Tasmania by supporting all fivegoals of the organisation.

3.1.3 Football Federation Australia

The following table provides a summary of the key Football Federation Australia policy,strategy and planning documents relevant to the business case:


Football Federation Australia

Mission Statement

FFAs mission statement is to be one of the top football

nations, both on and off the field, within the Asia-Pacific

region, by:

Preparing, presenting and leveraging national teams ofwhich all Australians can be proud.

Managing a highly popular national football competitionas a distinctive and innovative entertainment

proposition for Australia.

Building a very inclusive, mutually valuable relationshipbetween FFA and the Australian football community.

Delivering significant, mutually rewarding relationshipsbetween Football Australia and other Football bodies in

our region.

Operating in a way that entrenches financial viability

and stability for FFA and Australian football.

Providing the leadership to foster a unifying newFootball culture which embraces success, diversity,

professionalism, integrity and the universal appeal of

the Game.

A Tasmanian A-League team would support FFA strategic

objectives. Of particular relevance to managing the national

competition, and building an inclusive and mutually valuable

relationship between FFA and the Australian football

community.


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3.1.4 Football Federation Tasmania

The following table provides a summary of the key Football Federation Tasmania (FFT)policy, strategy and planning documents relevant to the business case:


Football Federation Tasmania

Strategic Plan 2009 2013The three goals outlined in the strategy are:

1. To ensure that football remains vibrant and viable at aclub and association level in Tasmania.

2. To further develop and maintain a state sport structuredemonstrating leadership and clear direction.

3. To increase the Tasmanian profile and representation ata national level.

The element of key relevance to the study is the support for

sports representation at a national level including the A-

League.

Football Federation Tasmania

Annual Report 2009

The FFT Annual Report states the following:

A number of activities in the form of meetings with

Government, radio interviews, participation in scoping of a

business proposal were undertaken during the year in

support of the Tasmanian A-League Task Force Whilst

the establishment of an A-League team is the responsibility

of private investment, and does not fall within FFTs charter,

it is a concept that FFT fully supports.

3.1.5 Summary

The business case will be informed and influenced by the key strategy, policy and planningdocuments detailed above.

It is clear that the development of a Tasmanian A-League team will need to consider keyFederal and State Government policy, and provide avenues to achieve the key objects ofstrategy and planning. The development of the Tasmanian A-League team business modelwill also carefully consider the strategic goals of both FFA and FFT.

Of particular focus and relevance to all stakeholders is the continued development andsuccess of elite sport in Australian, community participation in sport, recreation and physicalactivity, and the building of community sport.

The State Government also has an additional focus on driving economic growth throughinfrastructure, skill development and innovation.

Each of the aforementioned will be considered by the business case.


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3.2 Demographic Analysis

To understand the Tasmanian population in more detail, the following section presents thedemographic profile of Tasmania.

3.2.1 Population

Tasmania's population is distributed in three main regions - South around the capital cityHobart, North-east centred on Launceston, and North-West which features the cities ofDevonport and Burnie.

After a period of decline in the 1990s, Tasmania's population returned to growth in early 2001,with the population growth rate being near the national average of 1.8%.

Tasmanias population grew by almost 3.3 %, from 474,443 to 489,951 in the period from1996 to 2006. The State experienced a 0.6 per cent population decline between 1996 and2001, but this trend then reversed and Tasmanias population grew by more than 3.8% in thefive years to 2006.

Table 3 below presents the population growth from 486,327 to 503,292 in the period from2005 to 2009.

Table 3 Annual Population Growth1

Table 3 above presents the following:

During the period from 2005 to 2009, Tasmania experienced population growth of

approximately 3.5% (16,965). In June 2009, Tasmania's population reached a record level of 503,292.

Tasmania, with an annual growth rate of 1.1% in 2009, was the slowest of all states andterritories in Australia.

Tasmanias population is projected to continue the current trend and grow slowly over the next15 years.

Table 4 Projected Population Growth2

Table 4 above presents the following:

Tasmanias population is expected to reach approximately 605,306 by 2026.

From 2006 to 2026, Tasmanias population is projected to grow by approximately 19%.

The annual population growth rate will remain at approximately 1.1% over the next 15years.

1ABS Regional Population Growth, Australia, 2008-09 (cat. no. 3218.0)

2ABS Population Projections, Australia, 2006 to 2101(cat. No. 3222.0)

Year 2005 2006 2007 2008 2009

Population 4 86,3 27 48 9,95 1 493 ,2 04 49 7,922 503 ,2 92

AnnualGrowth 0.7% 0.7% 0.8% 1.1%

AnnualPopulationGrowth2005 2009

2006 2011 2016 2021 2026

ProjectedPopulation 4 89,9 51 51 4,65 6 543 ,6 30 57 4,340 605 ,3 06

5YearGrowthRate 5.0% 5.6% 5.6% 5.4%

PopulationGrowthRateto2026


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3.3 Review of Relevant Studies or Reports

The following reports have been reviewed and should be considered when reviewing thisdocument.

3.3.1 Tasmania United FC A-League Team Feasibility Study 2009

In 2009, the Tasmanian Government, in conjunction with the Taskforce, commissioned stageone of a feasibility study to explore the financial viability of a Tasmanian based A-Leagueteam.

The study explored the financial viability, facility requirements, as well as partnershipopportunities for Tasmania United FC in the A-League competition. The study also providedstrategic recommendations in relation to the establishment and ongoing operation of the club.

The feasibility study demonstrates demand for the establishment of an A-League team inTasmania and importantly that an A-League team could be a sustainable financial entity in itsown right in the short to medium term.

The key findings of the study are as follows:

Preliminary demand analysis indicates that Tasmanians are likely to support a TasmaniaA-League team;

The team is likely to generate solid membership and attendance numbers in comparisonto current A-League averages;

Existing facilities at Bellerive Stadium in Hobart and Aurora Stadium in Launceston areable to meet A-League requirements with little or no alterations to the current facilities.

The economics of the stadiums in Hobart and Launceston are superior to other stadia inAustralia which will provide a significant financial advantage to a Tasmanian A-Leagueteam.

Home games should be divided between Hobart and Launceston, with six and sevengames respectively.

The team should adopt a community development and engagement model and thereforeplay a significant and positive role in the local community, especially in the developmentof the game across the state.

Tasmania United FC should implement a Youth League team in year 1, even though it isnot a FFA requirement until year three or later.

The study recommends that the team be established with a football and administrationstaff expenditure at the upper level in comparison to other A-League clubs, in order toachieve success both on and off the pitch.

The study recommended further detailed market research and analysis be undertaken as partof the development of a business case and formal bid document.

It was also recommended that a business case explore the most appropriate business modeland structure for the development of an A-League team in Tasmania.

3.3.2 Hawthorn Football Club Sponsorship Analysis RepucomInternational

Repucom International (Repucom) was commissioned by Tourism Tasmania to undertake anevaluation of their sponsorship of the Hawthorn Football Club (Hawthorn FC) across the 2008AFL season.

The analysis undertaken by Repucom was across three specific components including brand exposure analysis, consumer research and an economic impact study.


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The 2008 AFL season was extremely successful for Hawthorn FC, winning the AFLPremiership for the first time in recent years.

The report highlighted that the on field success of Hawthorn FC in 2008 had led to a positiveimpact for the Tasmanian Government as a commercial partner.

As part of the Repucom report, an economic impact study was undertaken byPricewaterhouseCoopers (PwC). The key findings are as follows:

Interstate Attendee Details

Hawthorn FC matches held at Aurora Stadium had a cumulative attendance of 84,891across the five fixtures throughout the season.

Event research conducted by Tourism Tasmania found that on average 30.7% of allattendees in the 2008 season were from interstate, an increase in the number ofinterstate visitors recorded during the 2007 season (20% interstate visitors in season2007).

A high proportion (91%) of all interstate visitors were deemed to have travelled toTasmania for the primary purpose of watching one of the nominated AFL fixtures.

The economic impact study found that a total of 23,768 interstate visitors attendedmatches during the year, with AFL being the number one reason for travel to Tasmania.This represents a 77% increase in the number of football related travellers from season2007.

The economic impact study found these visitors spent an average of $220 per day whilstin Tasmania, with the average length of stay being 3.2 nights. The majority of this dailyspend was attributed to entertainment, followed by meals.

Economic Impact

The gross economic impact of the above attendees travel to Tasmania was $32.319m.This represents a 104% increase when compared with the 2007 gross impact.

The above results consisted of a direct impact of $16.931m and flow on impacts of$15.388m.

The growth in economic impact year on year is a result of a higher percentage ofinterstate visitors at matches, with a rise in the AFL as the primary reason for travel.

The total net impact to the Tasmanian economy was $15.136m, consisting of $7.794m indirect expenditure.

The study also found a total of 299 full time equivalent employment positions werecreated in the state.

Of these positions 197 were a direct result of increased tourist visitation, the most ofwhich resulted from accommodation, cafes and restaurants.

In assessing and considering the proposition of a Tasmanian A-League team, it is prudent totake into account the significant impact that an elite sporting team based in Tasmania wouldhave on the local economy.

3.3.3 Football Federation Australia A-League Expansion MarketResearch

FFA commissioned L.E.K. Consulting to undertake market research into potential A-Leagueexpansion markets to assess the overall attractiveness of these markets based on a range ofspecific criteria of interest to the FFA.

The following table relates to the support for football in nine potential markets for A-Leagueexpansion:


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TV Viewership o f

Football *

(Percentagewatching

professional

football on TV in

previous 12

months)

Sporting

Attendance *

(Percentageattending any

professional

sports match in

previous 12

months)

Community

Support

(Percentageresponding that

the community

would definitely

support a team)

Support for a

New A-League

Team

(Percentage who

would attend

matches)

Overall

Assessment

(Great emphasi sgiven to measure

of support for

new A-League

Team)

Townsville 22 58 53 53 High

West Sydney 48 58 26 41 Medium

Wollongong 37 56 33 43 Medium

Tasmania 29 52 26 50 Medium

Gold Coast 29 50 34 46 Medium

ACT 34 52 27 46 Medium

Melbourne 39 63 24 24 Low

Auckland 34 52 17 38 Low

Geelong 23 60 25 40 Low

Average ofMarketsSampled

33 56 29 42

Note: Attractiveness ratings assessed relative to average (by question) of all markets sampled

Table 5 Market Assessment3

Table 5 above highlights the following:

50% of the Tasmanian people sampled indicated that they would attend matches, incomparison to the sample average of 42%.

With the exception of Townsville, Tasmanian people are more likely to attend matchesthan all other markets sampled.

Townsville rated significantly higher than all markets with regard to people that would

definitely support a team.

Of the nine markets sampled, Tasmania ranked equal 5th

with West Sydney in relation tothe percentage of people that would definitely support a team.

L.E.K. Consulting rated Tasmania a Medium in the overall assessment of support forfootball.

Tasmanias overall assessment may be considered medium to high in light of the highpropensity of Tasmanians to attend matches.

The following table presents the Overall Assessment of Markets undertaking by L.E.K.Consulting:

3L.E.K. Consulting FFA Market Research


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Market Size

(Population of

statistical

district only)

Socio-

economic

(Median

Weekly

Household

Income)

History of Pro

Team Success

(Present

Teams\ Failed

Teams)

Participation

(Registered

Players)

Estimated TV

Universe

(Number o f

Households,

Oztam unless

noted)

Attractiveness

of Market to

Pay TV

Stadium

Availability

and Suitability

Busines

Intensity

(Business

with Reven


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Table 6 above provides the following information:

Tasmania has a higher population catchment than Townsville, Wollongong, Geelong andthe Sunshine Coast.

Tasmania has the 3rd

highest Business Intensity rating, behind only West Sydney and

Melbourne.

The number of registered players in Tasmania is significantly higher than Gold Coast,Townsville, Geelong and the Sunshine Coast, and comparable to all other markets otherthan West Sydney.

Tasmanias Estimated TV Universe is considerably higher than Townsville and Geelong,marginally higher than Wollongong and ACT, and comparable to the Sunshine Coast.

L.E.K. Consulting rated Tasmania a Low / Medium in the overall attractiveness based onthe selection criteria.

Upon review of the table above, and when Tasmania is benchmarked against similar markets(i.e. Townsville, Wollongong and ACT), it could be argued that Tasmania should be

considered Medium to High on overall attractiveness. Each of these areas has a similarpopulation, registrations and a greater TV universe. Tasmania also has significantly higherbusiness intensity, second only to West Sydney and Melbourne.

The report suggests that support in the Tasmanian market is Medium. Additional marketresearch may well demonstrate that market support in Tasmania is in fact actually high.

3.3.4 Cricket Tasmania Economic Impact of AFL Games at BelleriveOval

In October 2010, Deloitte was engaged by Cricket Tasmania, the venue operator at BelleriveOval, to provide an assessment of the economic impact of hosting AFL games at BelleriveOval.

This assessment also considered the economic impact of redeveloping Bellerive Oval toincrease the current crowd capacity from 15,500 to 19,500.

Deloitte reported that the expected per game economic impact of hosting AFL games(including Bellerive Oval redevelopment) at Bellerive Oval would be:

Direct jobs creation of 40 full time one year positions in Tasmania.

An increase of $22.2 million of output from the Tasmanian economy.

The total expected economic impact of hosting 20 AFL games over five years (includingBellerive Oval redevelopment) would be:

Direct jobs creation of 818 full time one year positions.

An increase of $493.4 million of output from the Tasmanian economy.

In addition to the economic impact detailed above, Deloitte expected the following intangibleimpacts:

Increased tourism and media exposure.

Participation in community sports.

Improved social cohesion.

Using the analysis undertaken by Deloitte on hosting of AFL games in Tasmania, it can beassumed that the hosting of A-League games in Tasmania would provide considerableeconomic benefits to the state; however the exact extent of this impact would need to beassessed specifically to an A-League team.


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3.4 Summary of Relevant Studies and Reports

The previous relevant studies and report assist the development of the business case bycapturing information prepared to date, and highlighting areas that the business case canbuild upon.

Specifically the business case needs to expand on existing market research and needs toconsider potential tourism opportunities and the immediate and lasting economic benefits.

In summary, these previous studies and reports indicate that:

A Tasmanian A-League team is a feasible proposition that should be explored further.

Tasmanians having an appetite for sport and attending national level sporting fixtures.

FFA considers the overall attractiveness of the Tasmania market to be Low/Medium.

The economic impact of a team participating in a national competition playing games inTasmania could have lasting economic benefits.

The situational analysis indicates that the Tasmanian market is considered a Low/Mediumproposition for the FFA. It is considered vital that further market research be undertaken todemonstrate that the overall market attractiveness is medium to high.


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4 Situational AnalysisThe following section provides an overview of the current and existing football and industrysituation specific to the business case and explores all information relevant to the business

case.

4.1 Football in Australia

This section details the governance and structure of football in Australia, including themanagement and existing situation of the national competition.

4.1.1 Football Federation Australia

FFA is the governing body for Football in Australia and is also a member of FdrationInternationale de Football Association (FIFA). While FIFA has FFA and more than 205 othernational associations as its members, it also recognises six confederations. Each FIFAmember is also a member of a confederation. FFA is a member of the Asian FootballConfederation.

FFA is responsible for the control of football in Australia and to ensure that the sport isconducted to the highest standards possible, whilst encouraging and facilitating the continualgrowth and development of the game.

Management of FFA is the responsibility of a board comprising up to 6 directors elected bythe members (including the Chairman, who is also the President) and up to 2 directorsappointed by the board. The board appoints the Chief Executive Officer, who is also theGeneral Secretary of FFA.

Each Australian State and the Australian Capital Territory and Northern Territory has a localFootball Federation that is accountable for the game within their respective geographic area.

Each of these governing bodies has a commitment to comply with the FFA constitution,applicable statutes, by-laws and regulations.

FFT is the controlling body and administrator of football participation in Tasmania.

Domestically, FFA manages the national competition, the Hyundai A-League, and intends toincrease that competition from the current level of 11 teams to at least 12 teams next season,with the possibility of 13 or 14 teams, over the next few years.

The FFA also manages two additional domestic national competitions, known as the WestfieldW-League (WWL) and the National Youth League (NYL). Both competitions are based aroundthe Hyundai A-League teams, the WWL provides a top level competition for the best womenplayers in the country and the NYL the opportunity for the best young players to have alegitimate pathway towards a professional contract in the Hyundai A-League.

4.1.2 Hyundai A-League

In 2005, in a deliberate strategy to increase mainstream appeal of football, FFA created the A-League comprising of 8 teams representing cities in 5 Australian states and New Zealand.This new domestic national competition is now known as the Hyundai A-League.

The A-League has since expanded from the original 8 teams to include the following 10teams:

Adelaide United FC Central Coast Mariners FC Melbourne Victory FC Wellington Phoenix FC Newcastle Jets FC Queensland Roar FC


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Perth Glory FC Sydney FC Gold Coast United Melbourne Heart

In February 2011, FFA withdrew the license held by the North Queensland Fury due toongoing financial difficulties and the failure to secure the capital investment required tocontinue operation. The team will now no longer compete in the A-League competition,therefore reducing the competition to 10 teams.

In the years immediately following its inception, the popularity of the A-League grew quicklywhich was reflected in increased club memberships, crowd numbers and TV ratings that theleague was attracting, together with increases in sports betting turnover.

However over the past 12 months media outlets have reported that some A-League clubs arestruggling financially due to both dwindling crowd and membership numbers.

A provisional 12th

license was issued to a consortium known as the Sydney Rovers, howeveras recently as December 2010; the license was withdrawn on the basis that the consortium

had failed to provide the necessary capital and financial guarantees required by the FFA.

Over the past few months it had been reported that the Rovers consortium was struggling tosecure suitable investors and provide the capital funding required by the FFA for a start upclub.

The FFA has indicated however that they believe that there is enough support in westernSydney for a franchise and that it is an important part of the vision for the A-League.

The withdrawal of the Sydney Rovers licence may provide opportunities for other alternateconsortiums however it appears that the FFAs immediate priority is expansion into westernSydney.

The plight of the Sydney Rovers, along with that many of the A-League clubs that are

financially struggling, has increased the need for any prospective licensee to demonstratestrong financial backing along with an ongoing sustainable model.

In the past 12 months the FFA has been forced into ownership of Adelaide United and NorthQueensland Fury. More recently, Newcastle Jets ownership was transferred to investorNathan Tinkler, due to financial difficulties. Brisbane Roar has also sought financialassistance from the FFA and Gold Coast United has been struggling with poor crowdnumbers.

It is estimated that A-League clubs lost a combined $25 million last season amid decliningcrowd and membership numbers, which is in contrast to the current trend in AFL and NRL.

The existing situation of many of the A-League clubs has meant a renewed focus on thesustainability of the A-League clubs, as well as the credibility of the brand.

Based on discussions with FFA and the Head of A-League, it is a requirement of anyprospective franchise to demonstrate that they can guarantee $8 $10 million in start upcapital funding or cash reserve. This figure is based on the premise that a new A-League clubmay operate at a loss of approximately $1 million per annum for the first 5 years, plus start upcosts and a one off license fee. In light of recent financial difficulties, FFA suggests that thisfigure may be closer to 10 million.

To support the business case, FFA has indicated that a key requirement of a successful bid isto raise approximately $8 $10 million in capital. The $8 $10 million is comprised of:

$1 million license fee.

$1 million start-up funding.

Up to $6 - $8 million as cash reserve to underwrite the first five years of operation.


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FFA has indicated that any business case prepared must present a realistic sustainablefinancial model, with investment that not only demonstrates viability but is well supported bydetailed market research and demand analysis. Strong government support for anyprospective franchise is also considered a very favourable proposition for the FFA.

Although the financial difficulties of A-League clubs have been well documented, the FFA hasstated strongly that the A-League competition will succeed and achieve its objectives. Theimmediate priorities appear to be expansion into western Sydney and to work closely withexisting A-League clubs to meet the existing challenges.

The FFA has also indicated that it is its intention in the short-medium term to investigatefurther expansion of the competition via the introduction of 13

thand 14

thfranchise licenses.

4.2 Football Participation Trends

The following section details relevant trends in football participation rates, player registrationand development in Tasmania.

4.2.1 National and State ParticipationTo ascertain state participation rates Coffey Commercial Advisory has referred to the annualExercise, Recreation and Sport Survey (ERASS), which is a joint initiative of the AustralianSports Commission and the state and territory government agencies responsible for sport andrecreation.

The ERASS collects data on the total participation rate in physical activity for exercise,recreation or sport over the 12 month period. The total participation rate is based on thenumber of persons who have undertaken exercise, recreation or sport at least once during theprevious 12 months.

The ERASS collects information on the frequency, duration, nature and type of physicalactivities that were participated in by persons aged 15 years and over for exercise, recreation

or sport during the 12 months prior to interview.

In 2009, national football participation reached 879,800, with a percentage participation rate of5.1% when compared to other sports. This is a significant increase from the 3.7%participation rate in 2001.

Year

No. of

Participants

(Nationally)

National

Participation

Rate

No. of

Participants

(TAS)

Tasmania

Participation

Rate

2001 551,300 3.7% 8,800 2.4%

2002 693,200 4.5% 7,700 2.1%

2003 669,300 4.3% 10,000 2.8%2004 659,200 4.2% 10,800 2.9%

2005 641,300 3.8% 10,900 2.9%

2006 697,400 4.2% 14,500 3.7%

2007 683,000 4.2% 10,000 2.6%

2008 855,600 5.2% 18,400 4.8%

2009 879,800 5.1% 14,000 3.5%

Table 7 Football Participation5

Table 7 above and Figure 2 below highlight the following key considerations:

5Source: ERASS = Participation in Exercise, Recreation and Sport Survey, Annual Reports, Australian Sports Commission


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Football participation in Australia has gone through a period of significant growth from2001 to 2009.

Participation in Tasmania experienced steady growth between 2001 and 2009, with asignificant spike in 2008. The national participation rate also spiked in 2008.

In 2009, football in Tasmanian had a participation rate of 3.5%, compared to the nationalrate of 5.1%.

Figure 2 Participation Rate National v Tasmania

4.2.2 Team Sport Participation Trends in TasmaniaParticipation in team sports makes up an important element of the sport and recreationlandscape in Tasmania. The following table outlines Tasmanias participation rates in teamsports over the past four years:

Table 8 Top Six Tasmanian Participation Rates in Team Sports 2006 - 20096

A review of these trends shows that:

Australian Rules football has ranked 1st

or 2nd

over the past 4 years.

Football (soccer) was ranked number 1st

in 2008 and 2nd

in 2006.

Football (soccer) has ranked no lower than 4th

over the past 4 years.

The participation rates indicate that soccer is a popular team sport in Tasmania whencompared with other mainstream team sports.

6Source: ERASS = Participation in Exercise, Recreation and Sport Survey, Annual Reports, Australian Sports Commission

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2001 2002 2003 2004 2005 2006 2007 2008 2009

NationalParticipationRate TasmaniaParticipationRate

1 AustralianFootball 5.3% Football(soccer) 4.8% Netball 4.2% Austral ianFootball 4.4%

2 Cricket 4.0% AustralianFootball 4.4% AustralianFootball 3.6% Football(s occer ) 3 .7%

3 Footba ll(soccer) 3 .5% Cricket 4.0% Basketball 2.9% Cricket 3.5%

4 Netball 3.2% Netball 3.8% Football(soccer) 2.6% Netball 3.4%

5 Basketball 2.7% Basketball 3.0% Cricket 2.4% Basketball 2.5%

6 Hockey 2.2% Hockey 2.2% Hockey 1.4% Hockey 2.4%

Rank

Activity/Participation Activity/Participation Activity/Participation Activity/Participation

2009 2008 2007 2006


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4.2.3 Player Registrations in Tasmania

Football Federation Tasmania currently lists 27 officially sanctioned senior and juniorcompetitions comprised of 30 senior clubs, 7 junior associations, 128 senior teams and 121junior teams. In total approximately 13,600 Tasmanians are registered footballers.

Participation rates in Tasmania have steadily increased over the past 8 years.

Figure 3 FFT Registered Participants

Figure 3 is summarised as follows:

In 2009, FFT membership reached a total 13,609 (11,729 juniors and 1,880 adults).

During the period from 2001 to 2009, FFT membership increased by 58% (5,025).

Football Federation Tasmania works closely with the education department to promote juniorcompetitions and to ensure that schools have a high representation of football teams.

4.2.4 Football Development in Tasmania

In 2007, football was included for the first time in the Tasmanian Institute of Sport (TIS)curriculum. This was a significant advancement for the sport in Tasmania as it providestalented young players an opportunity to be recognised for national underage teams inaddition to selection into the Australian Institute of Sports football program.

FFT has restructured its player development programs to coordinate with the TIS with the aimof assisting those players who are capable of playing at a higher level to realise their potential.

The TIS will select a squad of junior representatives that will train with the TIS programalongside FFTs State squad, giving more players an oppor

Tasmania United FC a League Team Business Case Sc1423_Final_Report_v4_-_Public_Release

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