The 2016 HPN Grand Final Preview

All year we’ve been running a simple ratings system of AFL teams using inside-50 differentials and inside-50 efficiency, based on the fact that inside-50s correlate fairly well with success and therefore the assumption that quantity and quality is a key measure of team strength. We’ve written a bit about this in the past, as has Tony Corke, the doyen of the fanalytics community.

There’s been a ton of Grand Final previews to date, and we don’t want to tread over the same ground. We seriously advise you to check out the Matter of Stats piece in The Guardian earlier this week, as well as the Figuring Footy pieces. Both are must-reads before the Grand Final, certainly more than this preview of ours.

We will look at a couple of different questions in this preview:

  • How have the teams improved since the Home and Away season?
  • What do previous Grand Finals tell us about this game, considering the strengths of each team?

Both the Swans and Bulldogs are at the tops of their respective games

There’s been a bit of chatter around regarding the improvement of the teams since the start of the finals, so we thought we’d pull up a few charts looking at the differences between each team’s performance in a few categories:

2016gfoff

Both the Swans and the Dogs have gotten better up forward in the finals, improving by very similar amounts. The Swans end up maintaining a similar edge in total Offense Score as measured by HPN, and they end up scoring on 48% of their inside fifty entries. The Bulldogs aren’t too far behind this in the finals, scoring on about 46% of their inside 50s.

Interestingly, the Bulldogs have managed to snag more marks inside fifty per entry since the H&A season ended, whilst the Swans have gone the other way. This may have something to do with the quality of tall defence that the Swans have faced compared to the Dogs (especially in Geelong).

2016gfdef

The Dogs have actually gone backwards defensively since the start of the finals. They have conceded scores on half of their conceded inside 50s, which ordinarily would indicate a bottom four defensive side. The Swans’ Defense Score has largely stayed the same, with a small increase in the scoring shots they have allowed per conceded inside-50.

In short, the Bulldogs’ defensive 50 has been quite leaky, but they tend to let the ball in there relatively rarely (as per the chart below).

2016gfmid

Both ruck divisions have suffered against strong opposition in the finals so far (with the Swans having an overall edge despite missing Tippett for parts of the series), while their methods of ball use are similar. The critical difference is the divergence in the inside-50 ratios of both teams over the finals. While the Bulldogs have improved significantly on their already solid performance in this area during the season, the Swans have gone way backwards.

Given that there is about 105 inside 50s in an average H&A game this year, it could be expected on finals performances to date that the Bulldogs will get the ball up forward around 81 times to the Swans 34. Whilst this is a projection based on a very small sample size, it represents the worst case scenario for the Swans (and the best for the Bulldogs). If the Bulldogs win the inside-50s to this degree, it will be extremely hard (if not impossible) for the Swans to generate enough scoring shots to win. Again, HPN expects this to somewhat revert to each team’s H&A averages, given the Swans have faced stronger midfields in the finals to date.

The Swans should be more efficient up forward, and better able to repel the Dogs attacks, however there will inevitably be a breaking point if they are unable to stop the Dogs monopolising supply via their dominant midfield. Even if the Swans manage to score on half their inside-50s, and limit the Dogs to scoring just 35% of the time, tor win they would still need to perform better in the middle than they have so far this finals series.


What do previous Grand Finals tell us about this game, considering the strengths of each team?

In this part of the post we’re going to take a look at how grand finalists since 1998 rate under this system. Below is a table of each premier since 1998, compared to their grand final opponents in each of the three ratings categories. Note that these ratings only consider the Home and Away Season.

premiers-scores

Presented another way, here’s a chart of each pairing over the years and how Sydney and the Bulldogs compare to them.over

In overall strength, the Sydney-Bulldogs gap is the third largest between grand finalists since 1998, with both larger gaps (Essendon-Melbourne in 2000 and Geelong-Port Adelaide in 2007) resulting in maulings by the favourite. The next biggest, Brisbane-Collingwood in 2002, was a closer 9-point affair.

Below is each of these gaps graphed. A number of premiers have overcome a gap in these measures, but none a gap as large as this (note how we are refraining from using the “UnderDogs” pun).

premiers2

The biggest upsets by this rating system were Sydney over Hawthorn in 2012 and Geelong over St Kilda in 2009. The Dogs upsetting Sydney would be a larger coup than this.

Lets drill into each individual line, starting with the midfield.

midr

The Bulldogs have the edge over the Swans by 6% of the league average in terms of raw inside-50 production. Their “midfield” (really the combination of how all players including midfielders contribute to ball movement and ball stopping between the arcs) is a bit stronger than Sydney’s in terms of generating and stopping forward opportunities.

This gap will be vital because:

offr

Over the year, the Bulldogs’ offfence has been anemic. They’ve needed to use their inside-50 advantage (presumably including repeat entries caused by midfield-based defence) to produce a larger number of opportunities to score.

That might be a problem in this matchup because of something we’ve been commenting on since early in the year:

defr

Sydney’s defence against inside-50s has been astonishing this year, clearly the best of the era, clearly better than every other team in the league this year, and well ahead of any other premier or runner-up. The Bulldogs are going to need to find ways to pick through Sydney’s defensive setup in a way Adelaide (+7 inside-50s) and Geelong (+32) were completely unable to. They have quite a different method of scoring than either of those sides, relying less on contested marks, and may provide a different test for the Swans.

The bright for the Bulldogs is their midfield edge. They should generate more opportunities to score and limit the more proficient Swans forwards. History shows having an edge in just one line is enough to give teams a chance.

premiers3

As we can see above, the three teams with across the board advantages have all won (though, again, the 2002 grand final was surprisingly competitive), but that winning just one line has been enough for seven teams out of 15 in that situation.

Which single line is the most predictive? Unfortunately for the Bulldogs, and perhaps contradicting some prevailing wisdom, it is the superior offensive line which has the strongest edge while defence only wins 50% of the time:

premiers4


Overall, our data presents an interesting picture. If the Bulldogs improvement in the midfield since the commencement of the finals continues (as well as the Swans’ dip there), then it should be a tight game on Saturday. However, if both teams revert to their form in the Home and Away season, then the Swans will have a decisive advantage. The Swans are the strongest team that the Bulldogs have faced so far this finals, and the Bulldogs the weakest opponent for the Swans (on the H&A HPN ratings).

This presents an interesting test: that of recent form against season long observed strength.

HPN usually refrains from picking outright results in games (as not to look like pontificating fools), but instead tries to pick the paths to victory where possible.

For the Bulldogs to win, they must dominate the territory battle between the arcs, deny the Swans chances to get the ball forward, and to wear down the Swans defenders with repeat entries.

For the Swans, they must aim to turn a likely superior ruck performance into an increased number of inside-50s (as compared to last week against the Cats). The Swans must exploit their apparent advantages up forward, and trust that their defence will hold up to repeated (but not constant) attacks down back.

It should be a fascinating game to watch, given the differing strengths of each team.

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Defenders Get Even Less Respect Than Forwards at the Brownlow Medal

Our post earlier this week looked at the inevitability of Patrick Dangerfield winning the Brownlow Medal. Which, unsurprisingly to most who were paying attention to football in 2016, ended up happening in a landslide.

We thought that Dangerfield would get about 34.5 votes, assuming that he picked up an average of 2.3 votes in games which the Cats won and he gathered more than 28 disposals. In reality, Dangerfield ended up with 35 votes, however he failed to get votes in a couple of games that met this criteria, shaded by better teammates (Guthrie in a career best performance and Selwood) or stellar performances by opponents in close games (Lachie Whitfield in round 11).

The post also looked at the likelihood of a forward having a shot at the medal, and their polling potential this season. HPN predicted that the Eagles’ Josh Kennedy and Lance Franklin would get 17 votes each, one off their eventual totals. For the lesser forwards, the predictions were less accurate (especially for Tom Hawkins) but generally in the ballpark.

One area we neglected to look at is the failure of the umpires to consider the contributions of the elite defenders of the game. Here is a chart looking at the total votes in this year’s Brownlow Medal for this year’s All Australian Team, broken down by nominated position:

2016aabvbyposition

When we looked at that we were a little bit surprised. Had it always been like this? Didn’t Wanganeen once win a Brownlow from the back pocket.

It’s worth noting that the four bench players (we added Boyd into “Bench” for argument’s sake, but his two votes don’t make a difference either way) got more than three times the number of votes as the six defenders.

Intuitively this makes sense to some degree because a defenders’ biggest contribution is often to negate the contributions of their opponents, with any positive contributions usually ancillary to their main role. However it does indicate that a significant part of the game is being overlooked by the current voting system.

We decided to have a look at the past six years of All Australian defender Brownlow Medal votes, to see if there was a consistent trend. We’ve categorized some bench players as defenders where their role is clearly that (such as Matthew Boyd this year). As such, some years have seven defenders, and some have six. For fun, we decided to also plot the Brownlow Medalist’s votes against this group of six (or seven) elite players:

aadefvsbm

DEFENDERS GET NO RESPECT. In this small sample in just two years did the best defenders in the land cumulatively receive more votes than just one player. In both 2010 and 2013 the All Australian teams had midfielders masquerading as defenders more than a spike in the votes for most defenders. For example, in 2013 both Sam Mitchell and Jarrad McVeigh were named as defenders, and were responsible for 29 votes between them. Whilst they both can play defence, a balanced team probably wouldn’t line up with both in the backline. Similarly, in 2010, Goddard was named off half-back, where he played occasionally but he was more a midfielder.


How did each club do?

Below is a graph of vote-getters by club, stacked to show each club’s total votes as well.

ctsprnsviaa2u3m

Sydney’s leading vote-getters all individually did quite well, but probably took too many votes off Luke Parker for him to be a threat. By contrast, Lachie Neale and Nat Fyfe got over half of Fremantle’s total votes between them. Likewise for Geelong, with Dangerfield and Joel (certainly not Scott) Selwood getting more than half their team’s votes.

The degree of vote concentration among leading players at each club can be seen here.

ctstxc7usaal_zv

GWS had the widest spread of votes across the list in 2016, with aAdelaide and the Bulldogs also having multiple players snag votes. All three sides are successful teams with a relatively even spread of workload from game to game.

It will take until at least 2124 to have every possible VFL/AFL grand final matchup at least once

2016 marks the first time that the Swans and the Bulldogs have ever met in a grand final. This is unsurprising since only rarely have the two sides been up at the same time. Footscray, like other Victorian expansion teams (Hawthorn and North Melbourne) spent decades of their early VFL history near the foot of the VFL ladder. South Melbourne never made a grand final after the 1945 Bloodbath match until 1996, well after their relocation to Sydney.

Some other matchups have occurred much more frequently. Below is a table of grand final matchups by year. It includes premiers and runners up from years such as 1924 when there was no grand final.

h2h-count

The forgotten rivalry

The most frequent matchup has been the grand old rivalry of Melbourne and Collingwood, which occurred seven times (between 1926 and 1964). The combinations of Carlton/Colingwood, Melbourne/Essendon Essendon/Collingwood, Richmond/Collingwood and Geelong/Collingwood have all occured six times.

Completing the set

There are 108 matchups between active clubs that have so far not happened. Gold Coast and GWS of course contribute 17 of these, while Fremantle contribute 16. Despite Collingwood’s 41 times in the top 2 of the league, Essendon have played the most unique opponents in eleven, with Collingwood only having played ten – the Collingwood/Hawthorn matchup has somehow never occurred.

Could we eventually see every matchup occur? 108 unique and novel matchups, occurring against astronomical odds in succession, would mean that in 2124 the last pairing would face off. At that point, presumably, we’ll declare the sport complete, identify an all-time overall winner, and go home.

Colliwobbles lol

Collingwood have lost a lot of grand finals – their record of 37% (roughly two losses per win) is a source of mockery and pain for a club which could easily stand alone as the most historically successful in the VFL/AFL. The gory details of this are shown below in the win/loss tables:

winloss

Collingwood can only claim historical bragging rights over Richmond and the Swans. That seven-time Melbourne/Collingwood matchup has been won six times by the Demons, with only 1958’s Collingwood premiership breaking the duck. That one occurred within a stretch when Melbourne won five flags in six years – three  against the Pies and two against Essendon.

The Crows stand alone as the only side to have won all (ie both) their grand finals, while Fremantle alone have made the big dance without claiming a flag.

Historical woes on the line this weekend

Sydney/South Melbourne will be looking this week to improve on a poor historical conversion rate. A win would give them a 6th premiership from 17 appearances, while Melbourne have won 12 from the same number.

It is, however, St Kilda with the worst long term grand final record – a 14% strike rate, one premiership from seven attempts. The Bulldogs’ historical woes have generally stopped short of grand final day pain – their two appearances so far have meant a 50% win rate which means a win would put them at 67% – almost on par with Hawthorn and Melbourne.

Forwards Get No Respect At The Brownlow Medal (which Dangerfield will win)

Dangerfield should win the Brownlow

We were going to write an extended Brownlow Medal preview, but we struggled to get excited enough to bother. It’s a foregone conclusion that Dangerfield will win, from the view of the betting agencies to that of the fans. We made a super simple model to illustrate this. In games that Dangerfield has accumulated more than 28 disposals, Dangerfield has accumulated 66 votes at an average of 2.22 votes per game. Dangerfield has 17 such games this year. Dangerfield also does slightly better in wins than losses, getting 2.3 votes per game where he gets more than 28 disposals in wins. He also had 15 such games this year.

If just counting 28+ disposal games in wins, Dangerfield should end up with 34.5 votes.

The only complication is the presence of Selwood, who also accumulates a ton of Brownlow votes. Selwood averages 1.67 votes a game in games where he gets more than 28 disposals, and 1.88 in games where he does so and his team wins. This year, Selwood had 11 such games. This should give Dangerfield enough clean air to get enough votes to win the medal.

Forwards get no respect

We also had a look at the leading forwards, and what they needed to do to accumulate votes. Like midfielders, it appears to come down to two key factors: wins and goals.

forwards.PNG

For most forwards to get Brownlow votes, they require at least four goals in a game, and for their teams to also win. As shown above, four goals is often not enough for these forwards to reap the sweet joy of recognition from umpires.

Some forwards who tend to work up the ground more tend to be able to get Brownlow votes where they get just four goals, such as Taylor Walker, Chad Wingard, Jeremy Cameron and Lance Franklin. Small forwards such as Wingard and Betts have also been able to get some votes in games where they kicked just three goals, but this is relatively rare.

This year, Kennedy and Franklin look set to lead the forwards in this year’s count. It’s conceivable that in a year with a number of consistent but not great midfield performances, in a team winning lots of games, that Franklin or Walker could snag a Brownlow, but it’s not likely. Franklin threatened in 2014, with 22 votes and 67 goals from 19 games, which put him 4 behind the leader Priddis in a year when a lot of top midfielders missed games and nobody could predict the winner.

A year like 2014 was close to optimal circumstances, and such a combination of vote-getting forward dominance, a successful team, and no dominant midfielder may not occur again in Franklin’s career. On exposed vote-getting efficiency and future potential, Jeremy Cameron probably looms as the most likely longer-term prospect of staging a forward’s Brownlow coup. Tom Lynch may also one day threaten if he can start kicking bigger bags and winning games.

The HPN Preliminary Final Preview

Greater Western Sydney v Western Bulldogs

Whilst the overwhelming narrative in the last week was that the Bulldogs felled the reigning premiers, most in the footy analyst community saw the exit of the premiers coming. We hedged a bit and suggested last week that the battle might be won in the midfield between the two sides, given their relatively equal strengths at both ends of the ground. By our most basic measure (inside 50 differential), the Dogs won that battle comprehensively, and were able to turn that into victory.

The Bulldogs may have passed their first two tests so far, but Giants present by far their sternest challenge. We suggested before the finals that four teams stood above the rest in the finals, with only one of those eliminated so far (Adelaide). The Dogs have beaten teams we considered to be the 5th and 6th strongest sides coming into the finals, and now face the third best side across the season. For those who have forgotten, here’s the chart:

movementratings

As you can see from above, the Giants have a clearly stronger attack and defence, according to the HPN ratings. Among the finalists, GWS sit second in defence, third in attack and sixth in the midfield (albeit a very close sixth). The Dogs sit last in attack, fifth in defence and second in the midfield.

The Bulldogs have the edge in just one category, but it’s perhaps the most important one (midfield rating). If the Dogs are to win, they have to maximise the opportunities that they have up forward, and minimise the deadly GWS counter-attacks from failed entries. GWS have a defence calibrated to beat a smaller backline, with only one large KPD in their 22 (Phil Davis). All of their back 6/7 (if you want to include Nathan Wilson) are quite mobile, and able to initiate attack from turnovers. With Jake Stringer running hot and cold in the past few weeks, it’s hard to point to a focal point of the Dogs attack. They tend to use Picken and Boyd leading forward to snare marks to open up play, but the second level targets closer to goal is harder to ascertain.

Up forward, it’s hard to see how the Dogs cover the three big threats of the Giants (Cameron, Patton and Lobb). The Dogs will likely try to crowd the space that they can lead into, however this may open opportunities for the latter (Lobb) to snare pack marks. The best way for the Bulldogs to stop this will be to stop the ball from going forward at all, a difficult but possible challenge.

The Giants should be good enough to win this one, but the Dogs have overcome the odds twice in this finals so far.

Geelong v Sydney

We wrote about this one earlier this week for Figuring Footy, and you should read that piece because it has better charts and graphs. Seriously. Read that now. Go do that. OK, here’s one chart Figuring Footy made for us to write around:

shotloc-sydneyopp

And in a nutshell, this chart might be the one that decides the victor of the game – the Swans defence. The Swans defence (and defensive midfield) strangled the Crows potent attack last week, rendering unable to even contemplate scoring.

We’re not going to go into this one in a whole lot more depth, but for now here are the component ratings and how the two teams stand.

Sydney sat 7th at the end of the regular season in attack (behind the anemic Dogs attack), 5th in the midfield and first (by a very, very, very long way) in defence. Geelong set the pace in the midfield, 4th in attack and 3rd in defence. After we posted our article, we thought we accidentally surmised it well on Twitter:

We suggest that this match should be pretty close, with the real battle being about which side can get the most out of their weaknesses, and to limit their opponent’s strengths.

Finally, some housekeeping

You might notice that our webpage and twitter account looks a little bit different now. Actually, it’s been so slight that you might not have noticed. Yep, that’s a new logo at top, after years of inaction about HPN’s identity. We’re sad to see the end of the slightly blurry Adam Goodes photo that we took at a NEAFL game, but it’s for the best. Let’s drag him out one last time, for old times sake:

IMG_20130915_170927

We’re currently updating what our thoughts around what HPN is, and making the operation slightly more legitimate. After years of shunning any form of effort other than content, we’re looking at an overhaul of the site and basic things like a Facebook page and an active Twitter account.

You will have seen above that we collaborated with Figuring Footy on a piece this week, and we hope to collaborate with more writers in the fanalyst community going forward. There are a lot of great writers out there who opine about footy on a regular basis that operate outside the realms of the major media outlets, and they are more than worth your time checking out.

If you have any thoughts about the direction you’d like to see us move in the future, drop us a line, either over email (hurlingpeoplenow [at] gmail [dot] com) or on twitter (@hurlingpeople, @arwon, @capitalcitycody). Even if the direction that you want to see us go is the bin (or the sea).

Is there a fairer model for AFL funding distribution?

Earlier this week HPN took a look at AFL club revenues in 2015 to see how much money each AFL club makes. In this post, given the context of the financial equalisation debate, we’re going to look at how AFL club revenues under the equalisation arrangements of some other prominent sporting leagues.

First, as a reminder, below is how the league currently looks. For an extensive discussion of these details please see our previous post.

revenue-by-source

How does the AFL do financial equalisation?

Currently, AFL clubs are given a number of distributions from the AFL. Most significant is the equal share of TV money all clubs receive, but there are other pots of revenue that also get given to clubs, either to compensate for inequalities or to fund specific ventures.

Clubs get to keep all the revenue they raise themselves, be it from sponsorship, corporate support, membership season tickets, gate takings, or merchanise. There have been some recent, limited experiments in imposing a spending-based redistribution, with clubs to be taxed for their off-field, football-related spending above a certain cap. So far the takings from these have been limited – the chart above shows the small size of the maximum $1m taking from each club.

The thing is, a spending-based cap is of course easy to work around, so it may work better as an effective limit on spending rather than on actually being redistributionist. If financial leviathans (HI RYAN!Hawthorn are restructuring to avoid paying it, it clearly isn’t going to raise much revenue to support the smaller clubs.

However, it appears that most leagues around the world attack financial redistribution from a revenue side and not a spending side.

How do other leagues level the financial playing field?

Let’s start with one of the biggest sporting leagues in the world, and a sport generally used as a model for much of the AFL’s corporate behaviour.

nfl

The NFL has 32 teams based all across the country, from two teams in monolithic New York to one in tiny Green Bay. Whilst the dollar values are at times cartoonish compared to Australian sporting leagues, they’ve long worked towards comparative financial balance for their teams. The NFL has a hard on-field salary cap, with extreme penalties for breaching it. Off-field, however, they believe that redistribution is a better idea than a strict cap on expenditure.

The NFL model sees all merchandise and 40% of all ticket revenue pooled together, and split equally between all teams, with each team retaining a 60% share of their own ticket revenue . Clubs can sell corporate box and “members club” type accesses and retain that revenue, but ticketing itself is subject to redistribution regardless of being season tickets or one-off tickets. Other revenue isn’t considered for redistribution, nor is gaming revenue a factor as it doesn’t really exist in US sport.

As a whole, this model provides a slightly more equal redistribution of funds than the AFL model. The clubs at the bottom end of the league, such as St Kilda, get a moderate boost whilst those high drawing teams, such as West Coast, take a bit of a hit. GWS and Gold Coast are notionally assigned an equal share and therefore lose ground due to their currently enlarged distribution. The biggest winners, surprisingly, are Essendon, Geelong and (especially) Carlton – clubs with stadium deal or size constraints which are currently not a big recipient of AFL funding.

For a similar model to effectively level the structural gaps between high and low revenue clubs in the AFL, gaming and other sources revenue would also have to be pulled in for redistribution.

Which brings us to…

mlb

Major League Baseball has no hard salary cap. It has teams with massive spending and annual revenue, and others with minuscule budgets which call themselves “small market” and accept that they likely will never be powerhouses without a lot of luck or excellent management.

The MLB model is similar to the one alluded to above – a percentage of all revenue is redistributed among all teams equally. This scenario sees each team keep 69% of their revenue, and for 31% to be pooled together and split equally between the 18 teams.

The outcome is slightly fairer than the NFL model above, but still leaves some definite haves and have nots.

But what about a more unfair model that the current one?

epl

The English Premier League has long been pilloried for having a Big Four and a significant gap to everyone else – a reputation that has taken somewhat of a hit after Leicester City’s title last year.

The modern EPL model still distributes more money to the popular successful teams, at the cost of those struggling to stay up in the top flight. It’s better than it was – Leicester’s success was built partly on a much better TV distribution than ever existed before. Their salaries were about 1/4th of the big boys which is much better than the 1/50th like occurs in Spain. In the long run the new arrangements will probably lead to more Cinderella stories in the EPL and we should never see championship odds of 5000:1 offered again. However the inequalities remain huge by Australian standards.

The model above shows teams getting distribution from the league based on two key items: finishing position in the previous season, and number of times broadcast on TV. This is how the rich get richer in the EPL, and the poor are left trying to keep up.

In the AFL the salary cap would largely mitigate much of the on-field disadvantage, but the comparative disadvantages off-field would be tremendous. The year-to-year revenue instability would cause havoc in football department spending.

We’ve used the prime TV free-to-air slots as shown in Melbourne as a rough analogue to the TV fee component. Off-broadway teams like GWS, Brisbane, Gold Coast and St Kilda get hammered under this model. West Coast and Fremantle do poorly in the TV stakes as well, as they’re generally only on Fox Footy in much of the country.

This model would really only work in an environment with a massive salary range, no salary caps, no draft, automatic free agency, and promotion and relegation.

Summing up

To summarise, then, below is the relative impact, for each club, of NFL-style partial revenue sharing, MLB all-in revenue sharing, and the EPL’s popularity and success-based approach:

impact-levelimpact-percentage
Revenue-based financial equalisation could be used to more significantly reduce the gaps between the clubs with the highest and lowest revenues, and there are precedents in other salary cap and draft based leagues. Certainly, looking at revenue rather than expenditure would be a more effective took to actually achieve a degree of redistribution. It would also likely be much easier to administer than a spending cap.

The big jingly elephant in the room

Gaming machine revenue is a massive influence in Australian sport in a way that it isn’t in these aforementioned leagues. Poker machines are insanely prevalent in Australia and do huge social damage. This isn’t an opinion; it’s a fact. This post by Greg Jericho illustrates (using hard data) the nearly unique damage they do due to the speed and automated nature of play.

Below is what the AFL clubs’ revenue would look like if, over night, the governments of Victoria, Queensland, and South Australia had outlawed poker machines.

no-pokies

That’s $110m in gaming takings, from $876m in total club revenue. It’s a significant amount to be removing. Clubs argue that they have little choice but to rely on this money, and it’s not hard to see why. Below is our modelling of what each club’s profit and loss situation would look like if pokies were removed:

p-and-l-no-pokies

Based on the research we have done, we think that a generous assumption is that 25% of the revenue from pokies are extracted as profit. The rest of that revenue will of course go to maintaining the venues containing the pokies – to operating costs and to subsidised food and drink, and perhaps on other donations (including charitable ones).

Some clubs, such as Port Adelaide, barely make any profit on having poker machines after costs – South Australia does not permit any denomination of notes to be bet in poker machines, while Queensland permits $100 notes to be fed into the machines.

Some clubs, traditionally seen as battlers who are forced to rely on the machines, look like they’d actually be relatively okay without them. The 2015 reported profit of $400k at the Bulldogs becomes a $900k loss. That’s significant, but perhaps not crippling. Most importantly, the AFL could likely compensate for the short term loss with redistributed funds.

St Kilda only earn about $2m in gross revenue from pokies, so the modelled half-million deterioration in their net profit is nowhere near as big as some other clubs would face.

Other, more pokie revenue reliant, clubs (Carlton and Brisbane for example), look more heavily embedded. And Hawthorn, who made a $5m profit last year, look like they could divest from their $18m in gaming revenue fairly easily right now.

At least 40% of pokies losses are by problem gamblers according to the Productivity Commission. That means AFL clubs are presently benefiting to the tune of about $44m a year from people with gambling addictions.

Our point here is simply to show that pokies are a policy choice for each club, and that they have a benefit and a cost. Perhaps the AFL would be able to, with its ample revenues, navigate poorer clubs out of their dependence on this source of revenue. The new broadcast deal, bringing in potentially tens of millions of new distribution to AFL clubs, would seemingly provide the ideal opportunity to reshape the financial landscape for the better.

And ultimately this is the conclusion that HPN keeps arriving at – that a more equitable (but not even) distribution of funds would be one of the biggest drivers towards competitive equalisation, especially at a time which the AFL is receiving an influx of funds.

How much money does your club make?

AFL finances can be a bit murky and opaque and are very important to understanding the debate around financial equalisation. Luckily thanks to public annual reports we can roughly chart the financial size and position of each club. Thanks to the sterling work of The_Wookie at Footy Industry and Bigfooty in compiling annual reports (including those only available from ASIC), we can present the following charts.

Firstly, for an “all-in” picture of the size of each club’s annual takings, we’ve taken revenue figures from annual reports and combined it with AFL, gaming and other data to tell us about the overall income picture for AFL clubs:

revenue by source.PNG

There’s a bit to talk through here.

Extra AFL support for the expansion sides is usually wildly overstated

Often reported as “pouring over 20 million dollars in” by the AFL or “subsidised over 100m dollars” since inception, the truer picture of the AFL’s current extra support for GWS is currently 3-5 million extra dollars per year, when compared to other small teams like St Kilda or the Bulldogs. It’s important to note that half the money that the Giants receive is the standard allotment for all clubs. And it’s perhaps even more important to note that this TV deal is as large as it is thanks in part to the existence of a 9th game and two teams in each mainland state. Furthermore, as small clubs, GWS and Gold Coast would be getting a few extra million dollars in equalisation funding regardless of their status as expansion clubs.

Prize money is minimal

Prize money is about $1m for the premier. We were last able to find it reported for 2014. This stands in stark contrast to the English Premier League, where a full 25% of the TV rights money is distributed according to finishing position.

Clubs get a lot of pokies money

It should be stressed that clubs don’t pocket all pokies money as pure revenue. Club venues have operating costs.

For example, Brisbane’s Springwood venue operated at about a $3.8m profit in 2015, costing $12m to run and bringing in $15.8m. That’s including an estimated $14.8m in pokies revenue using the assumption that their 200 machines operate at the average productivity of Logan’s ~2000 machines. Most AFL clubs don’t report their venue operating costs specifically, but we can assume they’re not running as charities and that pokies are a big part of those operations’ revenue picture.

Football itself currently costs about $20m to run, plus back office costs

We’ve included as important context the salary cap, the average football department spend and also the $45m in revenue that Gillon McLachlan gave as a minimum benchmark for a potential Tasmanian side in future.

If we use the expansion sides and small Victorian teams as the model, the bare minimum to run a club seems to be about 50% more than the cost of the football department, judging by the size of the smallest clubs’ revenue flows. The rest of these costs would be things like ground hire, cost of facilities, non-football salaries, equipment, administration and other costs.

Gillon’s estimate of $45m seems to be inflated, especially by the presence at many clubs of high cost, high revenue pokies-based establishments. After AFL money, it looks more like about $22-$25m of local revenue would be a more plausible target, but that would be greatly affected by the geographical location of the team. We would suggest that a potential Tasmanian AFL team would be significantly cheaper to establish and run, due to the costs of operating, than a new football team in Perth, due to Government support and the cost of real estate.

It is also clear why a number of clubs are alarmed at the potential for an off-field spending arms race, with the clubs at the lower end clearly looking unable to compete if football spending keeps rising without commensurate AFL support.

The standard distributions will change a lot with the new broadcast deal

The AFL standard distributions are largely made up of TV (and other) rights money, and this will likely increase in line with the new broadcast deal (and consequently the salary cap). Expect some big movement on this front from next year.

The rest of the AFL money is a mixture of items. A big share is disequal funding because some clubs get several million dollars extra money due to simple need or due to specific structural projects. Other shares include Etihad Stadium signage rights and promotional and marketing money given to clubs, including the Giants’ and Suns’ extra start-up funds.

With the new AFL broadcast deal reported to be perhaps 67% bigger than the current one, we can expect the dark blue share of club revenues to increase a lot, commensurate with an enlarged salary cap. If we assume a negotiated cap enlargement of 50%, funded for clubs by the AFL’s standard distribution, revenues could look like this in 2017 or soon after:

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Note that with a 50% increase to the salary cap you still don’t need $45m to run an AFL club.

Expanding the picture

Current revenue is not the entire picture with any business including AFL clubs. Another important component is a club’s assets and liabilities  – what they own and what they owe. The balance of these tells us how much a club is worth. Clubs like Hawthorn, Collingwood, Essendon and West Coast own significant assets with much smaller liabilities while a number of clubs own very little or have significant debts relative to what they own.

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Finally, we need to remember that while over the long run revenue tells us about club spending constraints, revenue isn’t the whole picture. Most income isn’t free and must be earned with expenditure. A club can have high revenue and still run losses, and eventually get themselves into a terrible position with burdensome debt.

Here is each club’s total revenue in the year to October 2015, along with whether they reported a statutory profit or loss:

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For example, half of Geelong’s statutory loss is the write-off of demolishing two stands at Kardinia Park, whilst Hawthorn had a million dollars in premiership prize money contributing to its big profit. In the long run, a persistent profit or loss creates a meaningful picture (it is clear that West Coast have an incredible financial position), but one year’s profit or loss can’t tell us a lot in isolation.

Coming soon: is there a fairer model for AFL funding distribution? And what would the funding of each club look like if the AFL followed the revenue sharing leads of some other sporting leagues around the world?