NGL money

Can the NGL remain solvent long enough to be a success in Australia? The model for sustainability for the NGL is simple. Don’t rely on football to fund football.

The biggest question about the National Gridiron League and it’s push into Australia is how it could be sustainable in a crowded footballing market.

The challenges for a new professional sport are unique in Australia. We are one of the few (if only) countries in the world which supports four professional football codes and have on-field success across all four.

How can a fifth football code, American Football, expect to remain sustainable in such a crowded market?

A look at documented facts, and with information from well placed sources across the local game, here is how the NGL can be sustainable in the long run.

Forget ticket sales

First of all, forget ticket sales.

The idea that ticket sales and merchandise can support an entire league is just plain false. There is not a single large-scale professional league in Australia that follows this model successfully.

The last of that model left sport in Australia with the Rugby League Super League war of the 1990’s and the collapse of soccer’s NSL in the early 2000’s.

The day’s of local club raffles, ticket sales and merchandise supporting a profitable professional league is gone.

The level of salaries expected, insurance requirements, escalating stadium costs and broadcasting expectations far exceed any revenue that could be garnered from this simple type of income model.

These incomes streams in a market the size of Australia do little more than pay for stadium hires, traffic control, the cost of catering and administration on game day.

The key to the NGL’s income instead falls into two areas.

Investment

Sources I trust within Gridiron circles have confirmed the NGL are attracting investment on a scale that would provide the basis of ongoing sustainability already.

The latest trend in sports funding models in Australia is the selling of media rights. This works for established leagues that are ingrained into the sporting culture of the country.

The NGL doesn’t have that, and so is not be in a position to think about substantial income from media deals.

The window for the NGL to be on TV is small. There is a four-month window between winter football seasons and is the only chance for exposure.

Even then they go up against Australia’s other football code in soccer for rectangular grounds and TV slots.

Sources I trust within Gridiron circles have confirmed the NGL are attracting investment on a scale that would provide the basis of ongoing sustainability already.

We are talking levels of investment that would cover operational costs of a professional sporting league no matter the attendance figures or media negotiations.

So where would this investment money come from?

A look at the most recent professional football code to (re)launch tells us exactly where that money can come from.

Overseas investment

There is currently significant interest from overseas investors in being involved with the eight National Gridiron League franchises currently slated for season one.

This shouldn’t come as a surprise for those involved in all types of business in what is now a global economy.

Soccer’s A-League, launched in 2005, replaced the existing NSL structure after the Independent Soccer Review Committee deemed the existing old-school structure to be financially unviable.

The relaunch featured all teams entirely owned by external investors. Some were local mining magnates, while others were multi-million dollar investors from overseas.

Sydney FC for example has a Russian billionaire owner in banker David Traktovenko. Brisbane Roar are owned by the Indonesian based Bakrie Group and had interest from parties in Malaysia and China.

Almost one in three of the 92 professional clubs in England are substantially owned by overseas interests.

Overseas investment across all codes is a reality where the spread of wealth is shifting to manufacturing powerhouses like those in south-east Asia. Two of three largest economies in the world are China and Japan.

Recent changes to Australian government policy includes mandates to new investors that part of that investment must go to startup ventures in Australia.

With returns on traditional investment vehicles like property stagnant (45% of last years Chinese investment was in property), it opens the door for the NGL, a startup company remember, to garner the overseas investment needed to sustain the league.

After all, who’s ego doesn’t want to own their own sporting team?

With the NGL generating income from business operations outside of football, it provides more than just a boost to the ego for an investor.

Instead it becomes an opportunity of a return on investment type encouraged by the government to gain a foothold into larger ventures in Australia.

This is not theory. This is happening right now.

The business of the NGL

The NGL, like most sport whether they admit it or not, are in the entertainment business. The NGL has made no secret of this, and American Football is the tool to provide that entertainment product.

There will be community engagement programs, but the league is not a community project.

Like most professional sports, we don’t know the exact business structures behind the NGL. The league however has not been started by mums, dads and committees. There is no democracy behind the running of a professional league across all codes.

The entity behind the NGL is big business with or without football.

I have seen first-hand the brief for investment into individual NGL franchises. The investment requirements and the returns on those investments make for an attractive opportunity.

Sport worldwide now has to run as a business or perish, whether old school thinking likes it or not.

Australia is no different.

A landscape with five professional football leagues across a population of 23 million makes it imperative.

The question now is not whether the NGL as a sport is sustainable, but rather is the business behind the NGL sustainable?

Corporate involvement in Australian sport

Corporate Australia are deep-rooted into Australian sport for decades. We have entire stadiums named after companies. “Third party” deals help sports retain their best players, even leagues now are attached to corporate brands.

It’s not the A-League, it’s the “Hyundai” A-league, NRL is the “Telstra” Premiership, Aussie Rules, Toyota.

The question now is not whether the NGL as a sport is sustainable, but rather is the business behind the NGL sustainable?

If NGL the business provide returns on an investment as promised, then the longer the league runs, the larger that investment pool becomes, and the more sustainable the sport is.

As Australian’s we have been brought up on a culture of community, volunteers and grass-roots involvement in the raising up of a sport.

No amateur sport can exist without the mums and dads dedicating their time, money and passion into these sports.

Unfortunately the shifting of money away from local to global economies means those models no longer work on a professional league scale.

Leagues are no longer competing between themselves for resources and players. It is a resource battle on an international scale.

They especially can’t work for a league with little history ingrained into the sporting culture of Australia.

The recent sale of the UFC for $4 billion dollars shows what can be done for a sport with no historical advantage that recognizes itself as an entertainment vehicle and runs itself as such.

Oh and where were those parties interested in buying the UFC for that crazy amount? China.

Welcome to the business of sport in the 21st century.

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