As all followers of sport in Australia know, funding not only a team, but funding a sport is a big issue.
At club level what does a sponsor get for their investment? How many actually see a return on that investment with actual business from players and others at the club, and does it ever cover the level of investment? As one club sponsor told Not The Footy Show, “I am not a sponsor, I am a donor. I do this not for a return, which would be nice, but because I love the sport and I love my club.”
This individual had played sport at junior level and was now playing veterans, but was well aware how important club sport is to communities and to children growing up. His children currently play in the juniors sides at the same club.
As we all know there is a willingness to support junior sport far more than there is senior sport. The reasons have to do with the feeling that the sponsor or donor is helping in the development of a child not only as an athlete but also as a person. That sponsoring a junior side is somehow “giving back” or doing your bit for the community.
When it comes to senior sides it becomes more complicated, especially when players within those sides are being paid to play. Suddenly the sponsors want to see results on the pitch. They also want to see mileage for their investment. They want media coverage and signage to give them some return on their investment.
When it comes to Government investment in sport a vast amount is spent on the elite level. Our athletes that compete on the international stage and promote us as a sporting nation. Regrettably much of the money that comes from Government for game development is chewed up by administration rather than actually making its way to those it is intended to help.
To try and alleviate some of the Financial burden more and more sports in Australia are heading down the path of Franchises. This is currently seen as the only viable form of survival. Yet this model sees them selling off their assets, the teams and the players to private enterprise, to run and administer, but under their guidelines.
Whereas the Franchise model appears the best option is comes with complications as many who buy into it fail to realise.
Ownership of a sporting club becomes more an issue of a feeling of public trust than running any other business. The owners are responsible for the long-term viability of the franchise. The owners obviously have to make bottom-line decisions that are best for them. However the last thing the fans care about is a discussion about profitability. They only want to see their team win and challenging for trophies.
Herein lies the major problem, fans often measure the commitment of team owners in direct relation to how much they’re willing to spend on player salaries. However player wages are often according to reports into the running of clubs “no more than a third to a half of the overall expenses incurred by an organization.”
So is it any wonder that money meant to be spent on grassroots is also being chewed up by administrators?
Finances in sport in Australia are currently a major issue. Every sport wants a truly national competition; except maybe Australian rugby! All want to not have the cost of financing clubs in every state. Yet private ownership comes with its own set of risks, as owners can up and move on at anytime. The Government wants to cut sports funding and have sport in Australia self funding, yet that model looks a long way off.
Maybe there is a solution.
A year ago the Australian Tax Office reported that over 700 companies in Australia had failed to pay Tax. In fact 380, or one in five, of Australia’s largest companies had paid no tax for at least the past three years. Amongst some of those who had not paid tax were some very large corporations. Some of the reasons that some of these companies had not paid tax we were told were because “There are still companies … hiding amongst those that have legitimately made a loss or have legitimate deductions.”
The report highlighted the following companies that paid no or little tax in 2015-16:
Adani: $0 tax paid on $724m revenue.
Chevron: $0 tax paid on $2.1bn revenue.
ExxonMobil Australia: $0 tax paid on $6.7bn revenue.
Origin Energy: $0 tax paid on $11.9bn revenue.
IBM: $0 tax paid on $3.6bn of revenue.
Ansell: $0 tax paid on $326m of revenue.
Glencore: $44m in tax paid on $24bn of revenue.
Ikea: $11m tax paid on $1bn of revenue (its first tax paid in the last three years).
The report revealed that Qantas which reported a pre-tax profit of the last financial year (at the time of the report) of more than $1 billion, had paid no corporate tax since 2009. Foreign owned Banks were another large group who were not paying tax.
The reason these companies were able to avoid paying tax was in the main due to Australia’s generous depreciation provisions and the ability to offset massive historical losses made by the companies against past and future profits.
The Government obviously highlighted a year ago that the drop in revenue from the mining sector affected their budgets and funding for essentials such as schools and hospitals etcetera, but is there not a possibility to change the way these companies operate in Australia?
These are large sums of money not being paid in Tax. Large sums of money that could be utilised if it was received. As the report showed most of the companies not paying tax were foreign owned companies. Could not the Government make it a requirement, or link to Foreign companies a tax break for investment in Australia sport?
Should we be looking to corporatise sport in Australia? In other words have corporations owning sports teams, and having the players and coaches on the payroll and training them for careers in the corporate sector once their sporting careers come to an end? Would such a system in fact curtail some of the bad behavioural issues that have been witnessed from sports stars? The reason being they would have less free time, as when not training and playing they would be working for these corporations.
As mentioned many “sponsors” feel that they get little return on their investment. Yet if a club was owned by a corporation they would be able to utilise the players in terms of their workforce. They would have a free avenue for publicity and promotion of their companies. They would also have a built in fan base with hopefully their employees feeling a strong link with a side that ultimately represents them, and the work that they do. They would also have built-in rivalries with teams owned by competing companies.
As appealing as it may sound there would have to be a lot more thought given to the details as to how such a proposition could work. It does however have some merit as it would take the pressure of the Government having to continually try and find money to fund sport, and the fact that much of the money never makes its way to those it is intended to help.
Nobody likes paying Tax. The big companies and their shareholders dislike it even more than the average citizen. Yet if that “tax” was invested into something tangible, such as a sports team or a group of individual athletes, payment does not seem quite so bad. As all can see that if those teams and athletes are successful they will be great ambassadors for the company, and who knows the share price could also rise.
These are taxing times for the funding of sport in Australia, but maybe unpaid Tax could be a key moving forward?
