Crikey’s Adam Schwab writes:

Has the AFL won the battle but lost the war? The decision by the AFL’s new Greater Western Sydney team to offer a speculated $4.2 million, three-year deal to Brisbane Broncos star, Israel Folau, may be the final piece of evidence that will convince existing AFL clubs as to the expansionary folly they have been lead to by the AFL Commission and executive.

The decision by the AFL to create new teams in the Gold Coast and Sydney’s west was made with virtually no independent financial consultation. The Gold Coast team proceeded on the basis of the recommendation of several “experts” who had a personal interest in the side, including the Director of Commerce Queensland and a Director of Surfers Paradise Central Management. One of those “experts”, John Witheriff, would within months become the Gold Coast side’s first Chairman. The rationale for the Western Sydney side was even flimsier, ostensibly based on the principle that there can’t be an “odd” number of teams, and “a lot of people live there”.

Regardless of the lack of financial feasibility studies, it is understood that the decision was unanimously supported by the sixteen existing clubs. However, it is likely that many of those clubs (particularly Richmond and Geelong, but for different reasons) are now regretting that hasty decision.

Unlike a company, a peak sporting code like AFL does not have a specific group of shareholders which they are paid or elected to serve. Sporting codes (except for perhaps the NRL) do not exist for the purpose of making a profit and providing a dividend to shareholders. Rather, the AFL Commission and executive are paid to serve the interests of the 16 clubs (and by implication, members), players and the game itself.

It is becoming increasingly apparent to the existing clubs that the Gold Coast and GWS sides may not be in those best interests.

The obvious problem with the creation of two new franchises is that the ultimate goal of any club is to win a premiership. This is made more difficult when there are more teams clamoring for the elusive “flag”. This is then multiplied by the fact that the AFL needs to ensure that the new franchises are competitive to avoid the problems which befell the Brisbane Bears and Sydney Swans in their early days. (Both Brisbane and Sydney lost tens of millions of dollars and were technically bankrupt within years of their establishment. Both were saved through VFL/AFL assistance and substantial salary cap concessions).

The dilemma for the existing clubs is this — if the Gold Coast and GWS are failures, the AFL (and by implication, the clubs) waste hundreds of millions of dollars; by contrast, if the Gold Coast and GWS are extremely successful, then they win premierships that would have otherwise been celebrated by fans of existing clubs.

To avoid the problem of the expansion teams being on and off-field duds, the AFL has provided them with extensive benefits. For example, the Gold Coast side receives selections 1, 2, 3, 5, 7, 9, 11 and 13 in this year’s Draft, and the ability to select a dozen 17-year-olds last year who were not yet eligible for the 2009 draft. The raft of early draft selections (and GWS receives similar benefits) over the next three years virtually condemns struggling sides (especially Richmond) from being able to improve their list by selecting the best young players.

Even more controversially, the Gold Coast side has been given access to the best un-contracted players at AFL clubs. This has been especially pertinent with arguably AFL’s best player — Gary Ablett. Ablett, who led Geelong to two premierships in three years and won last year’s Brownlow Medal has been courted by the Gold Coast with an annual package believed to be worth upwards of $2 million including endorsements (including a more valuable ‘front end’ contract).

By contrast, Geelong, which is required to operate under a far more stringent salary cap are only able to offer Ablett around $700,000 to $800,000 annually. It would not be lost on any Geelong supporter that their favourite son (Ablett is literally the son of former Geelong great, Gary Ablett Snr) would be heading to the Gold Coast based on concessions which it agreed to and being paid by money which arguably, is partially Geelong’s (funding for the Gold Coast side implicitly comes from the existing 16 clubs). Over the weekend, Ablett confirmed that he would not discuss any further contractual arrangements until the end of the year — effectively confirming that he is Gold Coast bound come October.

Struggling Richmond may also fall victim to the uncontracted player rule, with one of its best younger players, Dustin Martin, also believed to be within the sights of the Gold Coast.

Then there is the recent Israel Folau situation, in which a Rugby League player will be paid $4.2 million over three years (of which, half of the money is being paid by the AFL (and funded by existing clubs) through a “marketing allowance”). Brisbane coach and former AFL great, Michael Voss, was especially critical of the AFL’s decision, telling a press conference yesterday that he thought the millions of dollars being used to fund football in Queensland and NSW was “for investing in Auskick and Under 11 and Under 12s, not to pay the two highest players in the AFL.” Outspoken Western Bulldogs star, Jason Akermanis, dubbed the Folau contract “embarrassing, insulting and demeaning to every AFL player.”

The only way existing clubs and their members are able to benefit from the Gold Coast and Western Sydney sides would be through a substantial increase in the value of broadcast rights. It is however, an enormous investment for what is an unquantifiable and especially an uncertain return. However, what is certain is the incredible costs – both financial and otherwise to clubs and their paying members.