The inevitable occurred on Tuesday with the AFL formally granting the Gold Coast Football Club a provisional licence to become the 17th team in the competition, from 2011. The decision comes following the Queensland Government’s announcement to contribute $60 million towards the redevelopment of Carrara Stadium on the Gold Coast. While the AFL announced that it would contribute $10 million to the stadium, it neglected to outline the total costs being incurred by the League as a result of its Gold Coast frolic.

According to AFL CEO, Andrew Demetriou, the stadium redevelopment would:

…deliver an estimated 350 construction jobs, while the Gold Coast Football Club would support 440 direct and indirect jobs when it was up and running. It will also contribute more than $34 million in annual economic activity to the region, 92 per cent of which will go to benefit non-AFL businesses such as Gold Coast accommodation providers, retail outlets, transport operators, tourism operators, restaurants and cafes and the various services industry.

Struggling Victorian clubs may be forgiven for wondering exactly why they are bankrolling an expansion club which is predicated to boost the Gold Coast economy considering the current perilous state of their own balance sheets. Given the direct and immediate costs involved, Victorian club presidents would be better off advocating the AFL to develop its own, boutique stadium in Melbourne before it spends tens of millions of dollars on a risky, northern expansion club.

Following the AFL’s ground rationalisation policy of the 1990s, Victorian clubs including Collingwood, Essendon, Carlton, St Kilda and Footscray were forced to relocate from their (often dilapidated) suburban grounds. The AFL forced those clubs to play out of either the MCG or Waverley Park (and later, the Docklands stadium). The rationalisation policy had two distinct effects on these clubs. First, it destroyed the concept of “home ground advantage” that had previously been enjoyed. Second, and more importantly, it reduced any bargaining power which the clubs had in negotiating stadium deals. In dealing with the Docklands Stadium or MCG, Victorian clubs are forced to negotiate from a weak position, with no viable alternative.

In 1999, the AFL abandoned its wholly-owned Waverley Stadium in favour of the Docklands arena, which until 2025 is privately owned. The AFL also has no ownership interest in the MCG. As a result, Victorian clubs retain only 30 percent of ground revenue, compared with 60 to 70 percent of sales, which are retained by non-Victorian teams.

Essentially, through its ground rationalisation policy, the AFL (led by Demetriou’s predecessors, Wayne Jackson and Ross Oakley), forced clubs to rely on a centralised funding structure, consisting largely of broadcasting rights (and to a lesser extent, club memberships). As a result, broadcasting revenue (which, in essence, is earned by clubs) is paid directly to the AFL — when the clubs seek their fair share of that revenue back, it is ridiculously characterised as “special assistance”. As a result of the AFL’s long-term strategy (and poor stadium deals negotiated by the clubs themselves), Melbourne-based sides regularly lose money even in well-attended matches — the break-even crowd for a match at Melbourne’s Docklands is 35,000.

To protect Victorian clubs, the AFL must urgently consider developing a boutique stadium, with a capacity of around 30,000, to stage matches against low-drawing non-Victorian sides. The boutique stadium would benefit clubs in two senses. Not only will the break-even attendance be lower, but also, it will give clubs far more leverage in negotiating deals with the MCG and Docklands. Potential venues for such a stadium include the Junction Oval, Punt Road Oval, Olympic Park or even Ghosh’s Paddock (Collingwood’s current training venue).

At least one, AFL-owned, boutique stadium in Melbourne is essential for the survival of Victorian clubs. And protecting the interests of existing clubs, and their large membership bases, should be the leading priority of the AFL executive — not a costly and risk expansion of the game into the Gold Coast or Western Sydney.