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Why the AFL is killing Australian sport


Aristidi Armstrong

By

October 7th, 2013


Aristidi Armstrong adopts an economic rationalist’s view of the tactics the Australian Rules Football League is adopting to crush rugby league and rugby union in its own heartland; Western Sydney and Queensland, and why it seems to be succeeding.


Every Victorian knows who Lance ‘Buddy’ Franklin is, who Nathan Buckley is, and who James Hird is. Even non-supporters know these names, because AFL is so ingrained in Victorian culture and lifestyle that is almost impossible to avoid them. However if you ask an average Victorian who James Horwill is, there is a good chance that you will be given a blank expression as a response.

James Horwill is the captain of the Australian Wallabies, a side that is currently touring the world representing this country. What is more bizarre is this Australian sportsman is more widely known in New Zealand and South Africa, than in his own country. AFL has taken over the sporting landscape in South Australia, Tasmania, the Northern Territory and Western Australia, and is currently mounting a final assault into the last bastion of non-AFL obsessed Australia; NSW and Queensland. How have they done this? Many will argue that it simply comes down to the fact that AFL is simply offering a better product. It is a more enjoyable as a spectacle. If this were true, then why hasn’t the AFL established itself in New Zealand, where rugby union remains the state religion? Basketball started off strictly as an American sport is the late 1800’s, and now the NBA enjoys followers from across the globe. LeBron James and Kobe Bryant are household names whether you’re in Beijing or Los Angeles. Does this mean that basketball is simply a greater spectacle than AFL?

The truth is that the AFL’s governing body has set out on a crusade to dominate the Australian sporting market, and to establish itself as the leading sport in Australia. The AFL is not an aggregate welfare maximising body, it is a profit-maximising body. The evidence for this is unequivocal, and boils down to the fundamentals of sports economics. When the AFL announced that it would introduce two new teams into the league, Tasmania, a state that is footy mad and desperate for a representative team, was overlooked. This is despite the Tasmanian government meeting with the AFL on various occasions to lobby for one. Instead the teams went to Greater Western Sydney and the Gold Coast.

AFL has marketed itself as a safer alternative to rugby, meaning that more young kids are involved in the sport, which in turn justifies more government spending to maximise community welfare. The AFL has convinced local, state and federal governments alike that it is a superior public good, and there is evidence that in turn AFL teams receive highly favourable lease agreements.[1] This is a double-win for the AFL, not only have they received public funds, but the opportunity cost to the government is that they then can’t use that money to fund other sports. Due to the scarce allocation of resources given to the Australian Sports Commission, every time the AFL is given a bigger grant, the NRL’s grant is a little less.

The AFL also has control of the biggest stadiums in the country. This means that competing sports such as rugby are literally hemmed in by the size of their stadiums. The threshold from having a huge marginal cost of extra supporter in a large stadium is much higher than the marginal cost of more supporters in a small stadium. In other words, if 100,000 people want to attend the AFL Grand Final, the MCG can accommodate for this. To fit 100,000 in ANZ stadium, the venue for the NRL Grand Final, would require bulldozers and the erection of 20,000 extra seats. This produces very different, price-quantity equilibriums. A sell-out at ANZ would arguably be just as expensive to host as an MCG sell out, as a similar number of venue staff and security would be needed.

John Eales, former Australian Wallaby has famously described the Australian sporting market as the most contested in the world. The AFL is going about changing that through bigger stadiums, strategic marketing and presenting itself as a safer, healthier alternative to other sports. It may be hard to imagine sports like rugby and soccer being relegated to having the same popularity as say the National Basketball Association, but if the trend continues, that is maybe what we are faced with.

The views expressed within this article are those of the author and do not represent the views of the ESSA Committee or the Society's sponsors. Use of any content from this article should clearly attribute the work to the author and not to ESSA or its sponsors.

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