Football Australia explored selling off rights to the Matildas, Socceroos and the A-Leagues for 99 years in what would have been an unprecedented privatisation of football in Australia, Guardian Australia can reveal.
The deal could have also involved commercialising the data of all Australian football participants, including children as young as four, in a proposal that raised significant privacy concerns.
A slide deck prepared for a working group of the FA board in late 2020, seen by Guardian Australia, reveals plans for the establishment of a new legal entity, a “special purpose vehicle”, to control the sport’s major assets.
FA and the Australian Professional Leagues would have held a majority stake in the new legal entity, with a minority holding sold to a new investor. FA and the APL would have each held a 50% share of the majority stake.
The entity would have owned the domestic and international broadcast rights, sponsorship assets, merchandise and ticketing to the Matildas, Socceroos, the A-Leagues, youth leagues and e-sport leagues, along with participant data across the entire Australian football pyramid.
A third-party investor, suggested by the slides to be a private equity firm or sports marketing group, would buy into the entity and provide digital, technological and media expertise. Profits from the new entity would be returned to FA, the APL and the investor over time.
The slide deck suggested over $150m would be raised, which would be invested in new digital platforms, a streaming service and payments to A-League clubs “to support investment in improved on-field product”.
The proposal would have seen the rights held by FA and the APL granted to the new entity for 99 years. The investor would have also had a right to request that the new entity be listed on the Australian Stock Exchange via an initial public offering, under draft terms proposed for FA consideration.
Although the proposal was ultimately not adopted, it reached an advanced stage, with detailed financial modelling, market research and tax advice sought, the slides indicate. One slide stated that “market presentations commence in coming weeks, so exploration of key issues within the [FA] board is required in order to arrive at a go/no go decision.”
The commercialisation of participant data became a sticking point, Guardian Australia understands. “The control of community digital assets is politically sensitive,” reads one slide, “though it is understood that [FA] can retain control of community digital while providing data for marketing purposes to” the new entity.
FA’s latest participation report estimates that more than 1.5 million Australians participate in football as players, coaches, volunteers or referees. Their registration data could potentially have been used for commercial purposes under the proposal.
Another concern with the proposal involved tax. As a non-profit, FA’s surpluses are not taxed. “SPV profits may be taxable and create revenue leakage,” one slide warned. A subsequent slide insisted that a “core principle” would be that the new entity “be designed in order to preserve tax-free status”.
The slides also reveal that FA – then known as Football Federation Australia – considered moving from its current broadcast rights model and establishing a direct-to-consumer streaming service. This “alternative monetisation strategy” could, market research conducted for FA estimated, be priced at $25 per month and generate profits of $40m.
But FA did not proceed with this approach, with one slide stating that “the commercial risk involved makes this an unattractive option at this time”.
A final slide summarised that “whilst the bundling of football commercial assets is advantageous, FA must ensure it does not relinquish commercial control of the game in the long term”.
Similar attempts to sell-off stakes in national teams have proven controversial. Last year New Zealand Rugby sold off a stake in its commercial arm, including rights to the All Blacks, to an American private equity firm for almost $200m. An earlier proposal was blocked by the players’ union.
Rugby Australia has also explored taking private investment, but last week walked away from the idea after failing to secure the $150-200m they were seeking in return for a 20% holding.
A spokesperson for FA said: “The consideration of a special purpose vehicle and other various models and commercial initiatives was part of Football Australia’s proactive strategy to think outside the box and consider various proposals to rejuvenate the business during what was a financially challenging period, specifically amidst the Covid-19 crisis. At that point, concerns about Football Australia’s financial position were widespread.
“The primary objective was to explore numerous ways to grow commercial revenue for the game, including drawing inspiration from strategies implemented in various other sports around the world. While the exploration of such opportunities was crucial during the challenging times, Football Australia is not currently pursuing external investment.”
The spokesperson said FA took seriously its legal obligations in relation to privacy and any use of participant data would be taken with “extreme” caution. “Football Australia did take into consideration the privacy implications of commercialising participant data, which was an influential factor in the proposal not progressing,” FA said.
“It’s of utmost importance for us to ensure the privacy and security of all individuals within the Australian football community, especially our younger participants.”
The spokesperson said that “as a testament to our strategic decisions and the collective efforts of the football community, Football Australia currently finds itself in the most robust financial position it has ever enjoyed”.
The co-chief executive of Professional Footballers Australia, Beau Busch, expressed caution in relation to the proposal. “The players have driven enormous value for Australia’s national teams and clubs,” Busch said. “If the terms in which the players are delivering this value is modified, or the beneficiaries of that value changes, the players’ agreement is required.”
Guardian Australia understands that the proposal was ultimately not supported by a majority of the FA board, including the outgoing chair, Chris Nikou. The proposal was backed by FA board members aligned with the APL. Nikou did not respond to questions, directing Guardian Australia’s queries to FA.
Rather than proceed with the special purpose vehicle, FA spun off the A-Leagues into the APL at the end of 2020. “This unbundling was aimed at granting the league and clubs greater autonomy in commercialising and operating the leagues under Football Australia’s regulatory guidance,” an FA spokesperson said.
Katharine Kemp, an associate professor in the law and justice faculty at the University of New South Wales, expressed concerns about the privacy implications of the proposal and suggested it pointed to weaknesses in Australian privacy law.
“One of the key weaknesses in our outdated privacy legislation is that it doesn’t expressly prevent organisations from ‘bundling’ consents,” she said.
“So, for example, if you’re signing your child up for an activity with a company, that company might say you consent to their use of that information to organise the activity but also bundle in consent to use that personal information for third party marketing, profiling and advertising purposes. You don’t get to say ‘I’m OK with this but not with that’. That’s a problem.”
The APL did not respond to a request for comment.
