21778 - Revenue Stream Evaluation Report Assessment Answer

Introduction

Revenue streams are the various channels through which a company generates income by marketing goods or providing services. The classification of revenue in a company's financial records is dependent on the nature of the business's activities (Ennis & Ennis, 2020).

Australian football is widely regarded as one of the most prominent sports in the country. Even among individuals who do not actively participate in the sport, the Australian Football League or AFL is well-known as Australia's governing body of football.

The most people go to Australian Football League games than any other sport in the country. There were more than 6 million people in attendance at AFL finals games in 2005, and more than 3.3 million people watched on TV. For teams in the Australian Football League , winning the title is their main goal (AustralianExplorer, 2023). The winner of the league is decided by a final series between the clubs in the top three spots. After the winners, the two clubs compete for the title in the Grand Final. The given study will highlight different revenue streams of AFL in accordance to the objectives. Based on the findings, different recommendations will be given to the organization.

Analysis of different revenue streams

Figure 1: Revenue Streams

(Source: AFL, 2023)

Broadcasting and commercial enterprise are the primary revenue sources of AFL. A large television contract was negotiated for the 2022 season for the Australian Football League. The contract's total value was $4.5 billion for seven years. This deal brings the team an extra $100 million per year compared to the National Rugby League, their main rival(AFL, 2023). The National Rugby League and the Australian Football League are two of Australia's most popular sports leagues, while being very different from one another. Melbourne residents are much more devoted to the Australian Football League than their Sydney counterparts are to the National Rugby League.

The broadcasting arrangement for the A-League, a professional soccer league, comes in substantially behind with a total value of only $200 million over five years. This represents a significant gap between the two agreements. On the other hand, ticket sales can be considered other form of revenue (AFL, 2023)

The Australian Football League brought in a total of $738.1 million during the 2021 season through a variety of sources of revenue, such as television rights, ticket sales, and other types of commercial activity. The organization is responsible for several substantial costs, some of which are related to the distribution of money among its 18 clubs, investments in community sporting activity, remuneration for its workers and management, and, in the case of the year 2021, specifically, expenses relating to travel and the Covid-19 epidemic (AFL, 2023)

The vast majority of this money is distributed through financial assistance to various football teams all around Australia. In recent years, it has become standard procedure within the Australian Football League for struggling clubs or teams to receive relatively bigger payouts from the AFL. These more excellent payouts compensate for the clubs or teams' financial hardships. Most of these allocations come from the money collected through television (Ferguson &Pinnuck, 2022).

The Australian Football League brought in a total of $738.1 million during the 2021 season through a variety of sources of revenue, such as television rights, ticket sales, and other types of commercial activity. In the specific context of 2021, expenses associated with travel and the COVID-19 epidemic are two of the primary costs incurred by the organization. These costs include the distribution of earnings among its 18 clubs, investment in community sporting activity, pay for its people and management, and compensation for its personnel and management (AFL< 2023)

A sizeable percentage of this cash is set aside to provide financial assistance to various football clubs based in Australia. Underachieving clubs or teams in the Australian Football League have been given greater rewards in recent years as part of a customary practice that has become standard in the league. These larger payouts have primarily been generated from the pool of media money. The choice to include community investment to help volunteers, umpires, coaches, players, clubs, and leagues has been protected against changes in case the AFL Commission cannot come up with a new answer in the future. This safety measure is in place in case a different answer is found. This ensures that the AFL will continue to make more money from commercials and broadcasts in the future. This will mean that more money will be put into local areas over time. The business has made more money and built stronger relationships with AFL app and website users since it started using live streaming and match sites for the State League (Ferguson &Pinnuck, 2022).

Attaining the objectives

The American Football League has an organizational structure that is quite similar to the operational framework that is typically seen in corporate companies.

The objectives of AFL are as follows:-

• Establishing an independent board comprised of members who do not hold executive positions and who are chosen by the proprietors is the most essential component of the corporate governance system.
• The AFL's operating framework is quite similar to that which is utilized by the vast majority of enterprises, which is reflected in the league's hierarchical organizational structure. One of the most critical aspects of a good corporate governance structure is appointing non-executive, independent board members by the company's shareholders.
• The organisation's principal purpose is to encourage those residing in Australia, as well as, to a lesser extent, individuals residing in other nations, to participate in the sport of Australian Football actively.

The organization has the secondary objective of promoting the sport internationally. The choice to include community investment to help volunteers, umpires, coaches, players, clubs, and leagues has been protected against changes in case the AFL Commission cannot come up with a new answer in the future. This safety measure is in place in case a different answer is found. This makes sure that the AFL will continue to make more money from commercials and broadcasts in the future. This will mean that more money will be put into local areas over time. The business has made more money and built stronger relationships with AFL app and website users since it started using live streaming and match sites for the State League.

Through the use of its broadcast revenue stream, which is seen as a practical resource, the AFL makes it a priority to align the public interests of the league with those of its fans. This is made abundantly clear by the yearly reports, which highlight the availability of live television coverage for each and every game, as well as the live airing of the majority of games featuring teams from other states on channels that are accessible without a subscription in those other states (Hutchins et al., 2019). Therefore, it can be said that this revenue stream has helped the organization to meet its required objective.

Through the implementation of new allocative resources, the league creates a strategic connection between the public and commercial interests it has and the public interests of its supporters. These materials have been meticulously selected to coincide with the values that fans hold, so increasing the scope of the league and offering prospects for it to be monetarily profitable (Duncan, 2018).

Recommendations

Public Campaign (Public Sector Sources)

Donors usually give money to annual funding programs from the money they make each year. To increase the amount of money a group makes each year, it is important to get a lot of small donors to become big donors. One way that this goal might be reached is by starting a big drive to get public investors like European premier league is doing (Ferguson &Pinnuck, 2022). Organizations that think ahead and want to be financially stable in the long term may decide to invest some of their money with the goal of depending only on the interest they earn to supplement their yearly income..

Gifts in kind (Public Sector sources)

If an organization has long-term goals, like becoming indispensable or staying relevant over time, it may decide to put some of its money into investment projects. They can get an extra source of income every year through different types of gifts. Every year European leagues get funds through gifts from various stakeholders.

 In this part, an alternative way to raise money for endowments is suggested: a program in which living donors give money from their assets while they are still alive.

Merchandise (Third Sector)

Merchandise can be of different forms like jerseys, tickets and other elements which can be made available for the viewers. AFL can earn lot of revenue by selling these elements. The same think is being done by different European leagues (Ferguson &Pinnuck, 2022)For the years up to 2026, the AFL should make public its Strategic Plan for Sport-Related Concussion in Australian Football. This plan sets a framework for how the football industry will deal with concussions in sports. It also underlines the AFL's commitment to putting players' health and safety first at all levels while keeping the spirit of the game alive.

Conclusion

It can be concluded that AFL has performed well over the years in terms of revenue. However, the revenue streams can be further increased. The main sources of AFL come from broadcasting, commercial and football operations. However, the organization can also consider public sources and merchandising as a source of its revenue.

The study also reflects the AFL's goals and plan for making sure our sport is safe. It also gives a complete plan for dealing with the possible effects of concussions in sports. Getting great results in all strategy goals including Education, Prevention, Detection, Recovery, Support, and Innovation is what the plan is all about. The AFL sets up a steering group with five separate Working Groups to give advice and make sure that the five-year plan and its strategic goals are carried out well.

References

AFL.com (2023) Retrieved from https://resources.afl.com.au/afl/document/2023/03/03/a2ac5fc4-1ce6-4a12-85e6-9d398a960142/2022-AFL_AR_Digital-Doc_150dpi_Low.pdf

AustralianExplorer (2023) Retrieved from https://www.australianexplorer.com/australian_football_league.htm

Duncan, S. K. (2018). Managed play: The media’s impact on play in the Australian Football League.  Physical Culture and Sport. Studies and Research ,  77 (1), 5-16.

Ferguson, P. J., &Pinnuck, M. (2022). Superstar productivity and pay: Evidence from the Australian football league.  Economic Record ,  98 (321), 166-190.

Hutchins, B., Li, B., & Rowe, D. (2019). Over-the-top sport: live streaming services, changing coverage rights markets and the growth of media sport portals.  Media, Culture & Society ,  41 (7), 975-994.

McLeod, J., Shilbury, D., Parnell, D., & O'Boyle, I. (2023).Analyzing the Australian Football League's (AFL) governance structure: how does it compare to Europe's "club-run" leagues?. Managing Sport and Leisure , 1-18.

Ennis, S., & Ennis, S. (2020). Sports Distribution and Media Rights. Sports Marketing: A Global Approach to Theory and Practice, 101-127.

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