The AFL’s historic bid to create an even football competition is facing a mutinous response from at least five middle-level clubs disenchanted in the belief they will be harshly taxed by Gillon McLachlan’s complex equalisation formula.
Fairfax Media understands Carlton, Essendon, Fremantle, Geelong and Richmond have been stunned at learning they will be taxed between $200,000 and $400,000 annually over the next two years compared with the capped $500,000 to be carried by Collingwood, Hawthorn and West Coast.
McLachlan will roll out his new competitive balance formula to the 18 clubs on Wednesday in what looms as a lengthy session at head office, which will also mark Andrew Demetriou’s final day as AFL chief executive.
”The devil will be in the detail,’’ Fremantle chief Steve Rosich said. ‘‘Hopefully the detail won’t be the devil. Hopefully the middle clubs won’t be disproportionate contributors.
“You’d hate to see a disproportionate burden to be carried by a mid-tier club as opposed to a top-tier club.”
Several disillusioned chief executives have pointed out to the AFL that middle-ranked clubs will be the hardest hit, with some being taxed close to 50 per cent of their profits compared with closer to 10 per cent by Collingwood.
Intense lobbying from the wealthy clubs, led by the Magpies, led to the AFL backing down from its original revenue tax equation. Now the 2015 equalisation pool will include club contributions of no more than $4 million and as low as $3 million, although the AFL will top up that amount with money from its club future fund.
The key recipients of the equalisation pool in 2015 will be the Brisbane Lions, St Kilda and the Western Bulldogs, with Melbourne and potentially Port Adelaide and North Melbourne also having money put back into their football spending.
All the clubs facing six-figure taxes have been told the formula has been based on last year’s profits to dissuade – they suspect – any attempts to rewrite revenues.
It is understood the AFL has chosen to tax the clubs on all revenue, including gaming profits. But McLachlan is understood to have been more sympathetic towards fund-raising foundations, such as those being run by Richmond and Sydney and more recently established by St Kilda, which will not be included in club taxable revenues.
Several clubs remain hopeful the AFL will not include player welfare costs in the football department revenue equation, arguing such a move would result in that area of football spending decreased significantly to beat the tax.
The ambition is to allow every club to pay its players 100 per cent of the salary cap. The two expansion clubs, which are still being fully funded by the AFL, are not expected to be included until at least 2017 when the new broadcast rights agreement is struck.
The tax on football department spending will also be capped and only clubs spending more than $9.5million on football outside of its total player payments will be hit. The prevailing view is only Collingwood and West Coast will be taxed, although that money will reach poorer clubs until 2016.
The disillusionment shared by those middle-ranked clubs has been compounded by the belief they were under-represented by the working party that travelled to the US last July to examine the equalisation strategies in American football. Only Richmond’s Brendon Gale was on that trip and subsequent working sessions, compared with stronger representation from the wealthy and poorer clubs.