Melbourne Victory aims for profit in its second year

Melbourne Victory, the Samsung-sponsored exclusive A-League franchise in Australia's second largest city (and capital of Victoria state) is aiming for "a small profit next year of up to A$200,000" in only its second year of existance. "In the last couple of weeks we have noticed increased requests for sponsorships and memberships," club chairman Geoff Lord told George Lekakis of the Herald Sun (Melbourne). "I wouldn't try to put a figure on it, but the value of the game has gone up and making the second round of the World Cup should lead to more support for the local competition." He also disclosed that losses for the club's 12 months to the end of June are likely to be about A$1 million.

Lord's private business vehicle, the commercial property investor and developer, Belgravia Group, is fast catching the YMCA as Australia's biggest operator of exercise and sports facilities employing 3000 people across every state and territory and is "out there on our own in golf courses." A former chairman of the Australian Football League club Hawthorn Hawks, the fifty-nine year old owns 50 percent of Melbourne Victory with the other half owned by the Football Federation of Australia (10 percent) and a coterie of private investors. His half share reportedly cost him A$500,000, less than two years ago.

"I want to give something back to Melbourne and to build an iconic football club would be a wonderful thing to do," he said. "I also felt that if you got the timing right the value of the license and the value of the club could escalate. At the moment a naming rights sponsorship of a Melbourne-based AFL club garners up to $2.5 million and support for Victory is only a fraction of that."

The upside value in the franchise was underlined in August last year when Australian mobile phone czar, Crazy John's owner John Ilhan reportedly offered to sink A$20 million into the club if FFA agreed to hand him sole ownership without any involvement from Lord. "I wanted a guarantee that Lord and his shareholders walk. Why would I want to be involved with them?" he told the Herald Sun's Peter Desira last August. Lord said he was not aware he said that, "but he's a very nice young man and I'm always happy to have a chat with him," he told BusinessDaily. "I've never spoken face-to-face with John or had a phone call from him, but I'm happy to talk to anyone who wants to be involved as an investor."

Victory did not qualify for the inaugural finals series in the A-League this year but uncovered a solid support base with an average home game attendances of almost 14,000, virtual capacity of its Olympic Park home ground. The club signed about 8000 members last year and directors are hoping membership will jump to 13,000 or more for the next season, Lord told Ian Porter of The Age (Melbourne).
"When you recognise there are two million people in Victoria who are sympathetic to soccer and there are over 200,000 registered players in the state, I believe that people have been starved for a long time of watching a neutral club with no ethnic allegiances," he said. "If you look at the former National Soccer League clubs such as Melbourne Knights or South Melbourne Hellas, they had very strong ethnic ties. We're trying deliberately to have a side that appeals to all of Melbourne and Victoria."

Lord won the franchise license over rival bids from Football Federation Victoria (which administers the game on a state-basis) and South Melbourne Hellas (the leading Melbourne-based, Greek immigrant supported club in the defunct National Soccer League). The A-League, however, was designed to creat new broad-based clubs rather than represent state associations or ethic communities. "We appeared at the eleventh hour with the benefit of being a commercial organisation with some financial strength and a history of being involved in sports management," said Lord. "We met the criteria that the FFA was interested in having in Melbourne."

Lord told Lekakis that he would never have entered the bidding process had the FFA vision - exclusive licenses for the first five A League seasons, the A-League season be held in summer and entry for the top Australian clubs to participate in the Asian Champions League - not matched his own. He now wants the Victory to have an option to extend its exclusive position in the Victorian market by another five years. "We haven't been granted that yet, but we have been given assurances that if we are good corporate citizens and run the club responsibly, then the FFA will grant the extension," he said. "We have also been told that if the FFA admits more teams to the A-League then they wouldn't come from Melbourne or Sydney."

He also successfully lobbied the Victorian state government to secure its support for proposals to redevelop the pitch and facilities at Olympic Park. The government announced earlier this year that it would spend A$200 million to improve the venue as a dedicated football "rectangular stadium" with capacity to accommodate crowds of up to 25,000.

See also: Melbourne to build a new football-specific stadium (23 Jun)