Demetriou's 80% Pay Rise

[Q.]

http://www.crikey.com.au/Media-Arts-and-Sports/20080305-What-has-Demetriou-done-to-deserve-the-dough.html

What has Demetriou done to deserve the dough?

Charles Happell writes:


In 2005, AFL chief executive Andrew Demetriou was paid $780,000 to do his job; last year, his salary rose to $1.4 million. The AFL’s remuneration committee deemed that Demetriou’s performance had been so good over those two years that it warranted an 80% pay hike.

Inflation in that time has been negligible, the CPI running at about 3%. Most other CEOs – even at a time of executive salary blowouts – have had to make do with considerably less. The NAB’s chief executive John Stewart, for example, was rewarded last year with a piddling 5% increase.

Over at The Lodge, the Prime Minister’s salary since 1999 has limped up from $289,000 to roughly $336,000 – or a 15% rise. But that is over eight years.

And yet Andy boy pulls in 80% over two years. Why?

A chief executive in Melbourne who runs a vaguely similar club-based organisation and who is paid a similar amount to Demetriou is the RACV’s Colin Jordan. Jordan has responsibility for seven different businesses, 1700 staff, $2 billion in assets and 1.9 million members. And the RACV runs a profit of at least $100 million a year. On every count, it is a larger concern than the AFL, which recorded a profit of $26m last year. Yet, with fewer staff and responsibilities, Demetriou is remunerated the same as Jordan.

So, the question is begged: what has Andy D done to deserve the dough?

There is no denying the AFL secured a massive broadcast rights deal in January 2006, far in excess of what they had banked on. But it would be cheeky in the extreme for Demetriou and his team to claim credit for that.

Like an auctioneer mediating in the bidding between two people whose hearts are set on buying the same single-fronted terrace in North Carlton or Paddington, Demetriou happened to be in the right place at the right time as two of Australia’s richest men, Kerry Packer and Kerry Stokes, ramped up their own private power play to the tune of $780 million.

That much was revealed by James Packer in the weeks after his father’s death. Packer said that the Nine Network’s AFL bid was as much about making his rivals at Channels Seven and Ten pay top dollar as it was about ensuring his own network snared the lucrative deal. ’’If you get it, it’s OK and if the other guy gets it, you know, it’s going to be hopefully causing a bout of indigestion,’’ Packer jnr said.

All the performance indicators by which Demetriou’s job is judged – crowds, revenue, profitability, junior participation and so on – are up. So, within those narrow parameters, he can be considered to have done his job well.

But what about the intangibles, such as the League’s image? On Demetriou’s watch in the past two years, the AFL brand has taken a battering. The league watched helplessly as the Ben Cousins drug crisis unfolded before it, one PR disaster after another that went unchecked for months. Demetriou’s close links with those in power at West Coast did not help the perception that he was cutting the club too much slack.

The AFL also took a hammering from the former federal government, media pundits and many people within the game for its controversial three-strikes illicit drugs policy. And, after the most unsubtle and ham-fisted attempts at "persuasion", Demetriou failed to convince the Kangaroos to relocate to the Gold Coast despite a $100 million offer.

So it hasn’t been all beer and skittles for Team AFL. Perhaps fortunately for Demetriou, there’s no KPI dealing with the game’s image and the public’s perception of those running the game.

It is believed Demetriou wanted to be better remunerated than his one-time right-hand man, Ben Buckley, who was enticed to head Football Federation Australia on about $1.2 million a year. And in explaining Demetriou’s pay rise, which included bonuses, Commission chairman Mike Fitzpatrick said the AFL had decided to increase wages for key executives in order to stop poaching from other sports. Well that’s an argument that can be used to justify any pay hike, and is impossible to disprove. Was Demetriou awarded an 80% pay rise, and a $1.4 million salary, because he deserved it or just because the league wanted to deter any would-be suitors?

The AFL chief executive’s new deal was determined by the remuneration committee, comprising Fitzpatrick, Sam Mostyn and Bob Hammond. In 2006, the committee included the late Ron Evans, the then AFL chairman and well-known Demetriou supporter.

Demetriou said people would make their own mind up about the near-doubling of his salary in two years. At the moment the jury is out. Soon enough, though, they’ll come back with a verdict: that the game is succeeding because of Demetriou, or in spite of him.

[RustyCage]

Considering the saleries that some CEOs of major national corporations get, $1.4m is extremely low.

As much as Im not a huge fan of the guy, you cant have players earning more than the CEO of the whole shebang.

[smac]

Yep, to only pick one CEO to compare to is a little poor on the research side of things. I think the job is worth that much to the right person. Am a little unsure if AD is the right person though. A real set of performance measures wouldn't go astray - public perception and brand image are 2 things that can quite easily be measured nowadays, he should be accountable to those results as well.

He is after all in charge of the organisation that is responsible for the game as a whole.

[NFC]

Andy D is the worst thing that happened to this game. So no is my answer.

[Psyber]

I think CEO salaries are obscene. Err. Unless someone offers me one.
I'll do AD's job for 50% of what he gets - are you listening AFL??

[Hondo]

PAFC1870 is OTM. Average CEO pay in Australia is around $1.4m .... that's average so obviously some much higher some lower.

So AD is earning average CEO pay .... whether you have in principle issues with it actually doesn't matter because the market will pay what it will pay. It's nothing to do with CPI. Talk to an engineer and ask him how much his pay has gone up since 2005. Demand and supply ...

If the AFL offered $700K again we would have far more problems than we think are happening now because of the standard of person we'd end up with.

We also need to appreciate that the resources boom is taking up a lot of executive talent (mostly moving West) so you have to keep the pay up with the market otherwise we'd end up with squat. If we had to replace AD we'd definitely pay the same and very likely more.

[Q.]

http://www.thepowerindex.com.au/melbourne/andrew-demetriou

Perched at the top of the biggest game in Australia's most sports mad city, the chief of the AFL is always going to demand fealty.

But over the last 12 months, Andrew Demetriou, the North Melbourne wingman turned fake teeth manufacturer turned $2.2 million salary man, has achieved something approaching full-spectrum control.

On the surface, his fiefdom may appear limited -- he does, after all, operate inside a billion dollar bubble of athletes and egos -- but his impact extends well beyond the league's boundary line.

Not only is AFL the spectator sport of choice for 600,000 rabid club members, it's also the default entertainment option for millions more who choose to spend their Saturday nights soaking up ads in front of the plasma. And there's the cultural straitjacket imposed on Melburnians forced to pick a team to fit in. No wonder Demetriou took out the No. 1 spot in our 2011 sports list.

In a telling interview in August, Demetriou, who in the words of good friend Red Symons "is the AFL", admitted what critics have been bleating for years: "We are trying to control as much as we can control..."

And the tin pot strategy's paying serious dividends.

Last year, the league's media went nuclear when Demetriou inked a $1.25 billion five year TV rights deal with Foxtel and Seven. Record revenue of $335.8 million (in 2003 upon Demetriou's ascension it was $171 million) more than offset a slight decline in attendances. The other codes aren't within cooee -- the NRL is half that, and the A-League barely registers.

Ground zero is AFL corporate headquarters in the Docklands. There, 11 henchmen are paid at least half-a-million dollars each -- their salaries alone would single-handedly wipe out the debt of the league's two most imperilled Victorian clubs -- to control a league meant to be run by a 9-person elected commission. Instead, a hulking 300-strong bureaucracy serves just 800 players.

Former St Kilda coach Grant Thomas is scathing of the man angrily labelled a "control freak" by retired Hawthorn President Jeff Kennett:

"He's allowed to run away with gay abandon and do what he wants whenever he wants and he's answerable to no one .... the issue now is that the Commission is completely toothless," he says.

And just as Demetriou's cabal locks down the cash in the form of a "future fund", they're also about to seize control of the message -- in 2012 the league will start to roll out a total of $140 million to crank up its own propaganda arm, AFL Media.

Two journalists, The Age's Caroline Wilson and The Australian's Patrick Smith, are said to have a direct line into Demetriou's office. The others, excepting some notable warriors like Rohan Connolly and interstate scribes with nothing to lose, play, according to insiders, the courtier role. (Demetriou has twice declined an interview request from The Power Index).

In a rare attack in the Daily Telegraph in August, Rebecca Wilson noted damningly that the league's media conference room is named after a still-serving journalist -- the Herald Sun's Mike Sheahan.

One spin doctor, who declined to be named for fear of retribution, told us that "journos will get calls from the league's spinners before they've even written their story saying 'we've heard that you might be taking this angle'. And footy journos are not like political journos, they won't go hard and they'll back off so there's fertile ground".

Meanwhile, the players who create the highlight reels are restless. In the days before Christmas, Demetriou finally agreed, after months of tense negotiations, to a new $1 billion player wages deal. AFL Players Association chief Matt Finnis was not available to tell The Power Index how it went down.

But another participant was less reluctant, giving a direct insight into how the AFL does business. In short, the League stands over its target until they get the message across, even after the deal's been done:

"So they do the CBA [collective bargaining agreement], but Demetriou was absolutely filthy about this three year review clause [to take stock if the league stumbles across more money] ... the AFL and the AFLPA did a joint press conference and said 'good deal for the AFL, good deal for the players'. But then a few weeks later the AFL was going around town, telling the football industry not to believe anything they read about this being a good deal for players', gloating about all the ways the AFL had smashed the players."

Veteran Age scribe Connolly admits the league has power, but says Demetriou's results speak for themselves.

"The clubs' survival is now at least guaranteed. They've got a special distribution fund that about five clubs rely on, their broadcasting agreement's a real cash cow. There's not going to be any more Fitzroys ... I think they've really kind of enshrined the socialist principles if you like."

He remembers one Demetriou power play fondly: "Christopher Pyne and George Brandis marched into the AFL in 2007 trying to whip up hysteria on the [allegedly weak, three strikes] drugs code and he basically told them to **** right off. And was right -- Pyne's criticism of the drugs code was way off the mark."

ABC 774 host Symons also has a favourite Demetriou anecdote involving broadcast negotiations with the late Kerry Packer: "at once stage in the conversation/negotiation, Kerry said to him: 'that's the second time you've said 'no' to me, son.'" Demetriou, perhaps taking cues from Ita Buttrose, ploughed on unperturbed.

Former federal Wills MP and recent West Coburg under-18s premiership coach Phil Cleary salutes Demetriou's policy nous, admitting he played a "civilising" role in softening the game's attitude to women.

But he doesn't hold back when describing the elite league's impact on the grassroots communities that sustain it.

"Volunteers and supporters hold up the football world and it's disgraceful how they're treated. The AFL has a strategy -- they have their Auskick, their elite under-16s, their elite under-18s -- and the rest can basically get ******."

When asked whether the league's executive salaries should be diverted (the league claims to be "investing in the heartland"), the VFA legend is unequivocal.

"******* oath, no question whatsoever ... money needs to be diverted, millions need to be diverted to look after the local football community. The facilities at junior level are shithouse. You're fighting all the time with councils to provide better facilities and the AFL should step in."

Those struggles will be fought after Demetriou, 50, is long gone. In October 2007, The Bulletin ran a story claiming he was about to depart the AFL to live semi-permanently in his holiday home in Lake Como, Italy. The story was vigorously denied, but there are again signs his enthusiasm could be waning.

The player wages insider takes up the story:

"He did this thing where he visited Collingwood and gave a presentation and said 'this is the reason that the deal is good for players and you shouldn't listen to your union because you're getting an awesome deal'. But then he went up to two players afterwards and basically said 'I'm so sick of this, I want this to be over' ... with just this kind of shitty weariness.

"If you were the top of your game and you were enjoying your job, you wouldn't be saying that."

When The Power Index put this specifically to AFL media manager Patrick Keane, he declined to comment. "We'll let your story run," he said. "It sounds like we've heard a lot of this stuff before".

But even after he handpasses the baton, Demetriou's AFL squirrel grip won't be easy to shake.

[Gingernuts]

Very interesting read Q.

[Psyber]

Considering the saleries that some CEOs of major national corporations get, $1.4m is extremely low.
As much as Im not a huge fan of the guy, you cant have players earning more than the CEO of the whole shebang.

I'd say all the others are extremely high rather than that his is low, and that the players are way overpaid too...

[Q.]

Considering the saleries that some CEOs of major national corporations get, $1.4m is extremely low.
As much as Im not a huge fan of the guy, you cant have players earning more than the CEO of the whole shebang.

I'd say all the others are extremely high rather than that his is low, and that the players are way overpaid too...

Depends. In reality, they have a very short life-span as a footballer and many make permanent physical sacrifices to do so.

[scoob]

Considering the saleries that some CEOs of major national corporations get, $1.4m is extremely low.
As much as Im not a huge fan of the guy, you cant have players earning more than the CEO of the whole shebang.

I'd say all the others are extremely high rather than that his is low, and that the players are way overpaid too...

Depends. In reality, they have a very short life-span as a footballer and many make permanent physical sacrifices to do so.

On the flip side they get paid quite well considering they have little or no formal education - not to mention the doors that open up to ex-footballers that don't usually get opened.

[overloaded]

what a load of carp