As such it will not contest the $85,000 fine imposed on the club for its “technical” breach of the Total Player Payment Rules.
The decision was reached despite legal advice that the ruling would be overturned by the Trade Practice Court on the basis that the AFL’s rules were a restraint of trade.
“Given the significant implications on the competition as a whole, Essendon Football Club wanted to avoid such legal action if possible,” Essendon chairman Graeme McMahon said today.
“It would have been an expensive and protracted legal argument that would not have been in the best interests of the Essendon Football Club or the competition. We do however feel these rules need to be addressed.”
McMahon said that as the club maintained it acted fairly and reasonably in the matter it would be putting a submission to the AFL asking that the rules that led to this charge be amended.
“We would expect such a review should be able to remove the restrictive interpretations that are restraining the commercial endeavours of Essendon Football Club in relation to its website,” McMahon said.
“The rules as they stand were formulated for AFL football at that time and did not take into account the advent of website technology. These rules need to be re-visited and updated accordingly.”
He said the rules change must allow the AFL to permit clubs to reach agreement with its players in commercial situations that are in direct competition with other AFL clubs or the competition.
It was under the current rules that Essendon was found to be in breach.
Essendon Football Club identified its website as integral to its business strategy. In broad terms, this business strategy revolves around the fact that Essendon has in the vicinity of one million supporters Australia-wide. The club wants to access these supporters and turn them into registered customers.
The most cost-effective way for the club to underpin this business strategy is via its own website. The club has therefore opted out of the AFL / Telstra network – it was the only club to take such a decision.
Sports content drives website traffic - and ultimately generates significant erevenue and database acquisitions - provided that content is unique.
To this end, it was of paramount importance that Essendon Football Club secured the rights of its two key players and head coach. This was done to prevent unique Essendon content being provided elsewhere and therefore undermining the club’s business strategy.
Essendon purchased the residual rights of Matthew Lloyd and James Hird, an agreement that ensured they could not provide content in competition with Essendon. The club did not purchase the players’ domain names. The club had legal advice that such a purchase was legitimate.
“We most certainly did not enter into these contracts as part of a deliberate attempt to undermine the salary cap system. I wish to re-iterate that it is the explicit instruction of the board that the TPP rules not be knowingly breached under any circumstances,” McMahon said.
“These agreements were entered into with the sole purpose of implementing this club’s business strategy in a highly competitive commercial environment. These agreements were the core element of this publicly declared strategy which saw us operating and controlling our club’s website.”
“I again re-iterate that the rules relating to these matters must be changed to allow the club to use its major assets in such commercial arrangements without compromising the salary cap – the fundamentals of which this club is most supportive.”
