Almanac Economics: The politics and economics of the Tassie Devils
By Tim Harcourt*
South Australian Premier Peter Malinauskas is on a roll. First the Australian Football League (AFL) Gather Round, then the LIV Golf and now the beach volleyball world championships. He is making Adelaide the sports capital of Australia through force of personality and some impressive sports infrastructure built by his predecessors, notably Mike Rann and Jay Weatherill.
By contrast, Tasmanian Premier Jeremy Rockliff cannot take a trick. Just a few weeks ago, he was celebrating his triumph of getting the AFL to award Tasmania the League’s nineteenth licence, after a marathon campaign of over three decades. Likely to be called the Tassie Devils (barring a copyright case with Warner Brothers), the new club will field men’s and women’s teams based out of Hobart and playing four matches a year in Launceston and pre-season around the state.
However, Premier Rockliff has now hit a political landmine, as a condition of the new team was that Tasmania would build multipurpose stadium in a new arts entertainment and sports precinct at Macquarie Point on the Hobart waterfront. The precinct is opposed by the Greens, Tasmania Labor and some independents, so with no precinct, there will be no team, and Tassie could lose its chance at the AFL big time after years of campaigning. This would be a huge body-blow to the confidence of Tasmanians, who have had to suffer the indignity of being a foundation ‘heartland’ Aussie Rules state without a team, watching expansion teams like the Gold Coast Suns and the Greater Western Sydney Giants jump ahead of them in the queue.
The Tasmanian stadium saga has dominated Tasmanian politics and made national headlines. Why would an AFL team, and where they play, literally become a political football?
One reason is the high profile sport has. Sport is also intrinsically connected with national prestige and popularity. That is why leaders, whether democratically elected or autocrats, always want to host an Olympics or a World Cup mega event. Look at Russia’s Vladimir Putin hosting the Winter Olympics in Sochi or the soccer (association football) World Cup, or China’s Xi Jinping hosting the Winter Olympics just last year, it matters even if they don’t need the votes.
In addition, in democracies, sport is also what drives the state premiers in our own country to go all out chasing major events and wanting a home team to barrack for. In Australia, Sir Robert Menzies as Prime Minister loved Carlton and the cricket, Bob Hawke loved every sport imaginable, Anthony Albanese loves his South Sydney Rabbitohs and getting on the beers at the tennis. Malinauskas’s acquisitions for South Australia are reminiscent of what his predecessor John Bannon did with the Formula 1 Grand Prix (before Jeff Kennett pinched it for Victoria). In addition, of course that is why Tasmania Premier Jeremy Rockcliff is going all out for an AFL team and stadium, building on the hard graft of his predecessor Peter Gutwein.
And then there’s economics of it (which are ultimately part of the politics).
Politicians (at federal, state and local level) are prepared to undertake significant investment to attract a team and/or a special event. It (usually) reflects well on them. But in the case of Tasmania’s Jeremy Rockliff, he has come under fire for the cost of the new precinct at Hobart’s Macquarie Point which would include a new stadium for the Tassie Devils, the AFL’s new team destined to join the competition in 2028. It has led to him losing his majority in the lower house with two Liberals going independent and now needing special legislation to pass both houses.
This controversy has occurred because Rockliff pledged $375 million from the Tasmanian government to build the precinct, which is just half the cost of the $715 million price tag. However, Anthony Albanese also pledged $240 million from the Commonwealth (plus $65 million for an upgrade to Launceston). Furthermore, the AFL pledged an overall $360 million ‘package’ to the Tasmanian football in general including upgrades to ovals around the state, an AFL and AFLW academy, high performance centre, junior and community development programs as well as a contribution to the precinct.
But does it really cost a lot? Compared to health, for instance around one third of Tasmania’s budget is already devoted to health, so on average, $7.3 million is spent every day on health. The cost of the stadium/precinct is equivalent to around a two to three month spend on the health budget.
Furthermore, there are knock-on benefits from the new precinct in terms of extra economic activity – $2.2billion over 25 years – 6,270 new jobs and with a potential boost to tourism of around 123,500 international and interstate visitors, plus intra-state visitors coming to Devils games from around Tasmania. Also, compared to the $3.4 billion Queensland is getting for stadium upgrades for the Gabba and other facilities for the Brisbane Olympics in 2032, the Commonwealth’s $240 million is relatively cheap. This is especially the case when you consider this sets up the Tassie Devils for the rest of the century, whilst the Olympics are held for two weeks, with the Paralympics for two as well. Generally, the precinct in Tasmania is cheaper than the stadiums built in the USA for NFL teams and in Europe for soccer, where the cheapest top US$1 billion ($AUD 1.5 billion) and are paid for often by Municipal Government.
In some ways, building a new precinct and stadium is like building a new bridge. Because of the huge initial outlay, it can only be done by government, as the returns are public and cannot be totally captured commercially. No private sector could make a return on it not could a sporting organisation. It is like the AFL itself, it is a public good. For example, the AFLW also was established for social benefits, as it has helped raised female participation in footy. And over time, wages will improve, as will standards and revenues. Having a team in Tasmania is a significant social investment, and it is important to maximise the benefits of having a world-class art, sports and entertainment precinct by looking at its creative and community potential in addition to the excitement of the Tassie Devils in the AFL.
On the politics of it, it’s high stakes. If the precinct-stadium is blocked by the Parliament, Tasmania will lose its AFL team forever. The Tassie Devils will be stillborn and the stadium opponents, whether it be the Greens, the Independents or Tasmanian Labor (especially given Albanese’s $240 million support to the Tassie Devils) will likely get the blame for the next 50 years.
It just shows the power of sport in today’s global economy and how Tasmania got the deal of the century by Albanese and the AFL. After all, there’s the investment of $305 million from the Commonwealth, ($240 million for the Hobart precinct plus $65 million for the Launceston upgrade), $375 million from the State governments plus $360 million from the AFL for a community package. Taken all together this makes the Tassie Devils a pretty well resourced start-up club to run onto the field in 2028.
However, there is a final political twist. There is an opportunity for the pro-sport, pro-precinct popular Labor MP in exile David O’Byrne, to galvanise support for the precinct to save the team and make a political comeback. Like SA Premier Peter Malinauskas, O’Byrne is active in community sport and has a good feel for the electorate. He is close to Albanese and Malinauskas and could end up Tasmanian ALP leader again if he saves the precinct and with it the Tasmanian Devils.
*Tim Harcourt is Industry Professor and Chief Economist at IPPG at University of Technology Sydney (UTS) and host of The Airport Economist www.theairporteconomist.com and Footynomics – The Economics of Sport www.footynomics.com.au
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Agree with your general thesis Tim. Sport is definitely an investment in a social good particularly with women’s participation now growing strongly. Listening to Mike Clayton talk about the 7 Mile Beach golf development opening next year close to Hobart Airport. Between King Island, Barnbougle on the north coast and now 7MB – Tasmania has the 4 best premium golf resorts and courses in Australia – all with strong international appeal – at modest prices by international standards. Add sport to wine, food, MONA and the beautiful environment and Tasmanian tourism is a long term economic winner.
While the AFL/Fed funding is a good deal for Tasmania I don’t remotely trust the cost estimates. Optus stadium was 100% WA government funded (minerals royalties) but the initial estimated $700M became $1.8B when it was finished including the public transport infrastructure. Which partner is at risk for the inevitable cost blowouts?
Greens, Labor and Independents are undoubtedly playing parochial short term politics by opposing the project. Arguing that the money should be used for public housing. But the solution to housing availability is a national tax and inter-generational wealth problem – not something fixed with a one off local cash injection. Still given how the Tassie Libs played parochial politics to marshal Federal Hotels monopoly pokies and casino money to bury Labor at the 2018 state election – I don’t mind the boot being on the other foot.
Final note of caution about “big event” sporting windfalls. Winds can easily become storms that blow your house down. Following the LIV/PGA Tour merger I think Malinauskas may be stuck with a white elephant.
Thanks Tim.
A great summary and insight into the issue.
Interestingly, the Oakland As baseball team move to Las Vegas has been stymied by a non-vote for public funding for the ball park by Clark County.
More pushbacks to come Tim?
Thanks for your article Tim and the data within. I’m a mainlander so it’s risky to comment on Tassie politics/economics and “what’s good for them”, BUT, to my simplified understanding:
1. Having a team in the AFL will be a massive positive for Tasmania in perpetuity.
2. Not having one now that it has been finally been made possible, will be a backwards step of huge proportions.
3. A roofed, new stadium will be a benefit to sport, art/music and events well beyond the scope of football.
4. The cost (which admittedly is likely to blow out as RR says) is relatively low and being underwritten/co-funded by feds and the AFL. Tassie won’t get a better or more affordable deal, ever.
5. The boost through tourism will be on-going. The city of Geelong is reputed to benefit financially to the tune of $1m for every Geelong home game/win. Optus Stadium in Perth is already paying for itself with extra events- a Grand Final, State of Origin. Tassie can expect similar benefits and boosts (though probably not a GF).
6. Big infrastructure is expensive because it is BIG, and because it has big benefits to the whole community. Imagine Sydney without a Harbour Bridge, Melbourne without an MCG or West Gate Bridge and soon to be tunnel. Imagine London without the Tube or NY without the subway. These all cost millions/billions, but all are of immeasurable value, now, in the past and into the future.
I really, really hope to see The Tassie Devils playing in a fantastic stadium in Hobart in 5 years time.