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Australians view sports in much the same way people from the rest of the world might view religion, except sports is much more important. The MCG (Melbourne Cricket Ground) is as much an Australian icon as the Sydney Opera House, Aussie sportsmen and women are more famous than our writers and actors, and a horse race once a year stops the nation and is, in fact, a holiday in some places. Here is a brief array of sports that the humble Aussie plays or barracks for. (Oh, "barrack" means "support": Aussies don't use the term "root for")
The Australian cricket team is among the best in the world, and brings us such names as Shane Warne, Alan Border, and, of course, Sir Donald Bradman, who is so much of an Aussie icon that The Chaser once suggested (tongue in cheek) he should be Australia's first official saint. Cricket on Channel Nine is just as iconic, with generations of Australians growing up with summers filled with test matches voiced by the well-known commentator Richie Benaud. The most important test match in Australian cricket is The Ashes, where the Australian team plays against the English for an urn that symbolically represents the death of English cricket: any time Australia loses it, it's a national tragedy.
The self-proclaimed 'national game' (unless you happen to live in Queensland or New South Wales which about half the population do). Australia has a major league, the AFL, and a couple of minor state-based ones. The AFL Grand Final is one of the most watched sporting events in a given year. Most of what you need to know about it is in the article.
(Colloquially, "League" and "Union", or "League" and "Rugby.")
The most popular sport in Queensland and New South Wales. Well, sports: there's a difference between Rugby League and Rugby Union. The NRL (National Rugby League) involves sixteen teams (ten from NSW, three from QLD, one from the ACT, one from Victoria and one, oddly enough, from New Zealand) and is the highest league in Australia, but the most important matches in any given year are the State of Origin, where two teams, one representing NSW and the other QLD, battle each other thrice a year for absolute glory: they're so popular the matches will be the among the most watched sporting events in an average year even though they're rarely shown outside Queensland and New South Wales. If you want to imagine what it's like, think of the atmosphere of a superbowl, only fought with the hate of a world war between England and Germany and you'll get the idea. It's one of those games that is played at 110% for the entire game. And then played twice more after that.
Here is an example of a League game. The Grand Final of the 2010 Season between the St George Dragons vs the Eastern Suburbs Roosters.
Australia is also the leading team in League, with our fiercest enemy being the the teams from New Zealand and England.
Australia's rugby Union (that's the 15 man game) team is called the Wallabies. Australia has won the Rugby World Cup twice since it's inception in 1987. Every year the Australian, New Zealand and South African teams play in the Tri Nations tournament (similar to the Northern Hemisphere's Six Nations). As a part of this competition is a separate series exclusively between Australia and New Zealand called the Bledisloe Cup.
The closest thing that comes in Union to a classic match is the Bledisloe. Interesting because New Zealand is far better at playing really attractive rugby then we are.
Example of a union game. 
It's football, but not as you know it.
The early history of the game starts around the 1880's, with a number of clubs starting and playing matches between each other. The sport was relatively popular, but in Melbourne especially, a large push lead to a marginalisation of the pitches required, with football clubs being 'locked out' with areas converted into oval AFL/Cricket areas.
The massive multi-ethnic wave of immigrants that came to Australia after World War II brought a lot of soccer fans into the country, who formed their own teams and became devoted followers of the game: this resulted in an expansion of popularity for soccer, but it also resulted in it being dismissed as an "ethnic sport" (often by using the term 'wogball') by Anglo-Australians. And this could be a fair charge -- the National Soccer League, established 1977, was primarily made up of ethnic-based teams (whether Greek, Italian, Serbian etc.)
And so it was up till as recently as 2005. But then several things happened which has caused the popularity of the sport to expand and diversify rapidly: first, the NSL crumbled in 2004 partly due to Executive Meddling and being Screwed by the Network, and was replaced the following year by the A-League, which has a strict policy against ethnic teams and consisted of teams evenly spaced around the country, limited (initially) to one team per city; second, the Aussie national team (the Socceroos) reached the round of 16 in the 2006 FIFA World Cup, generating greater interest as a point of national pride. This has added up to soccer starting to become popular in mainstream Australia. It's even *gasp* being called football in some media. Yet somehow, the A-League still isn't broadcast on free-to-air television.
Football followers generally get split up into 2 sects, with one of them split again into two. Local supporters are the first, and they are split into "Old Soccer" and "New Football", named as the NSL era organisation was called Soccer Australia, whilst the A-League organisation was renamed to Football Federation Australia.
- Old Soccer are adherent followers of the ethnic-based teams who now play in the second tier state leagues. They are generally disdainful of broadbased non-ethnic clubs and the standard of the league. The worst kind generally wish the A-League to fold completely.
- New Football are people who started following football around 2005 (often as a consequence of following the game through the 2006 World Cup and the previous World Cup Qualification stage), or have only ever followed an an A-League club, often due to not 'matching' with the ethnic origins of the clubs in their area.
Eurosnobs: This group generally follow a team overseas, usually a big club in England (such as the two Manchester teams, Arsenal, Liverpool, Chelsea), Spain (Real Madrid or Barcelona) or Italy (The Milan teams or Juventus), but some follow teams in Germany, Scotland, France or other more minor leagues. Due to the nature of the broadcasting, matches are aired from 10pm up to the early morning depending on daylight savings time being in or out. They are so named because a eurosnob is derisive about Australian football completely, refusing to watch Australian matches due to a perceived lack of quality compared to the European nation based leagues.
Obviously, some people can have aspects of all three. Someone might follow an ethnic based state league team, their local A-League team, as well as their chosen European club. Someone might follow the A-League and a European team. Others might follow their ethnic club, and a club of their ethnicity overseas.
Gridiron (aka American Football)
Yeah, we don't play that here. It takes too long for a game where each play might last 10 seconds, and includes way too much padding. Maybe you'll get to see the Superbowl on SBS, if you're lucky. (There are some amateur leagues, proving that while Aussies do have particular favourites, we're mad about any sport.) Snarkyness aside, since Network Ten launched Ten HD, the NFL is starting to get a bit of coverage in Australia. When Ten launched One HD, there is even more coverage. It's not much, but it's there.
Ah, netball. Even though Australians are one of the best at this game, it has high turnout to its matches and some of its players are celebrities, for years the major networks wouldn't touch the broadcast rights with a ten foot pole. Maybe because it's a girls sport. For those of you who don't know, netball is kinda like basketball, only more restrictive: players can't move with the ball, players can only be in certain areas of the court (e.g. goal scorers can only be in the third of the court closest to the ring), and you don't get a back board. Despite this refined nature, Netball is one of the most brutal sports in the world, causing numerous injuries amongst athletic women, and one of the few sports to require a fingernail sharpness test before play. Although men's netball is common at amateur level, it's almost always played with women's teams, so some morons just say it's girlified basketball. In 2008, Australia and New Zealand started the (semi-pro) ANZ Championship as the highest-level competition, and pay TV provider Fox Sports and Free To Air's ONE HD is showing the matches, so it will soon get the recognition it deserves.
- Oh come on. Guys only watch it for the short skirts.
- Making them different from women watching the footy exactly how? (Have you seen a pair of AFL shorts?)
Basketball became very popular in the early '90s, with the local National Basketball League screening on prime-time TV and Michael Jordan being named as young Australians' favourite sportsman (to the alarm of some older people who didn't like the fact that an American got top spot). With Jordan's retirement, it declined in popularity, and the NBL teams in Brisbane and Sydney folded, leaving the league without teams in two of Australia's three largest cities. It still enjoys considerable popularity at the grassroots level, though.
- Hold the phone, Sydney are back now. The Violet Crumbles live again!
Australians have been to every single Olympics, won a medal at every Olympics, but, most importantly, we have ruled the pool. Because most Australians live close to the coast, Australians have an affinity with the water, and also swimming. In fact, freestyle's official name is "Australian crawl" - we invented it. (Or nicked it off one of the smaller Pacific Islands and then introduced it to the rest of the world; the historical record is foggy on this one.) Well known and successful Aussies in the pool include Dawn Fraser, Kieren Perkins, and the golden boy of Sydney 2000 Ian Thorpe (a.k.a. "the Thorpedo").
The Australian Open, one of the four Grand Slam tournaments, is the biggest tennis competition held in Australia, but a few minor ones are held each year. Australia has created a number of great tennis players, with the most recent one being the extremely cocky Lleyton Hewitt.
The Melbourne Cup is the race that stops a nation: held on the first Tuesday of every November, this is the highest competition of horse racing in Australia, but is also a major event associated with the fashion off the track, as the public often dress extravagantly, often with "fascinating" hats. There are similar events held in each state throughout the year. Famous Australian racehorses include Phar Lap, and Makybe Diva, the latter of which won the Melbourne Cup three years in a row.
In his autobiography, Murray Walker mentioned that touring car racing is basically a religion in Australia – with the caveat that our touring cars aren’t the delicate, high-revving 4-cylinder jobs Europeans associate with the term "touring cars", but big, heavy, angry, low-revving V8s that frighten old ladies and generally make blokes talk like Tim Allen. We call these beasts the V8 Supercars, shorthand for "is a taxi faster than a police cruiser?"
The Spiritual Successor to the old Australian Touring Car Championship, the series is realistically just NASCAR with road circuits instead of roundabouts, though it has overcome its reputation as a sport for knuckle-draggers and is actually reasonably exciting and fun to watch. Since Australia is a land of two choices, the V8s come in either red (Holden) or blue (Ford), and your allegiance to one or the other is expected to be absolute and uncompromising. Mention that your favourite brand is BMW, for example, and you’ll be thought of as a wanker at best, and a traitor to your country at worst. Wistful recollections about ‘Godzilla’ (the Nissan Skyline R32), however, are acceptable - doubly so, since the announcement that Nissan will once again field entrants in the championship from the 2013 season!
These days the V8s’ blue ribbon events are the Clipsal 500 (held on a shortened version of the old Adelaide Grand Prix circuit), the Sandown 500 (Bathurst's "little brother" since it shares the 161 lap-count) and the Bathurst 1000 (which is basically a religious holiday). In the mad old days, the crowd made Bathurst a dangerous place to be when the race was on, with car burnings, epic boozing and even the odd lost limb considered par for the course. In recent years the culture has changed and now it’s become much more family-friendly, so you can take your kids to watch the great race in the knowledge that the worst damage they’ll suffer is a bit of sunburn and an expanded vocabulary. That said, the fans still thought their throats had been cut when the new "one-slab-per-day" alcohol restriction was announced in 2008 (it says a lot about this country that 24 full-strength beers a day counts as a restriction).
Australia also features a much smaller, hardcore group of fanatically dedicated Formula 1 fans. These are generally the only kind Formula 1 gets in Australia, as thanks to time zones watching a Grand Prix usually involves freezing to death in front of the telly at 11 o’clock on a winter’s night. North and South American rounds are even worse, usually starting at 3am (whingeing Poms are advised to remember this next time they ask Bernie to shift our Grand Prix to a better timeslot). In The Eighties the Australian Grand Prix was run in Adelaide, until it was realised that views of Adelaide were putting the drivers to sleep at the wheel. Since then, it's been held in Melbourne, which is perfect because as the coffee and culture capital of Australia, Melbourne suits Formula 1 like a pretentious but still exquisitely cut suit. Adelaideans are still sore about it.
Less dedicated Aussies are generally only aware of Ferrari, because it's Ferrari and Australia has a large Italian population, and Mark Webber, because he is now winning. And not before time. Now Daniel Ricciardo is set to join Toro Rosso for 2012, there will be two Aussies on the grid for the first time in... probably ever. Since he's from Perth, though, it might not count.
Until recently, Surfer’s Paradise also hosted an annual Indycar round, but inabilities to fit it in with the re-unified series’ schedule means the event has now been dropped. Most Aussies haven’t noticed, however, as the V8s always drew 99% of the crowd anyway. We also host Moto GP, World Superbike and and have our own Formula 3 series, but these are all fringe sports at best. In an odd twist of fate, the Aussie drag racing scene has gained a boost ever since the U.S. shortened its drag strips in the name of safety. Since Australia's drag strips are much younger, they don't suffer the same safety concerns and retain their full quarter-mile length, making them the fastest drag strips... in the world.
Australia was one of the first countries after America to take part in the roller derby revival. While the extreme expense involved in transporting a team from Australia to anywhere else means there've only been a few international bouts, there have been several interstate games. While official rankings are hard to find, the Queensland derby leagues, especially the Sun State Roller Girls and the Northern Brisbane Rollers, have a well-deserved reputation for being the "bad girls" of the sport. The Great Southern Slam, the first tournament in the southern hemisphere (and featuring nearly every team in the southern hemisphere) had Victorian Roller Derby League come out on top, with Sun State in second (and the aforementioned NBR in fourth.)
Being an island nation with most of the population living on the coast, a relatively large percentage of Australians own a boat of some description, and many participate in sailing as a social and family event. Australians have been known to participate in the America's Cup, and have their own annual Sydney-to-Hobart yacht race.
Although these are the most popular sports in Australia, in general Aussies follow and play in nearly every sport under the sun. Oh, and we place a lot of bets, too. Most of these sports (excluding Aussie XI cricket, V8s and Rugby, which are on other channels, and roller derby, which isn't televised at all,) are all on Network Ten's Sport's channel, ONE HD.
Because of Australia's proximity to the coast, Surf Lifesaving has been a national institution for the past century. These culminate in events that use SLS rules in competitive races. The most popular is the Iron Man competition (Not to be confused with the international Triathlon series). Consisting of a Surf Ski (boat) leg, surf swimming leg, paddle board leg, and running leg. It's main event is the Coolangatta Gold: considered one of the premier Water events in Australia, with Volunteer lifesavers from all around Australia competing. Caused some controversy in 2010/2011 when a young competitor was struck by an airbourne Surf Ski and subsequently drowned. Officials spent the better part of an hour looking for him, While completely ignoring the advice of some 1000 fully-trained Lifesavers forced to stay on the beach.
Of course, where there's surf lifesaving, there's surfing, which has enjoyed massive popularity here since at least the 1960s. During the 70s, Nat Young actually tried to register surfing as a religion. Australia has produced several surfing world champions, and Bells Beach near Torquay, Victoria is one of the world's most famous surf locations. The surf industry is quite well-established in Australia, with a number of surfwear retailers based in Australia such as SurfStitch stocking Australian surfwear brands (such as RipCurl & Billabong), providing partnerships with surfers, promoting surf culture, and there is also a surf app for looking up surf cams, reports and forecasts.