In the isolated and fictional South Australian fishing town of Prospect Bay, football is the thread that ties two communities together. Gary 'Blacky' Black, Nathan Phillips, and Dumby Red, Luke Carroll, are teenage friends from opposite sides of the tracks. Dumby is the star of the local team and on the verge of becoming the next Aboriginal big-league star. Gary is the bookish son of hard-drinking fisherman Bob Black, Simon Westaway, and he is drawn to Dumby's sister Clarence, Lisa Flanagan. Blacky's supportive mother helps him grow as a player as he is chosen to be the ruckman for the upcoming grand final. On gameday, Blacky initially struggles to make an impact, but Dumby inspires the team, kicking several goals. When Dumby takes a mark near goal with the scores tied, he passes to a teammate instead of shooting. The teammate misses, and Blacky must crash into Thumper, Paul Eadon, to stop the winning goal. The team wins the premiership, but the moment is soured when Dumby is passed over for the best-on-ground medal in favor of coach's son Mark Robertson, Reece Horner. Dumby is furious, feeling the decision is racially biased.
Disgruntled, Dumby and his cousin Pretty, Tony Briggs, attempt to rob the bar where the celebrations were held, hoping to recover the medal. After breaking in, they confront the drunk owner, beat him unconscious, and head to the safe with the key found in his pocket. Bob, waking to find the owner injured, loads a double-barreled shotgun, sneaks up behind Dumby, and fires a shot into the darkness. He discovers he has killed Dumby. Pretty, who has been hiding behind the door, reveals himself by removing his makeshift balaclava. He does not shoot Bob but fires the remaining round into the ceiling and runs away into the night. Bob is questioned by police but is let off on the grounds of self-defence. Blacky is devastated over Dumby's death and angrily tosses his premiership trophy into the ocean. Clarence and Blacky console each other and fall in love. Bob and the family are greeted with hostility and harassed by some local Aboriginal people, which only fuels Bob's violent temper and bigotry.
Clarence sneaks into Blacky's room one night and they make love. The next morning Bob discovers them in bed, beats Blacky, and racially insults Clarence before throwing her out. Fed up with his father, Blacky leaves. He attends Dumby's funeral and later acquires the best-on-ground medal to place in Dumby's casket. Back home he is confronted by Bob and told he is no longer welcome in the house. Blacky stands his ground even as Bob punches him repeatedly, and Bob leaves the family for good. The team dissolves as Aboriginal players stop showing up to train or play. The film ends with Blacky and Clarence jumping into the ocean and swimming away, with Blacky narrating that they will both be leaving soon, as there is nothing left for them in Prospect Bay.
