NRL to introduce salary cap on off-field spending in 2017

NRL to introduce salary cap on off-field spending in 2017

The NRL will introduce a limit on football club spending next year in the biggest club equalisation measure since the establishment of a salary cap.
The governing body and its clubs are in the process of signing off on a whole-of-game funding agreement that effectively extinguishes any threat of a Super League-style breakaway competition. Rugby League Central has sent all clubs a copy of the memorandum of understanding which, when signed, will become a binding agreement that secures their financial future and holds them to a perpetual license to play in the NRL competition.

It's understood the document - obtained by Fairfax Media - has been signed off by a number of clubs. Others are expected to do likewise to qualify for the promised up-front payment of $1.125 million each in early July, made possible by the record broadcast deal. The clubs stand to earn an additional $100 million from 2018 to 2022, with additional grants totalling 130 per cent of player payments over that period.Head office is keen to ensure its franchises don't squander those funds, while also seeking to create an even playing field by controlling off-field expenditure. To that end, for the first time there will be a ceiling on the amount of money spent on football departments from 2017.The cap will likely apply to the dollars spent on the head coach and his staff, sports science, high-performance units, study trips and other means of achieving an off-field edge. There is a discrepancy of about $10 million between what the richest and poorest clubs spend off the field, with the new cap to bridge the gap.
"The parties will form a working group consisting of both ARLC and NRL club representatives with the express mandate to research and develop a football department cap system by no later than 31 October 2016," the agreement states.
"The terms of reference of this [six-person] working group will include development of the protocols for calculating football department expenses, cap limits and rules, reporting of information, compliance monitoring processes and penalties for non-compliance. An agreed process for capping football department expenses will be incorporated in the New Club Licence."
The AFL introduced an "equalisation tax" two years ago after confirming there is a correlation between football department spending and success on the field. Exactly how it is applied in the NRL remains to be determined, with rigorous debate sure to ensue before a figure is settled upon.
Brisbane and Melbourne are among the biggest-spending clubs off the field, paying head coaches Wayne Bennett and Craig Bellamy seven-figure sums. Wests Tigers, Gold Coast and Newcastle - the clubs that have gone cap-in-hand to the NRL for financial assistance - spend just a fraction of the amount on staff and facilities.
Another contentious issue is the NRL's move to remove ratchet clauses from player contracts. While the clubs and the League are aligned on the issue, the move puts them on a collision course with the Rugby League Players' Association. With the salary cap yet to be set for 2018 and beyond, most star players and their managers are holding off on a decision or asking for pay rises commensurate with any salary cap increases. The RLPA wants ratchet clauses to remain but the MOU states they are to be abolished, with a separate working party to be formed to oversee the drafting of a new collective bargaining agreement with the players.
"As a first step, ARLC and NRL clubs will agree a whole of game position regarding the use of ratchet style clauses in player contracts which they shall jointly and immediately take to the RLPA for approval," the document states.
Another working party will be formed by June 30 to focus on the issue of 'centralised stadia and match placement' for Sydney clubs. It's understood the NRL won't be able to dictate to clubs where to play matches, although several want clarification on the issue before signing off on the agreement.

 

Skimmed through, makes little sense to me.

 

It's going to limit what clubs spend on facilities? That's insane.

 

About time. Makes 0 sense whatsoever to have an on-field cap but no off-field cap.

 

For TPA, sure. For club facilities it makes no sense.

 

Well it does because if you're going to have an on-field cap on the basis of increasing parity between the teams, it doesn't take into account that a rich team such as for example the Broncos, will be able to have state of the art training, recovery, nutrition, coaching facilities and so forth versus teams such as the Tigers who are poor and can't afford these things, or least to the same standard.

Now whether you think that the reason between the teams financial capabilities is because of financial (mis)management or simply put the teams being in fertile vs unsustainable markets, that's one thing, but if the NRL is insistent on keeping teams alive with such disparities in their finances alive, then it's pretty necessary to have an off-field cap as well to maintain parity which is seen by fans as something important.

Melbourne have really been the benchmark team in terms of operation in the league for so long now, especially considering they don't have a junior base to draw from. They've essentially done 2 things which has given them the sustained success.
1) Invest heavily in a core of players that even if it consumes most of their cap, it gives them an unmatched competitive advantage in those positions (Cronk, Smith, Slater)
2) Invest heavily in coaching and off field facilities, who from their expertise can raise the value of the players around that nucleus of stars to a level above their actual monetary worth
Because Melbourne's facilities and coaching are so good (which is spending outside the cap), they can essentially circumvent the cap in the sense that while they might sign a player worth 150k on the market, for a contract worth 150k, the system off the field they have in place is so valuable that they can add an effective value of 50k-100k on each of these guys, so by spending outside the cap off the field, it gives them in effect an artificially higher cap on the field as the player is better than what their contract represents due to the resources that can be dedicated to them.
Other teams will sign a player for 150k, but without being able to pay for facilities and coaching to the level Melbourne does, only sees a return of 150k that they've paid.

 

I'm not saying it's good for the game though, it's obviously detrimental. I've just always thought it seems stupid to have a cap on spending on the field which isn't really ensuring equality because a team can just invest more off the field and take advantage of that means to make their team better.

If it were up to me I'd remove the salary cap altogether rather than introduce this.

 

That's punishing a team for signing a good coach and recruiting well.

 

Marquee signings should come with minimum 5 year contracts, or some kind of clause/rule preventing the player from joining a rival code once the contract is finished.

 

This will send the game backwards.