The ARU system works like this:
Club players earn diddly squat. If they get a S14 contract from the Reds/Brumbies. Force or Tards then they start to earn a little bit. Small amounts for younger players etc.
The most a single S14 franchise is allowed to pay their players is $150K. The rest is either from third party payments or if the player is deemed to be worthy of an ARU contract. I think there are about 50 or so players on ARU contracts, but I could be wrong (I think cricket there are only 30 or so on ACA contracts).
The plus side is that the ARU can entice players to stay. The downside, which has been touched upon in this thread, is that players who are good enough to earn a S14 contract but not good enough to get an ARU one will look elsewhere for money. This is the main reason that there are nearly as many Aussie RU players playing over in Europe and Japan as there are players playing in Australia on S14 contracts.
Why would you stay and play footy on $150K with only a small chance of getting an ARU contract when you can go O/S and earn 3 times that?
I think its the wrong way to go for the NRL. Keep the salary cap...maybe raise it...but include third party payments that aren't included in the salary cap so the elite players can earn what they are entitled to.
I reckon the NRL is getting a pretty f**king good deal out of its star players...