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$7 Million Salary Cap?

docbrown

Coach
Messages
11,842
Warning: it is a Daily Telegraph article by Phil Rothfield

http://www.dailytelegraph.com.au/sp...hits-the-jackpot/story-e6frexnr-1226052850747

Rugby league hits the jackpot


  • Exclusive by Phil Rothfield Sports Editor-at-large
  • From: The Daily Telegraph
  • May 10, 2011 12:00AM
THE exodus of stars from the NRL will become history under a new television rights deal that will lift the salary cap to $7 million for the 2013 season and provide minimum $100,000 pay-rises to senior players.

At least 80 new "jobs" will be created for stars who have been lost to the English Super League and rival codes in recent seasons under the plan which will also double the NRL's annual grant to the clubs from $3.65 million to $7.5 million. The bonanza will ensure league never loses players of the calibre of our list opposite again.


The money from the soon-to-be-negotiated TV deal, worth an estimated $1 billion over five years, will allow clubs to increase their current 25-man NRL rosters to 30 to address the serious issue of player burnout in a season crammed with 26 rounds, finals, Origin, Tests and City Country.
The Daily Telegraph's analysis is a result of an investigation involving discussions with NRL management, club chief executives, coaches and player managers.


For the first time in the game's history, the grant to the clubs will be higher than the salary cap and should ensure the long-term survival of all 16 clubs. Likely expansion into Perth, Central Coast or Brisbane would not impact on the handouts to the clubs because of extra television revenue that would be generated from an additional game every weekend.
Even with the huge club grants and the player payment windfall, the NRL would have enough money left over to build a war chest of up to $20 million a year for the game's future development.


This would at least put the game in a position to hold their ground in heartland areas and fight AFL's push into the Gold Coast and western Sydney.
Even with the $20 million put away for a future fighting fund, it would still leave the NRL with $60 million a year for operating costs - a substantial improvement on its current budget.


Further costs will be saved from a streamlined organisation that removes duplication of administration under the current NRL, ARL, NSWRL, QRL and CRL arrangements.
The bold new plans to future-proof rugby league for the next generation will debated and dissected in finer detail once the new independent commission is up and running - hopefully by this year's finals series. Players agents across the game are now instructing or advising their stars to hold back on signing long-term deals because of the expected windfall that will come with the 2013 salary cap.


Not all the cash from the new television agreement will go to the superstar players like Greg Inglis, Johnathan Thurston, Billy Slater and co.
But efforts will be made to entice recent code-switchers back to the fold.
The players' own union is pushing for - and is expected to achieve - an increase from the current minimum wage of $55,000 to $70,000. Having to pay salaries for five extra players in bumped 30-man squads will also soak up some of the difference from the current $4.3 million cap.


"First of all we've got to do the television deal," said NRL spokesman John Brady, "after that there will some robust debate involving many parties to ensure players, clubs and fans get the best outcome."
Even financially struggling clubs like Penrith, Cronulla and the Titans would be capable of surviving and matching it with the premiership heavyweights under the new grants and salary cap.
 

Perth Red

Post Whore
Messages
73,762
I think $6mill by 2015 is probably more realistic.

2013 $5mill 2014 $5.5mill 2015 onwards $6mill

Club grant will be $6mill ayear and the savings made in 13&14 used to offset club loans and shortfalls. Providing a decent TV deal of course.
 

Eels Dude

Coach
Messages
19,065
Sounds like an idiot journalist pulling figures out of the air.

But continue to post his crap, then he's going to keep writing it.
 

docbrown

Coach
Messages
11,842
Well his estimates break down like this:

Say 18 clubs x $7.5 million = $135 million per year
Development Funds = $20 million per year
Operating Costs = $60 million per year
= $215 million per year or $1.075 billion direct cash income

I mean not all of that would come directly from the TV deal as there's also other revenue streams.

However with $126 million a year earmarked for 540 professional players (i.e. approx $233,000 on average per player) they'd be able to keep all their talent and even start attracting some from overseas and from other codes.
 

Perth Red

Post Whore
Messages
73,762
what about funding for the ARL? That currently stands at $8mill a year from the NRL and you'd hope it will dramatically increase to offset any future damage to jnr funding from pokie decreased income and rebuild the game in country areas as well as fund much better development in affiliated states. Then you have the Storm funding to add in. That's why i think $6mill a team is probably closer the mark and a significant increase on the current $3.7mill.
 

docbrown

Coach
Messages
11,842
what about funding for the ARL? That currently stands at $8mill a year from the NRL and you'd hope it will dramatically increase to offset any future damage to jnr funding from pokie decreased income and rebuild the game in country areas as well as fund much better development in affiliated states. Then you have the Storm funding to add in. That's why i think $6mill a team is probably closer the mark and a significant increase on the current $3.7mill.

Well as the ARL would no longer exist in its current form, that $8 million would be increased and coming out of the $80 million anticipated for development, promotion and operation.
 

Whos Ya Daddy

First Grade
Messages
5,699
Well his estimates break down like this:

Say 18 clubs x $7.5 million = $135 million per year
Development Funds = $20 million per year
Operating Costs = $60 million per year
= $215 million per year or $1.075 billion direct cash income

I mean not all of that would come directly from the TV deal as there's also other revenue streams.

However with $126 million a year earmarked for 540 professional players (i.e. approx $233,000 on average per player) they'd be able to keep all their talent and even start attracting some from overseas and from other codes.
It's possible I guess.
 

oldmancraigy

Coach
Messages
12,078
Why should the salary cap be LESS than the amount the clubs receive in "TV rights"??

I know Cronulla is Slothfield's team and they're financially a mess --> but why should the other clubs be penalized for Cronulla's "inability to thrive"??

If the grant is $7.5mill, it'd be nice to see a cap of at least $8mill. Surely clubs can scrounge up the extra 500k (and then payments for support staff travel etc) through sponsorship/ gate takings?
 

AlwaysGreen

Post Whore
Messages
51,805
I can't see what raising squad numbers to 30 will do to improve the quality of football played. Unless they introduce a quality 2nd tier competition for those players not required for 1st grade the extra players will be just that, extra players.
 

juro

Bench
Messages
3,850
I think I'll wait until the IC is formed, the TV deal is negotiated, actual decisions are made by people in positions of power before I start getting excited.
 

Frailty

First Grade
Messages
9,593
I think I'll wait until the IC is formed, the TV deal is negotiated, actual decisions are made by people in positions of power before I start getting excited.

Exactly. I want the league to focus on getting the IC formed first. One step at a time.
 

Goddo

Bench
Messages
4,257
Looks to me like he has used $1b as a revenue figure for 16 clubs and worked backwards...

1b/5 years = $200m per year
200m-60m operating costs -20m cash savings = $120m anual club grant
120m/16 clubs = $7.5m per club per year.

Then he has tacked on $15m for an extra game per week with expansion. Its a nice story, but the numbers are plucked out of the air. And I'd be happier if the NRL held onto more of that money and injected it into Junior development, rather than just giving it to the clubs.

Interesting in the AFL with their huge deal, Demetriuou said he wouldn't just give it to clubs to pay off their debt, as the clubs are businesses and have to be run properly, and a cash handout is a waste of money. I'd agree. Just giving money to clubs, especially poorly run clubs like Cronulla to piss away is a waste.
 
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Nightward

Juniors
Messages
874
I wouldn't say struggling, but I know they asked the NRL for a forward payment, and their centre of excellence was well over budget.

Yeah, but those stories evapourated in the end. The Titans were having a cash flow problem- they had the money, but it was tied up in various sources they couldn't access- investments that hadn't reached maturity and so on. At the same time, they had the builder attempting to sue them, and that was also a case that either went nowhere or was settled out of court, can't remember which.

There's a bit of a difference between something on the scale of "Hey dad, can I have $50 to tide me over to pay day? I'll pay you back..." and "Hey dad, I need a lot of money. Again."
 

Goddo

Bench
Messages
4,257
Just using Rothfields calculations - revenue split across 16 teams with $80m in savings/running costs per year would require income from TV/Media deal and Sponsorship of:

$8m club grant - $1,040m over 5 years (+ an extra $80m over 5 years ($1,120m total) for 18 teams)
$7m club grant - $960m over 5 years (+ an extra $70m over 5 years ($1,030m total) for 18 teams)
$6m club grant - $880m over 5 years (+ an extra $60m over 5 years ($940m total) for 18 teams)
$5m club grant - $800m over 5 years (+ an extra $50m over 5 years ($850m total) for 18 teams)
$4m club grant - $720m over 5 years (+ an extra $40m over 5 years ($760m total) for 18 teams)

I think we will peg somewhere around $900-950m with expansion in our next media deal, plus something like $100-150m from sponsorship... so around $1-1.1b total revenue (for comparison, the AFL's would be around $1.4b)

But expenditure across the NRL ($80m per year), NSWRL ($40m per year?), QRL ($40m per year?) and 18 clubs ($900-950m per year).

In that case the club grant is probably more likely to be about $6.5m. I also don't think the 9th game per week will be worth as much as $16m a year. Expansion won't result in a boon for that extra game (which will be more like $8m a year), but has the potential to lift the value of the rounds in general, provided we expand where the broadcasters want more content/national footprint. (ie, locations like Perth, Adelaide, South East Queensland, Welligton)
 
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