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.
