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ROOSTERS CHALLENGE SALARY CAP
December 21, 2003
GRAND finalists Sydney Roosters have threatened to sue the National Rugby League over the salary cap, arguing that it breaches national competition laws.
In a letter sent to the NRL two weeks ago and obtained by The Sunday Telegraph, lawyers acting for the Roosters say the team will be forced to take legal action in the Federal Court if the NRL fails to increase the salary cap for 2005.
If successful, the legal action could end the $3.25 million salary cap, threatening the viability of struggling smaller clubs. The cap
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limits how much clubs can pay their top 25 players.
It is championed by the NRL as a means of providing a better competition by ensuring less successful clubs are able to hire top-drawer players.
The letter, drafted by Sydney law firm Teakle Ormsby Conn, was prompted by a decision not to increase the cap in 2005. It was sent to NRL chief executive David Gallop on December 11.
"We have formed the view that the Sydney Roosters have a cause of action under Section 45 and Section 46 of the Trade Practices Act, together with a common law action for restraint of trade," the letter says.
"We are instructed that over the past few months, you have indicated to our chairman (Nick Politis) that there will be an increase in the salary cap for the 2005 playing season.
"Now, it appears there will be no increase in 2005, therefore the NRL leaves the Sydney Roosters with no choice than to commence legal action in the Federal Court of Australia in early 2004."
Sections 45 and 46 of the Trade Practices Act cover contracts that restrict competition and the misuse of market power.
Mr Gallop told The Sunday Telegraph yesterday the NRL would defend any action, calling the salary cap "the foundation stone of the game's success".
"We've just had the best season ever, and I'd be surprised if one of our clubs is seriously suggesting we do away with the cap," he said.
"We haven't made a final decision on an increase, but the indications from 14 of the 15 clubs at the annual conference a few weeks ago was that the game couldn't afford it."
Newcastle Knights chairman Michael Hill said he was stunned by the Roosters' threat.
"I'm amazed, because I don't think the issue of there being no increase has been fully resolved," Mr Hill said.
Sources said there was a real possibility the cap could be found to be illegal, forcing the NRL to abandon it.
The Sunday Telegraph
December 21, 2003
GRAND finalists Sydney Roosters have threatened to sue the National Rugby League over the salary cap, arguing that it breaches national competition laws.
In a letter sent to the NRL two weeks ago and obtained by The Sunday Telegraph, lawyers acting for the Roosters say the team will be forced to take legal action in the Federal Court if the NRL fails to increase the salary cap for 2005.
If successful, the legal action could end the $3.25 million salary cap, threatening the viability of struggling smaller clubs. The cap
Continued Page 2
limits how much clubs can pay their top 25 players.
It is championed by the NRL as a means of providing a better competition by ensuring less successful clubs are able to hire top-drawer players.
The letter, drafted by Sydney law firm Teakle Ormsby Conn, was prompted by a decision not to increase the cap in 2005. It was sent to NRL chief executive David Gallop on December 11.
"We have formed the view that the Sydney Roosters have a cause of action under Section 45 and Section 46 of the Trade Practices Act, together with a common law action for restraint of trade," the letter says.
"We are instructed that over the past few months, you have indicated to our chairman (Nick Politis) that there will be an increase in the salary cap for the 2005 playing season.
"Now, it appears there will be no increase in 2005, therefore the NRL leaves the Sydney Roosters with no choice than to commence legal action in the Federal Court of Australia in early 2004."
Sections 45 and 46 of the Trade Practices Act cover contracts that restrict competition and the misuse of market power.
Mr Gallop told The Sunday Telegraph yesterday the NRL would defend any action, calling the salary cap "the foundation stone of the game's success".
"We've just had the best season ever, and I'd be surprised if one of our clubs is seriously suggesting we do away with the cap," he said.
"We haven't made a final decision on an increase, but the indications from 14 of the 15 clubs at the annual conference a few weeks ago was that the game couldn't afford it."
Newcastle Knights chairman Michael Hill said he was stunned by the Roosters' threat.
"I'm amazed, because I don't think the issue of there being no increase has been fully resolved," Mr Hill said.
Sources said there was a real possibility the cap could be found to be illegal, forcing the NRL to abandon it.
The Sunday Telegraph
