I have always had a different (and barely related) question about the cap specifically pertaining to the Warriors, so I guess I throw it in here to see what people think.
Given that the Warriors are based in a different country with a different currency and taxation system to the rest of the NRL, there does seem to be some issues around the cap. Would love to see a playing contract or just an explanation of how things are done, but I'll take a well reasoned opinion and/or sounding board if the first two aren't happening!
Obviously the cap is calculated in AUD. Anything else would be stupid.
Issue 1) Currency differences. Now the NZD and AUD are never likely to get too far out of sync in terms of covariance, so it's not likely to be a huge issue - unless we happen to be cutting it close one year. But if the relative values of the dollars change to an extent where the value of contracts being paid in AUD (what the cap must be calculated in) exceeds the cap level, what happens then? Clearly not the club's fault. This effect could be exacerbated by long contracts - a contract signed for a certain amount in NZD 3 years ago could be looking at a significant difference in the AUD cap value calculated back when it was signed to present day. The solution I've guessed at is to fix the cap value of the contract to whatever the exchange rate was on a particular date/time (likely the date the contract was signed).
Issue 2) Income tax differences. NZ has a significantly smaller top tax bracket rate than Australia. With the amounts of money we're talking about, the difference becomes quite huge, and this would become a significant competitive advantage for the Warriors. I'm guessing the solution is to calculate the cap amounts using after tax figures, but all I've seen on cap figures suggests that this isn't the case. This would mean the Warriors need to adjust what all applicable (most/all of the top 25) contracts are actually worth under the cap by applying them to the Australian tax system to get the 'cap figure' of each contract. Confusing and probably the hard way to do things.
Both issues seem to be made even more cloudy by the existence of TPA's.
Anyone have any different thoughts / possible solutions? Or anyone actually know any better? Because I'd love clarification (I work in financial law and actually enjoy it - weird I know, but this is the kind of crap I like to think about).
Given that the Warriors are based in a different country with a different currency and taxation system to the rest of the NRL, there does seem to be some issues around the cap. Would love to see a playing contract or just an explanation of how things are done, but I'll take a well reasoned opinion and/or sounding board if the first two aren't happening!
Obviously the cap is calculated in AUD. Anything else would be stupid.
Issue 1) Currency differences. Now the NZD and AUD are never likely to get too far out of sync in terms of covariance, so it's not likely to be a huge issue - unless we happen to be cutting it close one year. But if the relative values of the dollars change to an extent where the value of contracts being paid in AUD (what the cap must be calculated in) exceeds the cap level, what happens then? Clearly not the club's fault. This effect could be exacerbated by long contracts - a contract signed for a certain amount in NZD 3 years ago could be looking at a significant difference in the AUD cap value calculated back when it was signed to present day. The solution I've guessed at is to fix the cap value of the contract to whatever the exchange rate was on a particular date/time (likely the date the contract was signed).
Issue 2) Income tax differences. NZ has a significantly smaller top tax bracket rate than Australia. With the amounts of money we're talking about, the difference becomes quite huge, and this would become a significant competitive advantage for the Warriors. I'm guessing the solution is to calculate the cap amounts using after tax figures, but all I've seen on cap figures suggests that this isn't the case. This would mean the Warriors need to adjust what all applicable (most/all of the top 25) contracts are actually worth under the cap by applying them to the Australian tax system to get the 'cap figure' of each contract. Confusing and probably the hard way to do things.
Both issues seem to be made even more cloudy by the existence of TPA's.
Anyone have any different thoughts / possible solutions? Or anyone actually know any better? Because I'd love clarification (I work in financial law and actually enjoy it - weird I know, but this is the kind of crap I like to think about).