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How the rich clubs are sidestepping the salary cap
League News
Date March 20, 2014
Roy Masters
Rugby League Columnist
Sharks prop Andrew Fifita. His signing has raised objections about the fairness of the salary cap. Photo: Getty Images
Coaches fear the much touted "level" NRL playing field is tilting towards a handful of rich clubs, via a proliferation of Third Party Agreements (TPAs) which allow uncapped payments to players outside the official salary ceiling.
Cronulla's Andrew Fifita has been signed by Canterbury for $850,000, with the prevailing belief half this amount will be registered in the club's salary cap of $6.3m, with the other half legitimately recorded as a payment by non-club sponsors.
It means the Bulldogs can sign two front rows of talent, with only one effectively being counted in the cap.
Top end of town: Roosters chairman Nick Politis and Sonny Bill Williams in 2011. Photo: James Alcock
The NRL has no cap on TPAs, meaning a club with a wealthy coterie of business connections can point a player manager in the direction of a friend/supporter and arrange for an individual sponsorship.
An NRL spokesman sought to allay this fear by telling Fairfax Media the league administration would not register a player's contract if the amount shown to be included in the salary cap did not reflect the player's market value.
That is, if the Bulldogs registered Fifita for an inside-the-cap payment of $425,000, it would be rejected.
Mark Gasnier (No.14) marks Sonny Bill Williams (R) playing rugby in France. TPAs were designed to stop a player drain to rugby. Photo: Getty Images
Nevertheless, there is widespread concern clubs such as the Roosters, with top-end-of-town connections; the Bulldogs, with a rich Leagues Club connected to multiple service providers; and the Broncos - a one-town team - are perfectly positioned to capitalise on the absence of a ceiling on TPAs.
Should the financially weak clubs attempt to compete by utilising the TPA loophole, it is likely to drain sponsorship funds away from the club.
Any local business which elects to support a player via a TPA deprives a club of much needed revenue.
Cronulla is most vulnerable to the trend, with its nucleus of high profile talent and the crippling legal and punitive cost of the supplements saga.
The original purpose of TPAs was to help retain key players in the code, following the loss of champions such as St George Illawarra's Mark Gasnier to French rugby union.
But there is now a fear that rather than be used to retain NRL stars flirting with other codes and countries, TPAs have been used to recruit them.
Furthermore, a $40,000 to $50,000 TPA top-up to an official payment allows a club to secure a player's signature.
Each TPA must be approved by the club and the NRL, ostensibly to protect against ambush marketing of an existing sponsor.
This means the NRL is aware of the number and financial size of the TPAs at each club and could therefore monitor a trend which many suspect will show a concentration of these payments at a small number of clubs.
The NRL claims its registration process reveals no such disproportionate trend towards use of TPAs by rich clubs.
Coincidentally, the NRL has flagged the possibility of a cap on football department spending, imposing a ceiling on non-player payment outlays, such as the total wages of training and coaching staff and even comforts, including meals.
This raises the obvious question: why impose a limit on spending on professional services in order to create a level playing field when the main vehicle to achieve this - the salary cap - is being undermined by a growth in TPAs?
Compounding the irony of these developments are the Storm, who were stripped of two premierships and a host of players because they flouted the rules on TPAs.
The Storm's sin was to guarantee TPAs, meaning that if the club could not secure an agreed sponsorship for a player, it would pay the sum itself.
It was a recognition that, in an AFL city, individual sponsorships are hard to find.
Guaranteeing TPAs is still prohibited but within 12 months of the Storm's draconian punishment, the NRL introduced a Marquee Player Allowance where the club could arrange a payment of $500,000 outside the cap.
It also liberalised the use of cars by players, changing it from a situation where club sponsors could not provide any vehicles, to three per club and now six.
This is meritorious in that it allows additional money, which could have been diverted to other sports, to flow to the code.
While TPAs also source money which could be lost, only a handful of clubs have access to this rich pool.
The NRL correctly points to the role of player managers in securing TPAs.
If these highly paid agents rely on rich clubs to point them in the direction of a sponsor who will help secure a player, they are not fulfilling their responsibility to their clients at poor clubs.
"There is nothing stopping a player manager at a so called poor club in Sydney arranging a TPA with say a Brisbane-based company," a NRL source said.
"We would be foolish to limit the amount of money coming into the code."
Read more: http://www.smh.com.au/rugby-league/...-salary-cap-20140321-hvksf.html#ixzz2we1evdun
League News
Date March 20, 2014
Roy Masters
Rugby League Columnist
Coaches fear the much touted "level" NRL playing field is tilting towards a handful of rich clubs, via a proliferation of Third Party Agreements (TPAs) which allow uncapped payments to players outside the official salary ceiling.
Cronulla's Andrew Fifita has been signed by Canterbury for $850,000, with the prevailing belief half this amount will be registered in the club's salary cap of $6.3m, with the other half legitimately recorded as a payment by non-club sponsors.
It means the Bulldogs can sign two front rows of talent, with only one effectively being counted in the cap.
The NRL has no cap on TPAs, meaning a club with a wealthy coterie of business connections can point a player manager in the direction of a friend/supporter and arrange for an individual sponsorship.
An NRL spokesman sought to allay this fear by telling Fairfax Media the league administration would not register a player's contract if the amount shown to be included in the salary cap did not reflect the player's market value.
That is, if the Bulldogs registered Fifita for an inside-the-cap payment of $425,000, it would be rejected.
Nevertheless, there is widespread concern clubs such as the Roosters, with top-end-of-town connections; the Bulldogs, with a rich Leagues Club connected to multiple service providers; and the Broncos - a one-town team - are perfectly positioned to capitalise on the absence of a ceiling on TPAs.
Should the financially weak clubs attempt to compete by utilising the TPA loophole, it is likely to drain sponsorship funds away from the club.
Any local business which elects to support a player via a TPA deprives a club of much needed revenue.
Cronulla is most vulnerable to the trend, with its nucleus of high profile talent and the crippling legal and punitive cost of the supplements saga.
The original purpose of TPAs was to help retain key players in the code, following the loss of champions such as St George Illawarra's Mark Gasnier to French rugby union.
But there is now a fear that rather than be used to retain NRL stars flirting with other codes and countries, TPAs have been used to recruit them.
Furthermore, a $40,000 to $50,000 TPA top-up to an official payment allows a club to secure a player's signature.
Each TPA must be approved by the club and the NRL, ostensibly to protect against ambush marketing of an existing sponsor.
This means the NRL is aware of the number and financial size of the TPAs at each club and could therefore monitor a trend which many suspect will show a concentration of these payments at a small number of clubs.
The NRL claims its registration process reveals no such disproportionate trend towards use of TPAs by rich clubs.
Coincidentally, the NRL has flagged the possibility of a cap on football department spending, imposing a ceiling on non-player payment outlays, such as the total wages of training and coaching staff and even comforts, including meals.
This raises the obvious question: why impose a limit on spending on professional services in order to create a level playing field when the main vehicle to achieve this - the salary cap - is being undermined by a growth in TPAs?
Compounding the irony of these developments are the Storm, who were stripped of two premierships and a host of players because they flouted the rules on TPAs.
The Storm's sin was to guarantee TPAs, meaning that if the club could not secure an agreed sponsorship for a player, it would pay the sum itself.
It was a recognition that, in an AFL city, individual sponsorships are hard to find.
Guaranteeing TPAs is still prohibited but within 12 months of the Storm's draconian punishment, the NRL introduced a Marquee Player Allowance where the club could arrange a payment of $500,000 outside the cap.
It also liberalised the use of cars by players, changing it from a situation where club sponsors could not provide any vehicles, to three per club and now six.
This is meritorious in that it allows additional money, which could have been diverted to other sports, to flow to the code.
While TPAs also source money which could be lost, only a handful of clubs have access to this rich pool.
The NRL correctly points to the role of player managers in securing TPAs.
If these highly paid agents rely on rich clubs to point them in the direction of a sponsor who will help secure a player, they are not fulfilling their responsibility to their clients at poor clubs.
"There is nothing stopping a player manager at a so called poor club in Sydney arranging a TPA with say a Brisbane-based company," a NRL source said.
"We would be foolish to limit the amount of money coming into the code."
Read more: http://www.smh.com.au/rugby-league/...-salary-cap-20140321-hvksf.html#ixzz2we1evdun
