In light of the recent news (hint, hint) that the Parramatta Eels are pursuing (read – have effectively landed) Michael Jennings, and the impact that his arrival might have on our playing roster, I thought it best to have a quick look at the purposes and perils of the modern salary cap in the NRL.
Due to the fact that I could write for days, this will be a two three (now) four part series – in Part 1 I’ll be talking about the salary cap in general terms, and in Part 2 I’ll be discussing the different strategies NRL teams currently employ to balance the salary cap. The new Part 3 will look at which of these strategies Parra might currently be employing. And the even newer Part 4 will answer some FAQs about the cap itself, the second tier cap, Holden Cup cap and how teams currently are required to deal with injury.
The salary cap is the forever relied upon, yet much maligned mechanism in the NRL.
On one hand its goal is to make the competition a more even playing field; setting the stage for more intensely fought match ups, more evenly battled clashes, and encourage closer score lines which in turn please crowds and viewing audiences alike – it’s good business.
On the other hand, the salary cap is also blamed as being the reason that clubs cannot hold onto cherished sons and traditional family names, one club players are rarer than hen’s teeth, and that word ‘loyalty’ is no longer used to commend players, but instead to condemn, in accusation of their evident lacking.
In very basic terms the current salary cap is a $6.1 million limit across the collective salaries of the top 25 highest paid players at a club.
An additional 600k in marquee player allowance can be spread across any or all of a club’s playing roster, and effectively makes the cap $6.7 million (why do we have that again?).
There are also several ways players can earn/obtain more money than what is inside the cap; including 100k motor vehicle allowance (up to 5 players), and unlimited funding for tertiary education, traineeships, medical insurance, and temporary or relocating accommodation.
However, as you probably know, the most discussed avenue is the unlimited nature of third party deals, between players and corporate entities. There are a few rules regarding these third party payments (commonly TPPs), which are often treated as mere guidelines by cheeky clubs and football departments. The NRL states that the corporate sponsor must not already be a club sponsor, (ie Dyldam or Blades would therefore be ineligible for Eels players), nor can this sponsor be able to use any club logos, jerseys or emblems in association with this player (ie Chris McQueen is referred to as “Rugby League Star” rather than South Sydney Rabbitoh in his appearance on a Woolworths ad last year).
The entirety of the Titans’ salary cap in one photo.
Most contentiously, however is the proviso that “these agreements may not be negotiated by the club as an incentive for a player to sign a contract, nor can they be guaranteed by the club”.
Please. I won’t name any, but I’m sure we can all imagine which clubs would have read that proviso for no other reason but to figure out how best to ignore it. Close to all of them. I’ll be careful with my words here, but, as such, one could foresee that clubs could theoretically play a role in directing the managers of a certain marquee player towards corporate entities that might be interested in that player’s services – only if they played for that club, of course. The third party aspect of the salary cap fills a necessary need – that players be able to earn collectively beyond what their clubs be allowed to pay them. However the reality is shady; with rich clubs getting richer, and weaker clubs struggling to compete in a playing field that is supposed to have been levelled.
In our own backyard, unless you’ve been living under a rock, Eels fans would remember our difficult history in negotiating the ins and outs of the salary cap. This culminated in the 525k fine dished out to our club last season (later reduced to 465k after we were able to clarify some of our second tier cap spending). Parra were also ordered to undertake a significant review of their processes, meeting certain requirements or risk facing -4 competition points to start season 2016.
I won’t list some of the more ridiculous manoeuvres that those in charge of the Eels at the time attempted around the salary cap. Furthermore, I’ve been suitably informed that such attempts are no longer the practices of the Parramatta Eels, (nor could they be without risking significant ramifications from the NRL – and rightly so) and Parra have learned important lessons from the mistakes of the past. As an aside, I was also told that a number of other clubs heeded the warning sent to Parra and rectified their own practices as a result of the aforementioned sanction, but that’s a different story.
I think every fan likes to think of their club as the good guys, which is why breaches of this nature are so disheartening. Nonetheless, it’s good to see Parra responding to what was a pretty dark year to bleed blue and gold.
So, where to from here? What is of paramount importance is balancing a cap in the most advantageous way; between your halves, forwards and backline. As one of its ambitions, the salary cap means that no team can hoard talent across the park. Subsequently, in an era when rugby league players might only sign one or two significant contracts in their career, attempting to convince a team of football players to take unders to keep their talents in the same colours has been proven volatile at best (see Manly, 2013), and explosive at worst (see Manly, 2014-2015). Thus teams, often depending on what talent they start with, need to develop a strategy to have the best performing side on the park, for the least amount of outlay.
These strategies will be the focus of Part 2.
Go you Eels,
Mitch.
Part 4 (coming at some point in time)
Another quality ‘adult’ post…..
Great post Mich. The part that gives me isues is how they reconcile the cap if they have to go outside the top 25 due to injuries. Do they in fact need to seek permission to do this on each occasion and how does this then effect the cap if in fact it does. My assumption is that they can only go outside the top 25 for injury and not loss of form.
John
Ha, I’ll put that down after Part 2 – I think this will need to be a 3 Part series.
Thanks for the feedback all.
As far as I understand teams have $440k in the second tier salary cap. So when a player plays in first grade only then does the money count towards the second tier cap. Once that cap is reached that is when permission needs to be asked to play a player.
Thank Miatch, Insightful post…..looking forward to part two. All things considered we seem to have responded in the best possible way to the salary cap issues we faced and the use of Schubert seems to be having a positive effect. I especially like the fact we now don’t appear to be willing to pay ‘overs’ for anyone…. Although I am still hoping we can pull a major surprise and hold on to Jnr Paulo!!!!
I’d like to echo everyone’s comments about the quality of this post. Even with some grasp of the cap, I valued Mitch’s walk through and look forward to Part 2.
As for Junior, if he is prepared to consider a good offer, we can keep him. There is no way that the club would want to lose his talent, but they won’t keep him at the expense of 3 or 4 quality first graders – and the reality is that we would have to shed some good ones to match the huge offers. It’s all about balance. I think that this aspect is going to be explored in Part 2 of Mitch’s post.
Nice work there Mitch,
The salary cap is such a mirky and maligned subject, reviled by many, misunderstood by most, but, a beast that we must have in the modern game.
Huge thanks you in this first part in explaining the mechanisms of the cap so when you get down to part two, the thoughts on strategies can be grasped without (as much) bias or venom towards the subject material.
As usual mate, your comments are always well thought out and constructed.
Maybe this BS from paulos manager about the actual offer. Paulo should accept a good offer and keep loyal and stay in a competitve team. Has he not learnt anything about being greedy like hayne you want too much then we have less to go around hence weekens the team. The manly boys need to get into his ears about taking less for long term success.
I didn’t mention Paulo?
Nonetheless, as the TCT twitter feed said this morning, we’re pretty sure Paulo will still be in the Blue and Gold in 2016.
2017 is still up for grabs, however.
Good read Miatch, I’ve always wondered how the internal workings of the cap are played out within the inner sanctum at the club by the people who make the call on the players, their values and all the crystal ball stuff they would have to try and factor in for future years recruiting.
I must agree Gav. I’m looking forward to Part 2. Balancing the talent in the team within the cap restraints would not be an easy task.
Thanks Miatch, insightful and pretty comprehensive for a “Part 1” can’t wait for Part 2.
With all it’s potential for negative reports and opinions, the salary cap is an essential element of the game IMO.
Although it could be argued that the very rich and unscrupulous clubs/CEO’s/boards do have an unfair advantage over the other 10-12 clubs. The reality is, it has created a more even competition with the last two teams in 2015 finishing on 20 points. We need the poorer and/or less successful clubs or even poorly managed clubs (read Parra 2011-2014) to be able to compete, for the sake of their fans and for the overall success of rugby league in general.
I do recall a time (late 60’s and early 70’s) when Easts, Manly, St George and Canterbury were the only clubs that could consitently be considered a potential premiership winner. During that time blow-ins, clubs who had a successful couple of seasons by generating good young local talent and maybe fluked a good’n from NZ, UK, the bush or Queensland, would loose them to those above clubs as soon as the brown paper-bags were produced.
Go the Salary Cap! See’ya Gus, Uncle Nick and your latter day cronies.
Well written piece. I think this is a very important blog as by the end of part 3, people will understand all the possible machinations with the cap and then realize that sometimes the coach has no option but to pick certain players and is actually unable to pick the team of his choice (as happened last year). There is something very wrong with the system when the coach cannot pick the team of his choice. Gibson started the trend of the coach having the authority to pick the team but now that responsibility rests equally with the NRL which is ridiculous
Good read Miatch, the cap has always and always will be a controversial system. I’d like the NRL to look at players value in terms of rep footy etc. I still cannot fathom how Brisbane and others have so many rep players on the books…but I guess TPP help. Dodgy clubs would still exist and we have to be naive not to think that or maybe I should say, creative clubs still exist.
Good read and look forward to the next part Miatch. Cheers
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Good read Mitch.
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