The AFL and restraint of trade
Every so often the question of the ability of the AFL to withstand restraint of trade cases in court pops up for discussion, most recently with regards to the possible – if unlikely – deregistration of Kurt Tippett at Adelaide.
To date, the most commonly cited example of restraint of trade in Australian sport is that between the NSWRL and its players in the early 90s, which the NSWRL lost. The AFL draft and cap systems have not been challenged since being introduced in 1986.
However, the VFL/AFL has been subject to a number of restraint of trade actions.
In 1982, the VFL zone laws were challenged when Peter Hall was refused clearance by Collingwood to play for South Melbourne.
In this instance the Victorian Supreme Court found the zoning rules of the VFL constituted excessive restraint of trade. The Court believed that it was up to the VFL to prove it was necessary to protect its interests and it failed to do so.
In 1983, the zone laws were challenged again when Silvio Foschini took the league to court when his clearance from Sydney to St Kilda was refused.
In 1987, Gary Buckenara sought court action under the TPA, believing that Hawthorn’s refusal to clear him to play for West Coast constituted a restraint of trade. However, the Court found that in this instance Hawthorn were not in breach as Buckenara was still under contract, and dismissed the case.
To properly understand the subject, we must first go back to where it began.
The default position of the Australian court system is defined in the precedent set forward in 1874 (Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Limited) where restraints were found to be illegal unless reasonable and in the public interest.
Nordenfeldt is important as it was specifically cited in the case of Adamson v New South Wales Rugby League where the NSWRL draft was found to be a restraint of trade. The Full Federal Court found that the league’s internal draft was a far greater restraint than was necessary to protect the clubs and players of the NSWRL.
Further precedent can be found as far back as 1972 in Buckley v Tutty, with the Australian High Court citing a UK case, Eastham v Newcastle United Football Club. The UK Court found that the league had a special and legitimate interest in maintaining the quality and evenness of a competition, and measures taken to ensure that were permitted.
The immediate question at hand is whether the draft and cap are together in breach of the Trade Practices Act 1974.
The court must examine each of the following:
•Is there a legitimate interest in need of protection?
•Is the restrain reasonable in that circumstance?
•Is the restraint against the public interest.
The AFLs legitimate interests are likely to be:
•Onfield evenness in the AFL competition
•The popularity of the AFL as a spectator sport
•The promotion of Australian Football as a sport
Differences between the NSWRL draft, and the VFL/AFL draft
The NSWRL draft was an internal draft that involved players already under contract to clubs. It should be noted that the court did not say that draft systems were wrong – only the NSWRL one before it, and the court itself suggested that changing the rules would make it a reasonable restraint.
It should be noted that the NSWRL case concluded that much of the problem was because the players in question were no longer under contract. To compound the problem, this was the only way for players to change clubs at the time, hence the restraint.
The AFL system allows drafting for a two-year period, before allowing players to change clubs via trade, preseason or national drafts. In 2012 it entered a new phase where a limited form of free agency is permitted – and some would say it has been something of a success with 17 players traded during this period.
The AFL draft has never been challenged since the NSWRL case, primarily as the players and player association all signed on. It’s thought that when combined with the salary cap, the AFL could quite easily prove that it achieves its aims of a more even and competitive league.
Applying the Nordenfeldt case to the AFL, the following findings can be made.
Protecting the interests of the League
There is considerable evidence that the league is more even than ever. In the 90s for instance, every club made the finals at least once, with the exception of Fremantle, something which had not happened since the 1920s.
As a result of the strength of the competition, the league’s financial viability has never been stronger.
Protecting the interests of the public
It can be argued that the draft and cap have enabled more clubs to make more finals more often. A more even and more competitive league is in the interest of supporters. Theres some thought that the draft and cap system has kept some clubs viable a lot longer than may otherwise have been expected.
Protecting the interests of the players
While initially players have little choice in their employer, after two years it would appear that they have a number of avenues that begin to open up, with more opening up after seven years and total free agency after 10 years.
Players have a strong and somewhat militant association behind them and lobbying on their behalf, and they have considerable bargaining power as a result of the NSWRL case.
The only real sticking point now is that players may still be traded while under contract, to another club. This is in essence a breach of the TPA and if any area was going to succeed under challenge it would be a player traded against his will.
European courts have ruled against this in football under the Bosman ruling where transfers may not be made without player consent.
Legality of the salary cap
There has not been any challenges to a salary cap system, although there have at times been systems that limited individual players, these were either lost in court (UK) or scrapped due to poor administration (Aus).
It is believed that the salary cap would survive the relevant legal tests as its part of what has made the league and its clubs somewhat more financially stable.
Where it could fall down is that it may not be in the interests of all players, particularly those forced to relocate to another club in order to receive satisfactory remuneration.
The AFL system has never seriously been threatened by court action, but prevailing theory seems to be that the league would meet the tests applied under the Nordenfeldt precedent.
Its important to note that the courts have not ruled draft systems illegal, either here in in a 1968 case against the NFL, but have indicated that some simple rule changes would have enabled the drafts to continue.
In the NFL case, they made some changes and moved on. The NSWRL abandoned the draft altogether.
Player consent is the potential battlefield of the future, with precedent already set in Europe.
•Restraint of Trade in Australian Sport – Sam Chadwick, 2010
•The AFL contract and common law of trade – Sam Cusanamo, 1994
•Draft Systems and Salary Caps in Australian Sport – Dr. Chris Davies, 2012
•Draft Systems in Professional Sport – Dr Chris Davies, 2011
•AFL confident cap and draft solid, The Age, 2008
•Tippet could face sanctions, Fox Sports, Oct 26, 2012
•Could going back to zoning bring back the fans, Dr David Nadel, March 2012
•Restraint of Trade in Sport, Sportlawyer
•The use of Salary caps in professional sport – Dr Chris Davies, 2006
•History of Player Recruitment, Transfer and Payment Rules – Ross Booth, 1997
*note the author is not a lawyer, but has put this together from a number of articles, speeches and essays on the matter by people who are.