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NRL draft and the legal perspective

Peter_Allsopp Roar Rookie

By Peter_Allsopp, Peter_Allsopp is a Roar Rookie

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    Over the past month, a lot has been said and written in relation to the introduction of a draft in the NRL. Many have stated that due to the 1991 findings of the courts in Adamson versus New South Wales Rugby League, the introduction of a draft is impossible.

    This case was decided in 1991, over twenty years ago. Since that time, rugby league and professional sport in Australia have undergone considerable changes.

    Also, the financial state of individual clubs and of the competition today is drastically different to that in 1991.

    Restraint of trade cases generally take the view that a contract to restrain an individual’s liberty of action in carrying on his or her trade, business, occupation or profession and all restraints of trade of themselves are contrary to public policy and therefore void, unless the restraint is:

    (i) reasonably necessary to protect the interests of the person in whose favour it is imposed;
    (ii) not unreasonable as regards the person restrained; and
    (iii) not unreasonably injurious to the public.

    In 1991, one hundred and fifty four rugby league players commenced an action arguing that the `internal draft’ system which regulated the movement of players between clubs where they were not under contract was an unreasonable restraint of trade.

    The NSWRL argued, among other things, that the internal draft system had the objectives of ensuring an even competition, financial viability for the clubs, and to limit the mid-season “plundering” of the weaker clubs of their good players.

    Initially, the court held that the restraint imposed by the internal draft was reasonable, considering the legitimate interests of NSWRL, the clubs and the players.

    On appeal, the Federal Court found for the players. The Court declared the internal draft system was void as an unreasonable restraint of trade because the NSWRL could not show that the restraint was reasonably related to the objects of the League or the clubs, and afforded no more than adequate protection to the interests of the League and the clubs.

    The Court said that, in trying to secure an internal draft, the NSWRL was trying to ensure its financial viability by maintaining a strong and well matched competition.

    Unlike other industries, professional sport requires evenly matched teams because one-sided events are less attractive commercially.

    The rationale of the initial decision was, as the teams did not have equal salary caps (due to the financial position of some of the clubs at the time), the need for an internal draft was necessary to maintain the financial viability of the clubs.

    It has been argued that the salary cap is a restraint of trade. When first implemented for the 1990 season, it was uneven ranging from $1,500,000 to $800,000, as determined by the league’s analysis of each club’s financial situation.

    Currently the NRL salary cap is set at $4,400,000 for the 25 highest paid players at each club.

    This initial judgement seems to be remarkably prescient considering the fall out following Super League, and the clubs’ weakened position due to the deregulation of Poker Machine licences.

    As previously mentioned, the restraint of trade doctrine places the onus on the party imposing the restriction – the club – to show that it is no more than what is necessary to protect their interests.

    In order to maximise interest the NRL has to maintain an attractive competition whereby there is a high degree of uncertainty about the result of any competition, the economic power of certain clubs to acquire the best players must be limited.

    Since 1991, professional sportsmen playing rugby league have opportunities to ply their trade elsewhere. Rugby union has become a professional sport, players have the opportunity to play AFL or play overseas. This supports a claim that an internal draft is not an unreasonable restraint of their trade.

    The third and final component of the test for unfair restraint of trade is whether the restraint acts against the interests of the public.

    It would be difficult for those against an internal draft to argue that a competition where weaker teams will get increasingly weaker due to the poaching of players by more successful teams is in the interests of the public.

    It could be argued that the public is best served by a robust competition.

    If the NRL was to reintroduce an internal draft in combination with the salary cap it could legitimately argue that it was reasonable to do so in order to protect the game and therefore the player’s interests as well as those of the public.

    Therefore, there is no legal barrier to the reintroduction of a draft in the NRL.

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    The Crowd Says (47)

    • March 21st 2012 @ 7:59am
      oikee said | March 21st 2012 @ 7:59am | ! Report

      You say that rugby league players can go to rugby union and AFL, and yet you try to make us think that having a draft will stop this practice. ? Is that what you are saying, because not being able to move to another code, could that not be a restraint of trade.
      Look, your opening a can of worms, how mant times do i have to tell you to put this thing to bed, do you undetrstand what a precident is, it was set in league many years ago with the draft going to court.
      And your barking up the wrong tree, the players themselves could stop this practice arguing that they are the modern stolen generation being taken from their families at a young age without any support but footy players, and the younger guys who are married, or have partners or kids, imagine the fallout of having to shift to somewhere with no family network, and they will have no say in the matter. ?
      Yes they will, because it will jkust end up in court again. Let it go, put the thing in the rubbish bin where it belongs.
      Rugby league at the moment allows players to shift and feel if they can manage a move to another club in another state or country, and they can move back with a contract if they dont like it, we are not forcing them to do something they dont wish to do.
      Have you got any idea about family structures and how they work.
      You need to only look at the AFL and the way the draft is breaking down family structure, look at Jarrah, i bet their are hundreds of cases, the AFL wont report it unless it goes feral.

      Now put this draft to bed, throw the thing in the garbage, where it belongs, you will end up in court, in tears.

      • March 21st 2012 @ 9:00am
        Peter said | March 21st 2012 @ 9:00am | ! Report

        I am not arguing for or against a draft. I have an issue with commentators who argue that because in 1991 the Courts found that the draft was a restraint of trade that they would do the same today. The Court held that the argument that the Rugby League made for the introduction of the draft was not reasonable. If they were to introduce a draft again today a court may find that it is reasonable as the times have changed.

        • March 21st 2012 @ 10:12am
          Ian Whitchurch said | March 21st 2012 @ 10:12am | ! Report

          Peter,

          Oikee’s argument essentially comes down to ‘I want clubs in existing strong areas to be advantaged so the game wont grow’.

          • March 21st 2012 @ 1:05pm
            oikee said | March 21st 2012 @ 1:05pm | ! Report

            The game is growing now and was in turmoil with the super league war. Their is now growth about to happen, and no war. The memberships are growing as well.
            Saying it wont grow is not knowing the game. NZ is growing as well.

            • March 21st 2012 @ 1:43pm
              Ian Whitchurch said | March 21st 2012 @ 1:43pm | ! Report

              Oikee,

              If a side in an established area has first bite at all the kids coming through, then how are teams in Perth, Melbourne or Adelaide going to get a compeitive team on the paddock ?

              The current system is great if you’ve been gifted a massive area with no competition, the way Brisbane have, and you can turn that into better exposures for your sponsors, as Brisbane have.

              But, unlike you, I want to expand rugby league into new areas, and I know that having a viable NRL that goes across Australia, New Zealand and PNG is going to require supporting clubs that are in new areas.

              Yes, this will mean disadvantaging existing clubs.

              Deal with it, move on.

              Yes, this will involve kids being supported in their move from the country to the big smoke – and maybe your universe didnt have this happen, but in my universe Chris Sandow moved from Cherbourg thousands of kilometers to Brisbane and then the Gold Coast to play footy, and a lack of support caused the Gold Coast Titans to be out a tiny rookie contract.

              If they had been faced with losing a precious first-round pick when he goes home, then I can assure you they would have tried harder to have the kid work out.

              But yeah, keep doing everything you can to disadvantage new clubs in new areas, and then express surprise and amazement when they fail.

    • Roar Guru

      March 21st 2012 @ 8:17am
      peeeko said | March 21st 2012 @ 8:17am | ! Report

      nice piece of research and analysis but i feel the whole talk of a draft is a bit of a waste of time. i very much doubt that it is on the comissions agenda. its not going to happen

    • March 21st 2012 @ 8:25am
      Roarsome said | March 21st 2012 @ 8:25am | ! Report

      Not a legal issue at all. Look at the Police force, Teaching and Nursing where people are posted all over the various states.

      Comment left via The Roar’s iPhone app. Download The Roar’s iPhone App in the App Store here.

    • Roar Guru

      March 21st 2012 @ 8:38am
      The Cattery said | March 21st 2012 @ 8:38am | ! Report

      To add to this well argued article, I could a few points:
      1. In the AFL’s case, the fact that the PA agree to it has some influence.
      2. Looking over a 20 year period, with wages growing every year, it’s hard for players to argue that they are worse off with the existence of the draft.
      3. Like many other professions, you are invited to go through a particular process to to get gainful employment. No one holds a gun to anyone’s head to submit to that process, they can stay in the second tier, or they can go do something else, at the age of 18, you can go fininsh your schooling if you don’t want to pursue a career in the AFL. In the NRL, the choices are even greater, with union and overseas football a possibility, so it’s hard to imagine how the NRL would lose such a case if the AFL can manage it.

    • March 21st 2012 @ 8:39am
      Paul said | March 21st 2012 @ 8:39am | ! Report

      I think were all over this drat issue. Just introduce a trade window from August and be done with it. The players will just have to accept that it is in the games best interest and who knows maybe we wont get so many players moving between clubs as the current clubs will have the advantage. The game is about the Fans and Clubs, not the players.

    • March 21st 2012 @ 10:16am
      roarr said | March 21st 2012 @ 10:16am | ! Report

      Why dont they make some sort of hybrid draft/window where players enter the draft… but players get a right of refusal.

      I’m not exactly sure how an internal draft would work… but it would be a risk for a player to say no to a team knowing that other teams might offer less money or not offer a contract at all.

      Does anyone in Rugby League hierarchy ever do any active research/thinking/planning? Or do they just let issues go out in the media and let everyone complain about it…then copy another sports process.

      • March 21st 2012 @ 1:24pm
        oikee said | March 21st 2012 @ 1:24pm | ! Report

        This is what the commission is for, they need to look through the ideas that you and Paul are coming up with, to find a simple system that works well with our game and does not effect the season as is happening now, but also allows us to not worry about the off season as well. We have to much going on, and it is only going to get more congested in the future with more countries coming on
        board wanting to play internationals.
        Imagine having to fit a draft in their somewhere. Its madness, and will put our game back 20 years.

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