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
•Funding
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.
References:
•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.
Graham
Guest
I have intensely mixed feelings about the AFL Commission. I have enough experience in sports administration to realise that when the controlling body is made up of delegates from the associated clubs, there is very little progress due to bickering between the clubs. Self interest rules, to the detriment of the sport. On the other hand, "independant" commissions develop a sense of infalibility. They don't want advice. They rarely tolerate criticism. They forget, or don't care that other people have opinions and ideas, but, most damaging, they begin to believe that "they" are the sport. I understand the reasons for the draft, the trading rules, free agency and the salary cap, but part of me would love to see the legality of these tested in court. Until recently these were things that existed in the background. I was aware of them but, only as a side issue. I just want to watch football. However, over the past month I've learnt a lot, and I've become aware of the inconsistencies in some rules, the unfairness of others. I've begun to think of the AFL as the Heath Robinson Football League, a patchwork of rules and regulations that barely work, as they get modified, and the modifications get modified. Surely the AFL is sick of it's rules being seen as a joke. I can't see how enforcing a system which uproots 18 year old kids and shifts them across the country with the option of do it or don't play, can be legal, let alone efficient. I don't see how a draft which consistently punishes the more successful teams for their success is right, or whether it actually works. I am totally bemused by "Third Party" payments, and it appears that the Clubs and the AFL are in the same boat. How can you have a player (not a free agent) telling his club who he WILL play for, and when a trade can't be agreed, he goes in the draft and the club gets nothing? How can the same third party agreement be legal one day and illegal the next? How can a player who has said he will only play for one club nominate for a draft where he is obliged to play for whoever picks him? Could the stronger clubs eventually challenge the fact that they are consistently discriminated against? As for sanctioning Adelaide, they need to be found guilty first. I'm fairly sure that none of the people who have commented here are any better informed than I am with the details of the AFL charges. I am, however, extremely amused that the AFL has a system where an investigator who has an idea that a club or player has committed a "crime" , can charge the club or player, and then demand that they prove their innocence. That may be an area open to a legal challenge. It seems like a denial of natural justice to me. I live in Adelaide, but support a victorian team, in fact, up until a few years ago, I supported Essendon and any team playing Adelaide. I cannot believe the frenzy that this little saga has engendered in the press, and how the coverage has been so one sided. I can't see how this, in any way, compares to what Carlton were convicted of. My guess is that if Adelaide feel that they have been punished too heavily, their quartet of QC's may be let loose, and that the AFL may not want to risk that. Similarly, I think a heavy punishment for Tippett is out of the question, because Mr Galbaly is very convincing. In any case, from what I have seen and heard from Adelaide, the Crows appear confident and righteous. They don't look or sound like a club expecting the heavens to fall. In any case, I'm not convinced that this is "just" about the Tippett deal. I wonder whether the errant licences have a bit to do with it. (I love a conspiracy)
The_Wookie
Roar Guru
Bosman was about players consenting to be their transfers. Its part of the overall issue, but the be all and end all of the restraint of trade argument.
Damo Baresi
Guest
restraint of Trade - The Bosman ruling in Europe.
Lroy
Guest
Dude, I think you are right on the money, nice comment ;-)
Josh
Guest
Funny, I don't remember Middlesbrough winning the EPL anytime recently.
TC
Guest
This is what Wookie says in the article: 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. So the court actually gave the NSWRL a chance to amend the rules slightly and continue with a draft, but they decided to drop it altogether. Once again, the key point is that drafts are not an issue of themselves. TC
Lroy
Guest
@TC - "On top of that, the Australian courts have already ruled that drafts are NOT a restraint of trade per se" .Dude, can you point out when the AFL draft has ever been challenged in court?
Brewski
Guest
Both club and player should be pillocked.
Pillock
Roar Rookie
At some point the players themselves must be held to account for receiving above the odds under dodgy contracts. There is obviously collusion betwen the club and player so to only punish the club is manifestly unfair.
Brian
Guest
As wookie said he can be suspended and possibly forced into the draft (divided opinion) but he cannot be deregistered. Some laws supercede others and a restraint of trade will override whatever Tippet and the AFL signed. i.e Your right hand belongs to you no matter what contract you or anyone else signs saying otherwise, likewise Tippet's right to earn a living in his chosen trade belong to him irrespective of what he signed. The Bosman ruling not only challenged a player's right to not be sold to a club not of his choice it also challenged the right of an employer to demand compensation for losing an employee. Thus Tippet wouldn't just win restraint of trade he would have a good go at whether free agency should exist for a first year player.
The_Wookie
Roar Guru
As mentioned in the article, Australian Courts do cite UK cases when dealing with Australian issues. Notably 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_Wookie
Roar Guru
I expect him to be fined and suspended, or temporarily deregistered for somewhere between 6-12 weeks, but still allowed to go to sydney. As happened with Greg Williams. Matthew Allan was suspended for 5 weeks in 2002 for recieving undisclosed payments from Carlton. Its thought that Cousins deregistration only lasting a year had a lot to do with a legal minefield.. At the end of the day, the AFL has to convince the court whether its practices as defined under the TPA can be considered a reasonable trade restraint. Legal opinion goes both ways on this, and i dont think anyone would be keen to see the system challenged.
Chucker
Guest
If Tippett is prevented from going to the Swans, it will be as a punishment for his failure to fully disclose his 2009 contractual agreement with the Adelaide Football Club to the AFL, and Tippett, like every other player in the league , signs an agreement stating they will abide by the AFL's rules ie fully disclose contractual agreements. He broke the rules and got caught, and may be suspended for his breach of conduct.. That is NOT restraint of trade
Diablo
Guest
Can a legal expert explain why our laws would be so different from the US/Europe? In Europe all these practices were deemed to be illegal and a restraint of trade. In the US they need special legislation to protect them from legal challenges. So, again, why are our laws completely different from those jurisdictions?
Brian
Guest
False paperwork doesn't allow the AFL to restrain his trade. The AFL can have the police prosecute him for a false stat dec if they like but it will be between the police and Tippet and won't affect the different matter that they cannot restrain his trade. The signed PA may allow the AFL to run drafts and trading etc. but denying him employment? If they deny him playing he will go to court and he would win easily. Of one thing we can be sure, Tippet will be on an AFL club list next year.
Ian Whitchurch
Guest
Lroy, Unless of course the AFL suspend him because of signing the false statutory declaration - remember, he wouldnt be deregistered because moving would put Sydey over the salary cap or anything like that, but because he knowingly submitted false paperwork to the AFL,
TC
Guest
I disagree that it's as straight forward as you say. His PA signed on to the rules, that would be taken into consideration. On top of that, the Australian courts have already ruled that drafts are NOT a restraint of trade per se. So no, it's not so clear cut. TC
TC
Guest
A hard line approach? For decades clubs like Juve were allowed to pick and choose their own refs - with everyone's full knowledge. You should ask Del Piero - he'd know all about it. In the meantime, the FFA has kindly subsidised the recruitment of Del Piero. Great for SFC - but what about the other 9 clubs? And here you are trying to talk manipulation? Please. TC
Diablo
Guest
No, does not compute! The Italian FA does not manipulate the competition. There is a match fixing scandal from 3 or 4 years ago involving a couple of clubs threatened with relegation. The Italian FA is taking a hardline approach to this which should be commended. Match fixing happens in many sports not just Football. If you had more than one AFL league in the world then it would happen there as well. The FFA may help some teams get started but there are no concessions, priority draft picks or uneven draws because you don’t need to do those things in Football. The scoring system in the AFL just makes it impossible for new teams to be competitive in the short term. If you don’t like the comparison to Football then don’t bring it up on an AFL thread.
Lroy
Guest
Tippet is out of contract.. he wants to go to the Swans.. if the AFL stop him that is restraint of trade he would be well within his rights to challenge the AFL in court and London to a f*&ng mile he will win.. end of story.