The AFL will introduce a soft cap on football department spending as part of a range of new equalisation measures.
The league, responding to a widening gap between the size of football departments at its poorest and richest clubs, announced on Wednesday it will bring in a luxury tax from the 2015 season.
Instead of enforcing a strict limit on clubs’ burgeoning football expenditure, the league will punish the biggest-spending clubs by taking as much as $1 million a year.
The soft cap will be set at the “projected industry average spend plus $500,000” in 2015 and increase according to inflation in 2016.
Clubs exceeding this limit will be taxed by the AFL at 37.5 per cent in 2015 and 75 per cent in 2016.
The new rule, rubber stamped at Wednesday’s meetings of club presidents and chief executives, will be reviewed in 2017.
“At the heart of these measures is the fans’ experience. A determination to ensure each club has the on-field capacity to compete and potentially win each week,” AFL chairman Mike Fitzpatrick said.
“Uncertainty in outcomes in every match is critical … fans want to know their team can win on any day.”
Fitzpatrick said the league would enhance revenue sharing but that all clubs would retain “club-generated revenue”.
The on-field salary cap will be upped to $10.07m in 2015 and $10.37m the following year, with Fitzpatrick highlighting the shift to a “pure” salary cap.
The league’s cost-of-living allowance (COLA), in which Sydney clubs were able to pay players an extra 9.8 per cent of the cap, will be scaled down over the next two seasons and abolished in 2017.
The COLA will be replaced by an accommodation subsidy, to be paid directly by the league to those players earning a relatively low wage.
The threshold is yet to be determined, but the Swans’ multi-million dollar recruits Lance Franklin and Kurt Tippett will obviously not be covered.
Fitzpatrick revealed the league’s veterans’ allowance will be abolished in 2017.
The AFL will also introduce a new `banking mechanism’ for the salary cap, allowing clubs to exceed the cap for a season if they spent below the limit in any of the preceding two years.
“These policies will be regularly reviewed and refined,” Fitzpatrick said.
Duncan
Guest
This has been brought in because the AFL has realized it can no longer put unlimited funds into Gold Coast, GWS and the Lions as well as the four smaller Victorian clubs and the Power but without financial assistance the two new clubs and the Lions will struggls to survive. I wonder also how Etihad can make a profit when they were quored last year as saying they need a minimum of thirty six thousand to post any sort of profit and preferably ovet forty five thousand. Given quite a few matches this year have been well under this is this another debt the AFL has to shoulder?
Dalgety Carrington
Guest
I'm not sure the new measures will be all that precise in targeting equalisation, they seem a little too blunt instrument (and I don't even come close to understanding the rationale behind cutting the veterans list…is that an equalisation measure?). Why not have something a little more targeted/smarter. I do think there's a good case for the salary cap to be key in equalisation. It gives clubs the chance to directly and immediately impact on their on-field performance (especially with the free-trade movements) and provides an opportunity to build from there with membership, marketing and revenue. I reckon a formula similar to the one below could be used to work out a teams salary cap: # teams in state / # players from state in AFL years since last premiership (up to 40 yrs) avg size of membership past 5 yrs avg age of list / avg ranking in draft of current list avg crowd size past 5 yrs avg ladder pos past 5 yrs revenue from crowds & merch avg CoL past 5 yrs in resident location avg spend off-field past 5 yrs strategic ranking (giving the AFL some latitude for new teams) Each figure would be weighted and standardised to produce a percentage figure between say 0% and 10%, to be added to the base salary cap. Essentially it would give smaller teams, who have had limited recent success a chance to pitch for bigger free agency fish. Also built in is a chance for clubs without access to a strong base of ready made AFL players, to retain players. It also has a built in safety guard for clubs from non-heartland state who are very successful (and therefore more desirable to play for) to get less assistance. Also giving a five year timeframe you can allow a sustained run at it to build a list and decrease tanking concerns.
Jack Smith
Roar Guru
Good point Radeliade "A victim of their own success." I don't like it either to be honest but overall, I can understand most of the methods. Hopefully it does help the comp out.
brian
Guest
Seems a bit open to abuse. If Collingwood hire another fitness guru or psychologist how would the afl know whether his job related to the football department or to the non football department. He would invoice through a business name. Based on what they apparently knew about essendon supplements it seems unlikely they would have any ideas about payments to non players. Getting rid of cola good. The irony is all they are doing is reversing the decision about 10 years ago that instead of all gate revenue going to the afl a portion goes to the home club.
Axle an the guru
Guest
Typical AFL,we will give it to you in one hand and take it back with the other to give to the poor clubs. Clubs have got to learn how to stand on there own two feet. The rich should not have to give there hard earned money to the inept clubs who aint good enough to work at getting stronger. How long do the rich clubs have to keep propping up these clubs that run at million doller loses. If they carnt hold there own then let them go. Survive or fold. Strong clubs shouldn't have to keep propping them up.
Radelaide
Guest
I agree on most of the proposals just not the losing of veterans payments which is effectively punishing successful dynasties. Take Geelong for example they would have a few players on veterans right now (Corey, Enright, Bartel, Johnson etc) who are still playing now because they have been premiership champions, where unsuccessful teams are more likely to turn over more of their players and have less reach veterans stage. Lets take Port for example, they go through a successful 10 year period starting this year (win a couple of premierships over the next 5 years) they will still have most of their champion players but all of a sudden 28 yr olds will have to take larger pay cuts to stay together and because they have done the hard work they become a victim of their own success.
Jim
Guest
Yet again the more financial clubs have to bail out the poorer Prictorian clubs. Maybe if a few teams from Prictorian folded we would have a better competition and only the better players would be playing. Not some of the duds as is the current case. Members pay their memberships so their teams can enjoy some success, they shouldn't have to keep supporting the eternal AFL dole bludgers!!!
Jim
Guest
Yet again the more financial clubs have to bail out the poorer Prictorian clubs. Maybe if a few teams from Prictorian folded we would have a better competition and only the better players would be playing. Not some of the duds as is the current case. Members pay their memberships so their teams can enjoy some success, they shouldn't have to keep supporting the eternal AFL dole bludgers!!!
Jack Smith
Roar Guru
It is only a max of 5%. I am cool with that. Thought was much more.
Jack Smith
Roar Guru
Buddy and Franklin not covered. Oh no...Ireland said they were only paid $40000 combined from the extra cap. Sounds to me liek we were using it as it is meant to be... That spending under the salary cap is a worry though...that's like allowing tanking but in terms of money...
Ryan Buckland
Expert
I looked at the implications of this "soft cap" on football department spending in a piece a few months back, for those who are interested in this kind of thing: http://www.theroar.com.au/2014/03/05/a-primer-on-equalisation-in-the-afl-part-i/