AFL luxury tax aims to keep footy fair

Andrew Demetriou leaves the AFL a happy man after overseeing a raft of measures designed to keep footy fair.

With a goal to ensure “any team can win on any given day”, the league will introduce a luxury tax on exorbitant football department spending, end the veterans and cost of living allowances but increase player wages.

“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.

In effect, the luxury tax will stop runaway football department spending in the name of fairness.

It’s socialism AFL-style – the most significant attempt to foster a more equal league since the introduction of the AFL draft in 1986 and salary cap a year later.

The tax works by setting a “soft cap” at the “projected industry average spend plus $500,000” in 2015 and increase according to inflation in 2016.

Clubs exceeding the limit will be taxed by the AFL at 37.5 per cent in 2015 and 75 per cent in 2016, to a maximum of $1 million each.

The architect of the changes, Demetriou’s successor Gillon McLachlan, said spending was just not sustainable and damaged the ability of poorer teams to compete.

“Non-player football department spending has been growing at about ten per cent a year for ten years now,” he said.

“There’s an acceptance (the luxury tax) is necessary.

“We’re trying to find a complex way through.”

The package was crafted by McLachlan in consolation with six clubs representing the top end of town to struggle street.

The behind-the-scenes negotiating was hotly contested, with McLachlan saying Collingwood president Eddie McGuire was a strong advocate for his club.

“Eddie is well-known to be passionate and he protects Collingwood’s interests as a priority,” he said.

“But he is always also keeping an eye out for the game.”

McLachlan said increasing payments to players while curbing non-player football spending was justified.

“If you were given an extra dollar to the less strong clubs, the best way you could spend that would be on players,” he said.

While players will see increased payments, Sydney-based players will lose the controversial cost of living allowance, with below-average waged players receiving a direct rental subsidy.

The on-field salary cap will be upped to $10.07m in 2015 and $10.37m in 2016. In 2017, the veterans allowance will be scrapped.

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.

Demetriou, on his last day as AFL chief executive, agreed the changes were vital to the future of the competition and to “redress the imbalance” between clubs.

“We do want our supporters and players … of clubs to think that every year they get a chance to play in finals,” he said.