The word ‘unlimited’ is attached to the NRL third party agreements (TPAs), and unless your club is located near big corporates who find rugby league players marketable then you are offside before kick off in salary negotiations.
The NRL’s major financial partner is Channel Nine and they have taken advantage of a major loophole in the salary cap rules.
In 2006, the NRL introduced an allowance for players who can enter into TPAs with club sponsors; they called it marquee player agreements (MPAs). This season, the top 25 players were allowed to earn up to a maximum $600,000 in MPAs.
Most clubs can handle MPAs on top of the 2015 $6.55 million salary cap. But there are also TPAs with ‘unlimited’ dollars attached.
The broadcasters have been suffering with substandard performances in recent years from the high-profile Brisbane Broncos. It is crucial for the ratings that the Broncos are successful and that they make the playoffs. 10s of millions go down the drain in lost advertising revenue if the Broncos are not major contenders, which makes justifying TPAs easy.
Something had to be done and it was no coincidence that champion coach Wayne Bennett is back as head coach and it is also no surprise that the player list is bulging and boasts at least seven players capable of playing fullback in first grade side.
But that’s not enough – exciting prop James Gavet has just been signed on a two-year deal after he secured a release from the Wests Tigers.
How can this be?
The NRL have designed a TPA strategy that allows big clubs in a big city to have a huge edge over other clubs. The Broncos and the Roosters are only two clubs who have been able to exploit this.
This is how it can be done.
A champion, say Sonny Bill Williams as an example (these figures are for argument’s sake), is signed for 500k when his real value is $1 million. He is paid the remainder by a third party, agreeing to an exclusive interview or two. He may even have to co-host the Footy Show.
A club sponsor or official cannot enter into a TPA with a player, but with so many sub-companies and affiliates associated with Channel Nine and Foxtel, it would not be difficult to find a sponsorship conduit. Channel Nine Queensland is a sponsor of the Broncos and because of their immense following they are granted most Friday night games.
The parent company of the Brisbane Broncos is Nationwide News Pty Ltd, a subsidiary of News Limited, which as of June 30 2007 owns 68.87 per cent of Broncos shares. News also owns 50 per cent of Foxtel shares. It was the News Corp boss Lachlan Murdoch who phoned Wayne Bennett in July to convince him to come back to the Broncos. His return was officially announced the following day.
When Channel Nine and Foxtel fork out over $1 billion in exclusive TV rights, they clearly want the high-rating NRL teams playing in prime time, but importantly they have to be winners and they have demonstrated that they are prepared to be proactive to underwrite their investment in the form of TPAs.
They want the best players and the best coaches who attract the biggest TV audience.
This is what the NRL say: “All third party agreements must be registered and approved beforehand. This is to ensure that they do not become a way for clubs or players to use sponsors or third parties to undermine the salary cap and also for the game to ensure the protection of club and game intellectual property. There are provisions for club sponsors to enter into agreements with elite players under the Marquee Player Agreement allowance.”
They say that this is their plan to ensure that the salary cap is “not undermined”, but that is exactly what is being done.
The clubs that are in the ideal position to exploit these naive rules are the big clubs in the big NRL cities: the Roosters, Souths, Parramatta, the Bulldogs and Brisbane.
If you are wondering why the Parramatta Eels have not been more successful in recent years it is not because they have not tried to exploit the cap, but because of a divisive board, poor recruitment and coaching.
The clubs who are at are clear disadvantage are the New Zealand Warriors, who are in a rugby union-centric country, and the Melbourne Storm, who could never attract big corporate fees for their high-profile players in an AFL city. The Cowboys, although in a NRL heartland in Townsville, do not have the number of corporates of a major capital city.
The marquee payments and the TPAs needs to be re-worked so that they represent a level playing field for each club. The ability to attract corporate sponsors is crucial in this process and each club needs to be rated on their demographic and geographic capabilities and the likelihood of aligning with a TPA.
Compensation should be available to the clubs who are disadvantaged if the NRL are serious. There is overwhelming testimony that many clubs are giving away a $1m head start in the race to win the premiership.
The NRL have said income that a player earns from parties not related to his club is generally not included in the salary cap, however, the details of the agreement must be advised to the club by the player.
Third-party agreements are payments made by companies directly to players. There is no restriction on the amount a player can earn through TPAs where he is being paid for his own intellectual property, without the need to employ club logos or names and where the company involved is neither a club sponsor nor are they acting on behalf of a club to secure the player’s services.
The NRL say: “an example of this is a player promoting a brand or product, for example, Billy Slater and Australian Bananas”. The only problem is that Bananas do not grow in Melbourne.
Many players have TPAs that are outside the salary cap. Individual players registered third party agreements in 2013 was in excess of $10 million.
I wonder what percentage of that $10 million was negotiated directly with the players without a hand pass from the club? The answer would be somewhere between zero and not much, which underlines the naivety of the TPAs and its authors.
Walshy
Guest
Can someone explain to me about the parra debaricle I'm hearing all the third party chap is parra only doing what everyone else is doing
The RiffMarn
Guest
Will be a scary day in league when Penrith who until Gould came along did not use TPA's as it was against club policy believe it not (which in part explains the salary cap mess they got into), can fully utilise TPA's the same as other Sydney clubs. While Gould is there anything is possible as doors are beginning to open - we have seen plenty of Idris & Moylan on the footy show this year for instance.
The RiffMarn
Guest
Sorry Scott Im pretty sure the Panthers membership base was over 16K last year - most of the other numbers you have mentioned for clubs will include non-ticketed memberships wheras Penrith's numbers only represent ticketed memberships Re: crowds a minor miracle given hot Sat arvo games in March, no Sat 7:30pm no Sunday arvo games just 4 home games involving Syd teams & more MNF games than any other team, that Penrith slightly increased crowds in 2014
Dogs Of War
Roar Guru
Are they? Yes they have the finanaces, but they really need to be working solidly with the Govt and Union to get that indoor stadium built fast. Once they have the right facilities, and can work out how to attract Corporates to assist in recruitment (and understand that they should be targetting family men as Canberra is ideal for that sort of person, rather than just any young talent), then they could become a club that players want to play for.
Dogs Of War
Roar Guru
Maybe you guys could get Sandow back and James could organise him to spruik one of his casino's in Macua.
Pete
Guest
That's a naive view point and contradicts your article. If Canberra, North Queensland, Titans etc are at multi million dollar recruitment disadvantages due to location and access to big business then how much better "managed" do they need to make up the difference? Canberra are as well managed as any club in the league in the back office and invest the most of any club in junior development (growing their base). Somehow this doesnt translate into success? Maybe it's not all down to intangible "good management".
ScottWoodward.me
Roar Guru
Hi Glenn, The Finals will work themselves out but the h&a matches can be controlled by ch 9 and they are already demonstrated how influential they can be with recruiting.
Glenn Innes
Guest
Scott - But the other consideration nine has to take into account is do they want to be broadcasting lots of one sided games where people get bored and head for the remote at half time? Scott - If that is the case then why do the NFL allow teams form from provincial backwaters like Seattle and Denver to play in it's Superbowl.?Surely they should engineer things so New York,Chicago., Los Angeles (oops they don't even have a franchise) make it nearly every year? If the NRL goes down the path of setting things up so Brisbane play South"s every year people will wake up to that charade pretty quickly and the whole comp will lose credibility, which is why the NFL have not gone down that path.
ScottWoodward.me
Roar Guru
Red Block, No doubt Penrith is an NRL heart land and they have the best juniors, but to do well, really well, you need to rate well on TV. The Panthers dont do that on Tv and they are low on members and crowds attendance: Membership Numbers for Clubs Rabbitohs – 27,543 Broncos - 22,165 Dragons – 15,615 Knights - 14,456 Eels – 13,675 Bulldogs – 13,035 Storm - 11,813 Roosters – 12,963 Cowboys - 10,536 Sea Eagles – 10,123 Panthers – 8,255 Warriors - 6,679 Sharks – 6,812 Titans - 7,409 Tigers – 6,497 Raiders - 6,698 Average Crowd Figures for Clubs (2013) Broncos - 30,480 Rabbitohs –22,261 Bulldogs – 19,590 Roosters – 19,368 Knights - 18,821 Storm - 16,302 Warriors - 16,197 Cowboys - 14,112 Titans - 14,028 Sea Eagles – 13,522 Sharks – 13,470 Eels – 12,456 Dragons – 12,422 Tigers – 11,452 Panthers – 10,337 Raiders - 10,226
Red Block
Guest
Scott, you forgot Penrith. Although they have trouble attracting corporate dollars, they have the financial clout of the largest entertainment complex in the SH. Also Channel 9 were very concerned with losing support in the West and sent their Number 1 trouble shooter Gus Gould out west to sort through their mess. After a few lean years and some astute recruitment,, the results are showing. A Penrith/Souths GF would have been a ratings bonanza!
RMC
Roar Pro
Haha I was over hearing about Hayne the morning after he announced he was leaving! Yeah I agree Morgan is no where near the class of JT, but really who is? When he retires the Cowboys are seriously going to have to restructure a lot of their plays. One positive is that this year was the Cowboys best year ever defensively. I'll be pretty annoyed if Taumalolo leaves the club, given he's been on decent coin since he was 15. It was bad enough losing Sims, given time he'd been out and the potential to have one the best backrows in the comp in a few years. The ace for the Cowboys keeping Taumalolo will be if he doesn't want to leave his family - he spoke about it last time he resigned. Have heard he is thinking of leaving (I heard he wanted to if Henry remained coach) or have you heard the Roosters are going to offer him massive money? What are your thoughts the Cowboys hooker position. I think the best option is Cameron King - Bennent had massive wraps on him a few years ago.
ScottWoodward.me
Roar Guru
Rod, I have no problem if some of our top players go, we always replace them. 2015 will be another fab year and we will not miss Sam and Jarryd or SBW. Some new talent will emerge to replace them.
ScottWoodward.me
Roar Guru
RMC 100% But lets be clear, the NRL or Ch 9 do not want The Sharks and the Raiders in the GFinal. It is all about ratings and the teams that rate well will have an advantage. Its called good business.
RMC
Roar Pro
Yeah I thought that is an issue, capping the amount players can earn. However, individually aren't players already capped at how much they earn through third party? Also the issue with NRL giving additional funding/cap room to certain clubs is that those clubs may then be at an advantage. Also a club such as Cronulla could be receiving funding when they should be able to attract sponsors. But regardless the NRL must do something to even out the competition. This discretionary power is ridiculous. Firstly it rewards players who are disloyal to the game. Secondly it rewards clubs who star players are signed, not developed. Thirdly all it takes is a player saying he thinking of leaving to for Smith to hand him more money. Whats stopping a player such as Thurston saying he is thinking of leaving for French rugby just to get a top up? Or a star player leaving for one year, their club then signs a star player to replace him, after a year the player 'has a change of heart' and saying he want to return to his club. The club would then have both star players with NRL paying one of them.
Rod
Guest
I honestly can't see the salary cap lasting much longer . The NRL is not like the NFL where it's so wealthy and salaries so high, it has no real competition to steal it's best and brightest . The AFL simply does not produce athletes that are suitable for league and union by and large, so it does not need to worry about getting raided so the salary cap works. The only way the NRL can try and equalise the comp is through how it distributes. It's wealth, the way you could look at, you might say the broncos has a massive market to itself, because of this the NRL may give no grant to the broncos , but might look at the sharks a much bigger grant. Of course that's a simple overview. But maybe something along these lines might work
ScottWoodward.me
Roar Guru
RNC Happy to get off topic as long as you dont wanna talk about Jarryd Hayne. The Cowboys already have a fullback in Lachlan Coote and we have not seen the best of him as yet. Mick Morgan had a gr8 season and his ability to get Try Assists is what I mark class fullbacks on, byt in the fair dinkum department he is not in JT post code. To add to that, I think you will lose Taumalolo to the Roosters.
ScottWoodward.me
Roar Guru
RMC, thanks, It gets dangerous when you shut the gate on what players can earn, it is better to the NRL to fill in the gaps with the clubs that are disadvantaged. Ponder this: The Eels and the Bulldogs fill their caps in 12 months but both want Hayne and Folau. How do they do it? A: The NRL give them the cash and it is not included in the cap because the threat will be they will head to UK Union. btw, Hayne will be going to the Bulldogs, not the Eels.
ScottWoodward.me
Roar Guru
Muzz I have no doubt that our beloved NRL boss is an avid Roarer and he will take on board this problem and fix it.
RMC
Roar Pro
Don't mean to get off topic on this thread, but I think Michael Morgan will be key when JT retires. If he doesn't move into the halves next year, he could move there when JT retires. Given the abundance of talented outside backs that come out of North QLD they could find another gun fullback. If he steps up I think, in time, after JT retires they could be competitive.
Muzz
Guest
How can you say he's doing a good job when you present an article highlighting that some teams are at a disadvantage before the season even starts?