NRL CEO Todd Greenberg has remained consistently silent on an issue that continues to ring loudly following last year’s Parramatta Eels salary cap saga – the impact third party agreements (TPAs) have on the competition.
Despite the Eels scandal, little information has yet been provided by the NRL regarding the nature, quantum or justification of TPAs in a league reliant on roster strength.
TPAs were introduced in 2006 following a push from players and agents to remove the cap on certain payments from third parties which were not deemed club or competition specific.
The NRL website notes that players can now earn unlimited amounts from sponsors “who are not associated with the club and who do not use the game’s intellectual property (no club logos, jerseys or emblems) provided these are pre-approved.”
The NRL goes on to state that these agreements may not be negotiated by the club as an incentive for a player to sign a contract, nor can they be guaranteed by the club.
This clearly did not happen at Parramatta, where management were complicit in organising and guaranteeing TPAs to top up players’ salaries.
But other clubs also seem to have issues managing the process. A quick investigation of the NRL’s website shows that pretty much every club has been fined for not disclosing or treating player payments correctly.
While some are minor and administrative in nature, others are not.
Outside of Parramatta, other serious breaches include Canterbury in 2002, New Zealand in 2006, Melbourne in 2010, Cronulla in 2014, and the Titans in 2014.
Why is this all so difficult to manage? The answer lies in the significant benefit TPAs provide in strengthening a team’s roster.
The NRL does not provide a breakdown of TPA amounts by club or player, but does state that individual players registered third party agreements totalled in excess of $15 million in 2015.
This would equate to an average of $938,000 per club, but clearly some clubs are stronger than others.
Fairfax columnist Adrian Proszenko notes an estimated “seven-figure discrepancy between what the rich and poor franchises are able to bring in for their players”, in line with estimates also provided by Phil Gould.
Whatever the number may be, it is clear that TPAs managed effectively can add significant extra funds to pay players, providing a strong benefit in attracting and retaining the talent required to win a premiership.
With so much on the line, it is understandable how important it is for clubs to get the balance of TPAs and salaries correct, particularly as executives are usually judged on the performance of their team on the field.
And herein lies the problem. The NRL’s system relies on the clubs to exclude themselves from any negotiations or even discussions surrounding TPAs, despite the fact they potentially make the difference between having a competitive roster or not.
Is this realistic or is it even possible? Wouldn’t every team want to know what its players are getting paid in terms of both salaries and endorsements and sponsorships if one of the key reasons for players to move between clubs is financial remuneration?
Understandably, club bosses are not exactly bursting at the seams to speak about the process, given the implications of getting it wrong.
But a remarkably candid article by former Cronulla Shark’s Chairman Damian Irvine sheds more light as to how the TPAs operate within the clubs’ confines:
The way things are done is that agents go to clubs and say “player X is off contract next year, he’s looking for $150,000 salary on the cap, and another $50,000 in third party deals”.
The better resourced clubs have club directors or staff working full-time on finding and facilitating third party deals wherever they can. It makes them more attractive to players, and agents, and it means they can spend more on their roster than other clubs.
The stupidity of the situation the game has created with these third party deals is that the resources of the game, that is underpaid office staff and commercial staff who are working their backsides off to fill regular club inventory sales, hospitality and signage to keep your club alive and commercially viable are now expected, pressured mostly, into finding and filling third party obligations that the football manager has included to win the services of a player.
Then, although not allowed to be guaranteed in the contract to lure the player to the club, if for some reason a third party sponsor doesn’t pay the player, goes broke, or gets upset with player behaviour or the world in general and decides they won’t honour the deal, the star player and his agent come banging on the CEOs door demanding their money that was ‘promised’ and using it as a reason to get out of the club and go somewhere else where they will get their extra cash.
Irvine’s article indicates that, quite contrary to the NRL’s view of TPAs sitting outside of team activities, clubs are in fact allocating fulltime resources to sourcing and facilitating deals for players. He finishes his article with the following comment:
“I know one thing for certain, all the wage bills, phone bills, petrol and time spent on obtaining these third party deals are sent to and paid by your club.”
On a Twitter fan forum in May 2016, Greenberg was questioned about the opaque nature of TPAs and how fans should interpret them. He responded as follows:
“Clearly it’s something we need to do a better job of explaining because telling that story and making sure people understand the intricate details of how third party agreements work is important. We want to see it done in a fair, level and transparent playing field.”
Almost a year later, his silence is deafening.
Danielle
Guest
The Barry is a true blue Bulldog.
SSTID_1970
Roar Rookie
The Barry Souths don't have one TPA... they have many! Like ALL other clubs. I am sure Souths do better than most other Sydney clubs but I still hate the inequity and inconsistency inherent in the system. If Souths didn't have Russell Crowe and James Packer backing them and helping to to attract corporate dollars I have no doubt Souths would be in worse shape than the Knights and in more financial trouble than the Balmain Tigers side of the West Tigers franchise. I feel for clubs like the Knights, Dragons and Tigers who are forced to eat scraps from the corporate sponsorship table. The fact that Souths may benefit from this system in a way that gives them some advantage over other clubs is not something I celebrate. But clearly the Broncos have a bottomless pit of TPA's and sponsors lining up to throw their money at the Broncos and this is all "off the books" and not counted against the salary cap which clearly allows teams like the Broncos, Rabbitohs and Roosters an advantage. There are also a lot of businesses on the north shore and major companies like URM that throw money at the Sea Eagles but I get the feeling that the 3 Sydney clubs combined would still fall short of the money that is sitting behind the Broncos (and remember the combined fortunes of Russell Crowe and James Packer are irrelevant as they cannot finance TPAs for their players). You have me at a disadvantage, as I am new to the site I don't know which club you support. So who do you follow?
The Barry
Roar Guru
Way to completely miss the point! If the advantage the Broncos got from third party deals was so pronounced why have they gone ten years without winning a comp? If the 3-4 Sydney teams that everyone keeps mentioning have such an advantage why have none of them dominated premierships? If it's such a massive advantage where's the evidence? The main difference is that some clubs find, foster and build corporate sponsors while some clubs can't be bothered and would prefer to whinge about life being unfair. I went back to 2006 because that's when the third party sponsorship rules were introduced. Of course with your photographic memory you knew that already.
The Barry
Roar Guru
I'm sure Souths don't have any TPA deals going for their players...
Billy Buttons
Roar Rookie
That's not true. The primary purpose of the cap is to ensure an even playing field between clubs. This is from the NRL's website: "The NRL Salary Cap serves two functions: 1. It assists in "spreading the playing talent" so that a few better resourced clubs cannot simply out-bid other clubs for all of the best players. If a few clubs are able to spend unlimited funds it will reduce the attraction of games to fans, sponsors and media partners due to an uneven competition. Allowing clubs to spend an unlimited amount on players would drive some clubs out of the competition as they would struggle to match the prices wealthy clubs could afford to pay." The only reason the Salary Cap stands up legally is because the NRL has a right to ensure it runs an even comp. TPA's are threatening that, and in hand, potentially threatening the legal standing of the Salary Cap.... but that's another article all together :)
Billy Buttons
Roar Rookie
Yes it is unfortunate in my view. I'm not asking for details of every business transaction a player is involved in. I agree that asking to view players bank accounts is just not possible nor is it reasonable, but there has to be a middle ground. The NRL discloses how much each club is allocated in players salaries, why not show us how much each club declares in TPA payments? Every public company discloses how much it pays its top executives in salary as well as share bonuses and the like. Players have their contract values played out all through the media, these guys are not signing up to work for McDonalds they are taking high profile jobs and need to accept the limelight that comes with it. Even if clubs don't break it down by player, they could tell us the total amount so we can see that e.g. the Broncos have $1.5M vs the Knights $200K. This is a question about governance and the number of breaches shows the system is not working. Greenberg himself says he wants to provide more 'transparency' on the issue.
billyg
Roar Rookie
sstid - tongue firmly planted in the cheek , however its interesting to note that none of those questions have ever been satisfactorily answered by the NRL and entity involved . As I understand it, the NRL has to vet and approve (if not even register) all TPA's to ensure they are valid and are not being used as a mechanism to circumvent the salary cap or exploit a loophole. You hear it annually after each audit of the salary cap. I feel that the reason that the NRL is deafly silent on the whole matter is that they are aware of the scale and magnitude of TPA's in clubland and are wary of the public and media (read: NEWS Ltd and Hadley) backlash that may occur as a result of the release of the statistics. It is symptomatic of the way the NRL deal with the issues - player agent investigations, player investigations, fafita affair, the foran issue and so on, Andrew Gee affair and so on. You sweep it away until the public and media forget about it or the outcry becomes so great that they are forced to act and then over react.
Mapik
Guest
Wow! All the way back in 2006? What a hazy memory. Just for some balance to those Bronco's supporters who think it is a god given right for Brisbane to win every second year the Sharks just won their very first comp since joining in 1967 and the "cheating" eels haven't won a comp since 1986. But yeah, what a drought for the Bronco's (who lets not forget were one dropped kick off away from winning yet another comp just 2 years ago). Yeah, the Bronco's are playing on an even playing field to the rest of the comp.
Mushi
Guest
I think there seems to be two key themes form the author’s article and responses in the comments. Perfect transparency and why does our system not work. First is we basically need complete transparency. Sounds all well and good until you know, we try to apply it in the real world. Sponsors, who negotiate bilateral agreements on a confidential basis, are either going to price the heightened reputational risk into their sponsorships (less resources for the NRL) or in the case of larger companies with set policies, just walk on by the NRL as being too difficult to deal with (less resources for the NRL). Then you get the legal rights, whilst it may seem like they’ve given up their “right to privacy” with all the tabloid stuff it’s more they commercially gave up the expectation of anonymity. They still do have many of the protections that we do and if the NRL is going to make it compulsory to remove some of those they’ll rightly have a battle on their hands. Not just from the NRLPA but many other groups would support the challenge as I personally wouldn’t want a precedent set where employers decide which protections I’m entitled to without consultation or reasonable grounds. And “being frustrating for consumers of your product” isn’t really grounds in my view, which is where we are at. So then there is the system issue. So why don’t other codes have these TPA debacles? First, and I remember a former player wrote something on here talking about it in terms of players getting into trouble because NRL players are high profile enough to command attention but not wealthy enough to insulate themselves from it. The same issue is part of it here. TPA’s move the dial more in league than they do for many other sports. It’s a an outright thing and a “marginal utility” thing, this means they can be a greater inducement than say for the guy on a 10m a year contract in the NFL. Then there is the issue that when you’re found breaking the rules in other comps you get made an example of with an enduring penalty, other teams see that and the risk reward suddenly doesn’t make sense. The NBA took away years of first round picks from Minnesota for an under the table agreement with Joe Smith. The NFL took the equivalent amount of the next years cap for the redskins not even breaking the rules but effectively being cute and using a loophole during a non-cap year to move cap charges into a year they wouldn’t count. In the NRL they break out wet lettuce and say hey here is (now) a less than 1 year penalty for up to 10+ years of benefit. Even the AFL took away future draft picks. In the NBA example, it just isn’t worth cheating. If you get caught you run the risk of hamstringing your team. In the NRL it is definitely worth it. That’s the bit we need to fix – the penalties. Give clubs a materially reduced cap going forward when they cheat (with the gap to be paid in an annual fine that is distributed to all players to keep the player pool equalised) and they’ll worry about getting caught. I’d give an amnesty to come forward, and treat all disclosed events as minor ones with fines, and then have teams on notice that they’ll be hamstrung for seasons on end if they cheat for seasons on end.
Mushi
Guest
So basically anyone involed with the NRL (players or sponsors) loses all rights to confidentiality that the rest of the nation enjoys so that untrained investigators can make leaps in logic and accustaions around the inappropriatness of their dealings?
Mushi
Guest
The whole point of a Brown paper bag deal is that it deliberately avoids the a bank account. Monitoring the bank accounts of the guy receiving the cash is basically relying on them being so incapable of executing the fraud that you'd surely catch them without trying. Outside of brown paper bag cash payments you could also just put it into family's accounts or various other undeclared vehicles. From there the NRL would a team larger, better trained (and more expensive) than anything the public secotr has to monitor the payments effectively. You would also get a bit of an issue around montioring the bank acocunts of family members/assocaites given the NRL isn't actually the police and has no legla power to do so. You hit the nail on the head with the last part though. The issue is the penalty is less than the benefit and as long as it remains so teams will behave in teh way the NRL is incentivising them.
Mushi
Guest
Is it really that "unforutnate" they don't show us. I'm not sure paying my annual membership entitles me to details of every business transaction a player is involved in. You literally have no right in this country to what you're asking for.
Mushi
Guest
No the whole purpose of the cap is to restrict how much of the NRL's money they get paid not paid in general. If that were the case you would have no cap as I couldn't see that remotely surviving a challenge.
SSTID_1970
Roar Rookie
ScottWoodward.me "ANY club in Sydney are in a prime position to attract RL loving corporates, as the Broncos are in Brisbane" Let me put it this way, in Sydney 9 clubs have to fight for their share of the Sydney corporate market, or one slice each of a pie that has been divided into 9 pieces. Meanwhile Brisbane have a monopoly over most of QLD and over Brisbane in particularly, so they have the whole pie to themselves. Hardly a level playing field now is it? "My point being it is NOT a level playing field." OK, so you do get, But my point is still valid. The only club and group of supporters who don't have a problem with the current system that allows at least one club to have a virtual bottomless pit full of TPA's are the Broncos. It's pretty clear that for the sake of a healthy and sustainable national competition the NRL have a vested interest in seeing that teams both north and south of the border do well and prosper. Equally the NRL have had an agenda for a long time to fold, merge or move teams from Sydney to allow them to expand the game into other areas outside of NSW to increase their market share and the games exposure nationally. For mine ALL payments to players should be counted under a clubs salary cap (albeit an expanded one to allow for this). But no one is willing to open THAT pandora's box as it is a legal minefield to try and gain access to a players financial records and a restraint of trade to dictate if they are able to earn income through endorsements over and above a salary cap. Frankly it is just a legal form of cheating. I can't help but wonder though if there was a dramatic shift in the status quo so that Sydney clubs enjoyed a monopoly of sponsorship dollars and TPA's whether the NRL would act to address this inequality to protect Brisbane and Melbourne and the NRL's interests in each of these states.
SSTID_1970
Roar Rookie
@billyg Careful billy boooiyeee stick your tongue too firmly into your cheek and it might get stuck there! But reading between the lines, there needs to be more transparency involved in the entire TPA process for mine. That includes only one set of books. Perhaps if all TPA's were registered directly with the NRL and bypassing the clubs it would help to ease the perception that the clubs are doing under the table deals. Then again having a cap on a clubs overall TPA's (a ceiling that sets a limit on how much these players get while representing their clubs and the NRL) might be a fairer way to go but then that would be disadvantaging teams like the Broncos who have a monopoly in this area.
Magnus M. Østergaard
Roar Guru
Have to agree, Billy Slater has has lent his face to a local pool company in Brisbane, not sure how much that has to do with the Storm.
The Barry
Roar Guru
In your first point. That's fine if you're running a cleaning company (we might be thinking a little small) and looking for a league player to represent your company. But how often do you think that happens? What about - you have a cleaning company. You haven't considered sponsoring a footy player before. A club reaches out to you, knows something of your business and says we have a number of players that are looking for sponsorship - how about an introduction? That's perfectly within the rules and why some clubs manage the TPAs better than others. After that it's up to you to negotiate terms with the player(s). When that player leaves the club maybe you continue your relationship with him. Maybe you contact the club to start a new one. Surely the turnover in premiers and grand finalists is THE way to gauge the success of the cap and anything that goes with it.
andrew
Guest
I get your point. I think if say it says Jarryd Hayne is on $400,000 plus $250,000 in 3rd party payments - the NRL have this registered and know which company (or multiple companies) are paying this payment. But with 400 players with different TPA's it is hard for the NRL to monitor all the links between 3rd parties and the clubs. Neil Henry's brother works as a sales rep for the car dealership that sponsors Leivaha Pulu - (hypothetically). With all the agreements out there, the NRL probably won't notice this, but media organisations will get tips or do investigating. And clubs will no that and be more accountable. I'm happy for clubs to be allowed to be involved in TPA's - It will drive clubs to recruit better back of house staff and reward clubs accordingly with better squads and more on field success.
Billy Buttons
Roar Rookie
Thanks for the comments guys. I disagree again though, if TPAs are not connected to the club why are they being asked for to join a specific club? If you want Joe Bloggs to endorse your cleaning company, it shouldn't matter if he plays for Manly or Melbourne or Penrith. If you want him to endorse your cleaning company because you're a Melbourne fan and want him at Melbourne, good for you but that is getting around the point of the TPA carve out. Whilst the comp has had good turnover in premiers, it has had WAY too many cap scandals for the system to be deemed a success. What other codes have had this type of drama? Teams losing titles, teams being stripped of points, and suspicion over every big signing because we don't know how much is being paid above board and how much is a mysterious TPA. Greenberg himself has said they need to do more to give transparency around it - but he has done nothing. That is the point of the article, I'm not suggesting it's easy or that I have a fix. But give us something - the integrity of the comp is at stake.
Magnus M. Østergaard
Roar Guru
But how exactly does that clear it up? Now we know the amounts, which the NRL already know anyway, but we dont know how they got them, which is appreanty such a big issues. You last point is very good tho. A club with a head office in turmoil is never going to win anything.