NRL 360 host and former NRL player Ben Ikin recently did a piece for Fox Sports highlighting the NRL salary cap and grants from 2012 to 2019.
The figures during that time make for some very interesting reading.
The clubs weren’t too pleased with NRL headquarters on how they spent their money, but maybe they need to look closer to home. I want to discuss how clubs used the salary cap and grants, and how the clubs fared from these particular years of 2012, 2017 and 2019.
Using the figures Ikin presented in his article, it’s clear that clubs are dropping money on average, which is despite getting a healthy grant from the league, as well as revenue through merchandise, memberships, crowd attendances and sponsorship. And to top it off, some clubs gained funding from their leagues clubs, while others are privately owned.
To bring a new perspective into clubs’ financial mismanagement, hypothetically, I am going to alter the figures of 2017 and 2019 where the cap is going to be $1.65 million over the grant, like it was in 2012.
In this hypothetical game, in 2017, the clubs acquired grants of $9.5 million. The salary cap was $11.15 million. So if the cap was over $1.65 million like it was in 2012, all clubs in total would squander $111.40 million – a $6.96 million average loss per club. From 2012, that is an extra $91.40 million shortfall – a $5.71 million average loss per club.
And in 2019, the salary cap hypothetically was $14.65 million – $1.65 million over the $13 million grant. The results: all clubs lost $105.4 million – a $6.58 million average loss per club.
Even in this hypothetical game, it still uncovers the extra spending from clubs outside from the grant, even though the grant had a healthy positive gap from the salary cap.
So what is the solution? How do clubs wipe out the $31 million defecit in 2019? With $31 million, that equates to a $1.93 million loss per club.
The easy solution is to reduce the salary cap by $1.93 million to $8.07 million to every club. However, what happens in two or three years’ time if the clubs are again $31 million in the red? Do they go back to reduce the cap even further?
I am sure the RLPA and the players would be thrilled with that. If that were to happen, you could see many players leaving the NRL and going to French or Japanese rugby union.
The alternative solutions to reducing club debt is for clubs to streamline their operations. There needs to be fewer jobs for boys. Another solution is for every club to find new revenue streams, grow their brand and stop relying on handouts from the league, poker machines or private ownership. Or maybe the NRL could introduce a salary cap for non-playing staff.
Once this coronavirus pandemic is over, every club needs a major reset of how they operate. The amount of spending that has occurred between 2012 to 2019 is not sustainable. If clubs don’t reset their operational costs, then they would only have themselves to blame if their club goes under.