NRL Salary Cap

When the Australian national rugby league (NRL) competition incorporated in 1998, it inherited a salary cap system from the old NSWRL (introduced in 1990). The current system is explained here.

It seems the salary cap has two primary objectives: to keep clubs solvent and to prevent a situation of vast wealth disparity and almost permanent domination like in English soccer.  These are reasonable goals, however the ignorant rules and their apparently high handed, unconsultative application has left the NRL open to charges that the current salary cap regime is an inflexible, destructive system which has the perverse outcome of artificially breaking up good sides.

There are two things above all others that fans do not want to see: clubs going broke and clubs being broken up.

It is possible to have a salary cap system which goes much further than the current one toward maintaining the solvency requirement, while concurrently achieving a much better balance between the fan requirements of allowing good teams to stay together, but not allowing wealthy clubs to dominate for decades.

The first “pillar” of the policy should be to impose maximum debt to equity ratios. For example, not allow clubs to incur debt of more than 50% of their assets.

The second is to keep the principle of the salary cap while tuning its calculation to allow teams to stay together and reward player loyalty. One way is to allow discounts for length of service.

In 2003, the NRL introduced a “long serving player allowance”, at the time allowing an extra $100,000 in total payments to be made to players with more than 10 years service (with that club). That’s really just a token concession and does nothing for clubs with a few Australian or state representatives who have been there 7 or 8 years. If a club is well managed and can earn enough income to keep a swag of representative players for several years without going beyond the debt to equity limit, why should this not be allowed? Why is it bad if one or two teams are in the grand final for 5 years in a row? Who begrudged Souths and St.George their success in the 50’s and 60’s? Is the NRL now being run by hard line socialists?

A team could discount 10% of a player’s salary for every year above 3 they had played with that club. For example, if a player is paid $200,000 and has played 7 seasons, the club receives a 40% discount. Only $120,000 counts toward the salary cap. Salaries of players with 13 seasons with the one club are exempt.

Thirdly, players should be paid separately (and well) by the NRL for rep games.

With limits on clubs’ debt, this strikes a balance between sound financial management, tradition, history and player loyalty and preventing situations like in European soccer.

Football fans do not want to see successful teams artificially broken up. Who wants to see a club icon finish their career with another team because of an ill conceived salary cap?

Fans don’t have a problem with team dynasties. The St.George-Souths rivalry of the 50’s and 60’s or the Manly-Parramatta rivalry of the late 70’s and early 80’s are a great part of the game and its history.

I recall the ad: “7 premiers in the last 8 years … who will be next?”

If it’s a lottery, who cares?