Eels Blogs

In an effort to demystify the NRL Salary Cap (even a little) I have been doing a bit of research and thought I’d put a quick write up together to try to explain the Salary Cap as I understand it.

Where’d the Info Come From?

Let me start by saying that this information is very hard to find as multiple sources have multiple different figures. The info below is heavily based on the information provided here: https://www.nrl.com/nrlhq/referencecentre/salarycap/tabid/10434/default.aspx

This information doesn’t tally with some media reports, ZeroTackle or basically any other sources that list a top level dollar value for the cap, but it's pretty close and I'm assuming there's been some "media rounding" going on to get the figures to look nicer. Let’s just say that the figures are all indicative and the ratios are more or less correct.

If you find any errors or things that need correcting please let me know!

Basic Breakdown of Money Involved in the Salary Cap

Picture the following 4 Buckets:

For those who can’t read my handwriting, that’s:

• Top 25 Salaries – The salaries of the top 25 players
• 2^nd Tier Salaries – The salaries of players who played Telstra Cup but aren’t in the top 25
• RLPA – The Rugby League Players Association
• Misc. Payments – Payments that fall outside the other 3 buckets (yes, it's bottomless)

Money can flow into one of those four buckets. The money can come from a few different sources, namely:

That’s money from the NRL (they distribute a certain amount of dollars each year), money directly from the Club and finally, money from “other sources” – these are payments made directly to players by third parties.

So how much is allowed from where?

The Salary Cap, by definition, is an upper limit on how much money can be put into the various buckets by various parties. Here’s what the Salary Cap limits look like in a table:

What’s that? You want it in a badly drawn picture? Okay, here you go:

Take a moment to actually digest that…when you work through it it’s not actually too bad. A few points to sum it up:

• Basically the majority of players are paid by funds supplies by the NRL, the Clubs proportion these funds to players within the $6.5ish Million they have to spend on Top 25 players.
• Any players outside the Top 25 who play in the first grade competition must have their contracts upgraded via the club provided 2^nd Tier Salary money
• Any players who are moved on before their contract is up forcing the club to pay out a portion of their contract are paid out of the 2^nd Tier Salary money – even if they are now playing for another club
• There are base salaries for players who participate in First Grade so you can’t just bring up a non-Top-25 player and not pay them extra if they’re below the base salary
• The Club can also supplement $100K extra in total to their top 25 players by way of a Motor Vehicle Allowance
• Third Party Sponsors of the Club can also top up salaries a further $600K via a Marquee Player Agreement Allowance – these are basically Club organised TPAs
• The NRL also contributes some funds to support the running of the RLPA and put money into a kitty for Players Retirements

This leaves two “odd” ones. Approved Fees and Third Party Agreements.

Why are these ones odd?

Because they’re defined as unlimited. Strange to have a Cap if there are some “unlimited” buckets isn’t it?

Now Approved Fees includes things such as Tertiary Education fees, medical insurance costs, traineeships, relocation costs etc but all of these expenses must be approved by the NRL and must be accounted by the club. These fees are articulated clearly and this is not an easy area to take advantage of. It’s designed to ensure the clubs are looking after the welfare of their players.

What’s the one that’s left? Oh yeah, Third Party Agreements. Heard of them lately? Also known as “At Arms Length Agreements” they are defined as (and I’ve paraphrased here):

Pre-approved agreements from corporate sponsors who are not associated with the club where the agreements are not negotiated by the club, are not used as an incentive to sign with a club, and are not guaranteed by a club.

Sounds pretty iron clad, doesn’t it?

An interesting thing to note is that all of these agreements must be declared and pre-approved by the NRL. That means two things:

1)      The NRL (supposedly) has an all-inclusive list of Third Party Agreements undertaken by all players at all clubs

2)      The agreements are between a player and a corporate sponsor, so the club has no involvement

A few questions from me

This raises a few questions from me.

Firstly, if the NRL has a full listing of all TPA’s along with their value for all players at all clubs, why not release the aggregated figures per club along with a list of Corporates who own these agreements? Wouldn’t it be interesting to see if the clubs who had players who were most able to maximise these TPA’s (and thus may be inclined to accept a lower market rate) were the most successful clubs over the longer term?

Secondly, if the Third Party Agreements are by definition without Club involvement, why are clubs held responsible for players not reporting correctly to the NRL? In fact, why are Clubs in the loop at all? Shouldn’t it be a players (and players agent) responsibility to report these directly to the NRL?

Okay, so our system has loopholes. What’s the alternative?

There are quite a few alternatives. Here are some of them:

1)      Remove the cap altogether.

2)      Let the NRL assign a value to players based on statistics and use that as the player distribution cap (so remove $$ from the equation altogether)

3)      Don’t cap TPA’s for the individual player, but cap TPA’s per club to ensure that particular clubs can’t hoard all the players who have the ability to pull large TPA’s.

4)      The easiest one? Make all the information visible. Publish the current aggregate TPA values per club and let the rugby league community decide whether it’s fair or not, and let them come up with an alternative.

It’s both laughable and frustrating that the “Unlimited” buckets each club can tap into aren’t visible outside the NRL. If the playing field is truly level then there’s nothing to hide. But requiring all clubs to be 100% visible when you won’t meet that standard yourself comes across as a little…rich.

If you’ve read this far, congratulations! Hopefully when the inevitable news breaks you’ll be able to have a bit more of an informed discussion about the current state of the Salary Cap, TPA’s and how they all work (or don’t work).