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NRL Mailbox: Why the salary cap is here to stay

NRL Thu, May 26, 2011 - 12:30 PM

The salary cap ensures an even competition, meaning every week your team is a real chance of winning. Copyright: Action Photographics

The NRL often gets questions about the benefits of a salary cap system, why clubs can’t spend whatever they want on players and how some clubs seem to have plenty of elite players and still remain under the Salary Cap. Here is the league's explanation of how the Cap works.

 

The NRL Salary Cap is currently $4.3m for the 25 highest paid players at each club. Each club can exercise its discretion in relation to how much individual players are paid, providing that total payments do not exceed the $4.3m cap. In addition to the $4.3m Salary Cap for the top 25 players, each club may spend up to an additional $350,000 on players outside the top 25 who play in the NRL competition.

There is a further $100,000 that is paid by the NRL to each club that goes to the Player Retirement/Rugby League Players’ Association fund.

It is important to note the Cap affects what both the club and persons associated with the club can pay a player. A player can earn unlimited amounts outside of the Cap by leveraging his own intellectual property, provided any agreements are approved by the Salary Cap Auditor and that they comply with the Salary Cap Guidelines. For example, the game allowed almost $6 million in approved third party arrangements last year that saw players raise significant income on the back of the profile they earn through Rugby League.

There are also a number of education and other allowances, such as medical insurance costs and relocation/ temporary accommodation costs, that are outside the Cap.

In terms of how some clubs can have a lot of elite players yet remain under the Cap, there are various reasons for this. The reality is all clubs spend the Salary Cap but not all are successful on the field. Someone has to come last and someone has to win, regardless of what they spend. Some clubs will attract players on the basis of what the club can offer a player’s career rather than just money. Other clubs may need to spend more money to attract the same level of player.

Many factors affect individual players’ remuneration levels. Some of the reasons why a player may sign with a club include staying close to the player’s home town and family, the chance to work with one of the top coaches in the game, increased opportunity to play NRL with that club due to a lack of competition for the player’s preferred position, and the number of support facilities on offer.

Apart from the benefits the Cap has brought in distributing player talent, it is also significant to remember that it reflects what the vast majority of clubs can afford to pay. Its presence has led to more stability in terms of club finances and assisted the game in expanding to the Gold Coast.

 

The nature of the Cap is that it will force some movement of players but often when people look at this they neglect to also note the playing talent that is being accumulated at the same time. The equation the Cap guards against is a team that wishes on one hand to retain all its high profile players and at the same time to outspend other clubs in the recruitment market.

 

Allowing a minority of financially strong clubs to spend an unlimited amount on players would see a significant number of clubs forced into a situation of decline that would see first a lop-sided competition and then a significantly smaller one than we have today.

 

That said, the game never wants to lose a single player. We want to grow the game’s revenue and with it the Cap so that we continue to offer more opportunity to more players. Spending more than the game or the clubs can afford however is not a viable option. Rugby League already returns a greater percentage of revenue to the players than other codes and it gives a higher proportion of its revenue to club grants than other codes.

 

It is worth noting that the current system has delivered some of the most even and closely fought competitions in the game’s history. The last four years has seen every NRL team making the finals and an era of record crowds for the game.

 

Importantly, where there are options to make improvements to the Cap we will always look at them.