The End of Fairness: Third Party Agreements and the Health of the Game

BY HERMAN

The NRL salary cap is meant to ensure the fairness of the competition.

This is an important part of success in the Australian sporting market. Every major national Australian sporting competition uses a salary cap. In a market such as Australia, with uneven access to large markets and resources, ensuring that all clubs, regardless of locality, have a chance of being successful is a vital part of maintaining a vibrant and successful competition. It allows the sport to grow and expand into new markets. It gives supporters of all clubs a reason to continue supporting their side. The competitiveness adds to the theatre of the competition. Each year could see your side fly up the ladder or tumble down. There is always hope and fear of what is to come.

Overall, the fact that most Australian sports are incredibly tight competitions, where any club can win the comp over a five year period, is one of their major drawcards. It’s one reason the NRL, AFL, A league and Super Rugby competitions are such great spectacles followed by millions of fans across the country.

Which brings me to the NRL annual report that came out last week. The report painted a pretty picture about the state of the game. Revenue is up. Profits are being posted. The salary cap is working. Everything is fantastic!

Good news. Dave Smith fixed everything.
Good news. Dave Smith fixed everything.

However, sometimes*, it’s not good to take the word of the people in charge about how good the thing they are in charge of is at face value. It turns out doing that can make you doubt the NRL’s version of events.

Within the report, there was one thing that stood out. The discrepancy in third party agreements (TPAs) that fall outside the $6.5 million salary cap between clubs. Some clubs only receive 200k per year in TPAs, others receive 2 million. That is a HUGE discrepancy and should be a cause for concern for all supporters of the NRL. Unwittingly the NRL has made it sparklingly clear that the current way TPAs are being policed has completely undermined the stated goal of the salary cap. Fairness. Fact is that there are clubs in the NRL whose players are getting paid a lot more than other clubs. A LOT MORE. The discrepancies dwarfs the cap cheating scandals of the past. For example, the Storm were “only” ~20% over the cap. The NRL report suggest that some clubs are ~30% over salary cap. Sure it’s legal, but it sure as hell ain’t fair.

This is a problem because money matters. Money is a very successful way of buying success in any sporting endeavour. Contrary to the corny hallmark card bullshit about “passion”, “pride” “desire” “wanting it more” and the like, sporting success can be bought. If you have enough money you can win anything.

This brings me to the second role of a salary cap. Ensuring the financial stability of the sport. Money is so successful at buying success that clubs will literally bankrupt themselves in an attempt to be successful. The salary cap caps the wages bills of each of the clubs, ensuring that they aren’t going bankrupt trying to win. For the sport as a whole this is a good thing. It ensure the long term health of the sport and ensures that at least some clubs remain solvent entities.

What this means is that in the NRL any wages advantage you can get over the competition can be incredibly powerful. Clubs have figured out that TPAs are a way to do that. Some clubs are exploiting the system and it is clear that they are winning big. For them the salary cap is no longer a constraint.

Clubs so blatantly circumventing the cap in this manner mean that under the current system, the cap cannot hope to achieve fairness. With some teams spending as much 30% over the cap on players, “fairness” simply can’t happen. The link between money and success in sport is simply too strong.

If the current system is left in place, classes of NRL “haves” and “have nots” will quickly emerge. Some clubs will always be there at the pointy end of the season. Some will always find themselves at the bottom. Season after season after season. It will be boring.**

This in and of itself will threatens the financial stability of the competition. Without success the “have nots” will struggle to survive. They will struggle to get sponsorship. They will struggle to get attendance.  They will go bankrupt despite the cap (just look at the long running dramas with the financial situation at the Sharks went on and pre-kicked-out Bunnies).

Greater than that, the product and “brand” of the NRL will suffer. One of the great things about the NRL is how close the competition is. With the current TPA system, that is unlikely to be the case into the future.

Allowing these TPA rorts to stand is tantamount to the game shooting itself in the foot. The mess that is TPAs threatens to do far more damage to the “brand” over the medium term than a cocaine scandal could ever hope. The truth is that everything is not as rosy in the NRL as the NRL would like you to think.

*all of the time

**some may argue this is already happening

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