THE SALARY CAP - An in depth explanation.

[Captain Kickass]

Salary Cap - How does it work?

The NRL Salary Cap for 2008 is .....

• $4.1m for the 25 highest paid players at each club.
• If each player was paid an equal amount, they would get about $160,000 each.
• Each club can exercise its discretion in relation to how much individual players are paid, providing that total payments do not exceed the $4.1m cap.
• In addition to the $4.1m Salary Cap for 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.
• Total Cap - $4,450,000 (minimum squad = 25 players)

In 2008 the NRL has introduced an exciting new competition (the NYC)
• For players 20 years and under.
• Will have a Salary Cap of $250,000 for the top 20 players who qualify for the Toyota Cup but do not sit in the clubs top 25 Salary Cap.
• In addition to the Salary Cap for the top 20 NYC players, each club will be able to spend an additional $50,000 on players outside the NYC top 20 who qualify and play in the NYC.
• Total NYC cap - $300,000 (minimum squad = 20 players)

Salary Cap Timeline
1990 : Salary Cap introduced by NSWRL with a cap ranging from $800,000 to $1.5m depending on individual Club circumstances.
1991 : NSWRL lifts Salary Cap to $1.6m.
1994 : NSWRL approves rise in maximum Salary Cap to $1.8m.
1997 : Super League war. No Salary Cap in place.
1998 : NRL formed and proposes $3.25m Salary Cap for 1999. Cap acknowledges 'notional values' of players from contracts signed during the Super League war.
1999 : NRL Club Chief Executives, Chairmen and NRL Board recommend retention of the $3.25m Salary Cap for next two seasons.
2000 : NRL provides guidelines for breaches of the Salary Cap including fines and the loss of competition points for breaches from 2001 and beyond.
The Sponsor Servicing Allowance was introduced lifting the effective Salary Cap from $3.25m to $3.325m.
2001 : Sponsor Servicing Allowance further increased lifting the effective Salary Cap $3.347m.
2002 : Clubs which could increase overall sponsorships were provided with an extension of the Sponsor Servicing Allowance bringing the total available allowance to $200,000 and an effective Salary Cap of $3.45m.
2003 : Long Serving Player Allowance introduced to encourage Clubs to retain players who have served a continuous period of 10 years in first grade. This $100,000 allowance lifted the effective cap to $3.55m.
2004 : The NRL and RLPA agree via a Collective Bargaining Agreement the Salary Cap for 2005 will be $3.3m and $3.366m for 2006.
2005 : The Salary Cap rises to $3.3 million in 2005.
2006 : A heads of agreement for a four-year Collective Bargaining Agreement was signed in June for seasons 2007-10. The agreement provided for:

• A $3.9m salary cap in 2007 – up from $3.366million
• Minimum wages of $55K (1-17) and $50K (18-25) – up from $37,500.
• Origin payments increasing to $12,500 per game
• Increases in Third Party Sponsorship Agreements to $150,000
• Reduction in qualifying period for veteran players from 10 to 8 years

2007 : A further $100,000 increase to the salary cap was agreed to by the NRL and RLPA bringing the total salary cap to $4m for 2007 and $4.1m for 2008.
2008 : Introduction of the Toyota Cup NYC. The NYC is introduced with a Salary Cap of $250,000.

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Season 2008 1st Grade Squad - Salary Cap
In 2008 the Salary Cap will be a maximum limit of $4.1m for the 25 highest remunerated players at each club. All other players that play NRL in the current year must fit under a $350,000 Salary Cap this figure is commonly referred to as the 2nd Tier Cap.

For players in the top 25 Salary Cap or 2nd Tier Salary Cap, the Salary Cap value for a player each year is broken down into the following categories:

• Playing Fee - fully included in the Salary Cap
• Included Benefits - all benefits provided to players including accommodation, travel, motor vehicles, interest free loans and manager's fees and any applicable fringe benefits tax.
• Win bonuses & appearance fees - Payments for appearing in or winning a game are calculated based on the number of NRL games the player played in the prior year multiplied by any applicable bonuses. For win bonuses, the calculation is capped at 13 wins.
( Example: A player appeared in 10 NRL in 2006 and now has a 2007 Contract for a $50,000 contract fee plus $1,000 per game. His Salary Cap Value would be $50,000 plus 10 times $1,000 = $60,000. )
• Other bonuses – Any other bonus contained in a player's contract will be calculated in the Salary Cap if the NRL Salary Cap Auditor expects him to achieve the bonus based on his prior year's performance.
( Example: A player played State of Origin in 2006. His 2007 Contract includes a $20,000 State of Origin bonus. This bonus will be included in the player's 2007 Salary Cap Value. )

• Note: Where a bonus is achieved by a player but was not assessed in the player's Salary Cap Value, the bonus is carried forward and calculated in the player's Salary Cap Value for the following year.

Is any Remuneration excluded?

In addition to allowances, the Salary Cap Auditor has specifically excluded the following benefits to players:

• Tertiary education (TAFE & University)
• Approved Traineeships
• Medical insurance costs
• Relocation & temporary accommodation costs

In addition to the top 25 Salary Cap, clubs will have a maximum limit of $250,000 to spend on the 20 highest remunerated players who
(a) do not form part of the top 25 salary cap and
(b) who qualify for the NYC (turning 20 or less in the current year).

All other players who play in the NYC must fit under a 2nd Tier Cap of $50,000.

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Toyota Cup Salary Cap

For players in the top 20 Toyota Cup Salary Cap, the Salary Cap value for a player each year is broken down into the following categories:

• Playing Fee – fully included in the Salary Cap
• Included benefits – all benefits provided to players including accommodation, travel, motor vehicles, interest free loans and manager's fees and any applicable fringe benefits tax.
• Win bonuses & appearance fees – Payments for appearing in or winning a game are calculated based on the number of NRL games the player played in the prior year multiplied by any applicable bonuses. For win bonuses, the calculation is capped at 13 wins.
( Example: A player appeared in 10 NYC games in 2007 and now has a 2008 contract for a $10,000 contract fee plus $500 per game. His Salary Cap Value would be $10,000 plus 10 times $500 = $15,000. )
• Other bonuses – Any other bonus contained in a player's contract will be calculated in the Toyota Cup Salary Cap if the Salary Cap Auditor expects him to achieve the bonus based on his prior year's performance.
( Example: A player played U20's for NSW in 2007. His 2008 Contract includes a $2,000 U20's NSW bonus. This bonus will be included in the player's 2008 NYC Salary Cap Value. )

Note: Where a bonus is achieved by a player but was not assessed in the player's Salary Cap Value, the bonus is carried forward and calculated in the player's Salary Cap Value for the following year.

Is any remuneration excluded?

The Salary Cap Auditor has specifically excluded the following allowances for players to encourage clubs to spend money on career development outside football for players in the Toyota Cup:

• Up to $10,000 net per player for Tertiary education (TAFE & University)
• Up to the award rate for Approved Traineeships
• Up to $10,000 net per player towards an approved apprenticeship or pre-apprenticeship program.
• Up to $10,400 per annum in living away from home allowances.
• Medical insurance costs.
• Relocation & temporary accommodation costs.

Are there any allowances?

The only allowance a club may use to pay players outside of the Toyota Cup Salary Cap is an allowance of up to $20,000 across the top 20 NYC players for secondary education.

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What about money paid from other people or companies?

The basic guide is that if a player is receiving money from any person as a way of inducing him to play for the Club, then that money will be included in the Salary Cap.

• Income that a player earns from parties not related to his Club is generally not included in the Salary Cap, however the details of the agreement must be advised to the Club by the player.
• The Club must then get approval for the agreement from the Salary Cap Auditor in order for the Remuneration to be excluded.

In 2006, the NRL also introduced an allowance for players who enter into Third Party Agreements with club sponsors. IN 2007 three of the top six players are allowed to earn up to an extra $50,000 each from sponsorship leveraging but the total payments under these sponsorship leveraging agreements must not exceed $150,000.00 per club.

How can some clubs have so many elite players and still be under the Salary Cap while other clubs at the bottom of the table seem to be just under the Salary Cap?

The reality is all clubs spend the Salary Cap but not all are successful on the field and, 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 player.

Many factors affect individual player's remuneration levels. Some of the reasons why a player may sign for less would include:

* Staying close to the player's home town and family.
* The chance to work with one of the top coaches in the game.
* Being part of a winning team and the potential to play in the Telstra Premiership Finals series or Grand Final.
* Increased opportunity to play NRL with that club due to a lack of competition for the player's preferred position.
* The increased profile a player may enjoy in a one-team town.
* The number of support staff, their expertise and the support facilities.
* Education and welfare support structures.

In addition, a player's salary package may include benefits that are specifically excluded from the Salary Cap, such as the payment of medical premiums, university fees etc.

How does the Salary Cap Auditor monitor the Salary Cap?

• All NRL player contracts must be lodged with the Salary Cap Auditor.
• These contracts are reviewed and each player's remuneration is included in the Salary Cap.
• The CEO and Chairman of each club must provide a statutory declaration to the NRL at the beginning and end of each season in support of the club's Salary Cap calculation.

The Salary Cap Auditor monitors each club's Salary Cap position throughout the year based on the information provided by clubs.

In addition, the Salary Cap Auditor may perform investigations into the remuneration of players if discrepancies arise. These investigations usually involve the club and its associated entities and cover all payments made and agreements entered into that may result in benefits being provided to players.

The Salary Cap Auditor also continually monitors media reports and makes enquiries in an effort to uncover any information that may have Salary Cap implications.

When clubs have been found to either breach the Salary Cap or have made undisclosed payments to a player, then the club is issued with a breach notice.

 

[B-Train]

Thanks for posting that CK. It should be a sticky for future reference.

LMAO at the explanation of what the Salary Cap Auditor (Schubert) does and the role he plays. It should just say he watches Sesame Street while wearing a blindfold and that would be a slightly more accurate description of the role he plays.

 

[Bull4life]

That is very informative, thanks CK.
1 question, there was some talk that if a lower grader played up to or above so many games in 1st grade that he has to be paid a bonus which could push it above the cap.
There was some mention that Folkesy was not playing someone in a game last year for that reason. How does that work?

 

[B-Train]

That is very informative, thanks CK.
1 question, there was some talk that if a lower grader played up to or above so many games in 1st grade that he has to be paid a bonus which could push it above the cap.
There was some mention that Folkesy was not playing someone in a game last year for that reason. How does that work?

That is the part about the second tier cap. You basically have a cap of 350k for NSW Cup players or players who aren't in your top 25. If you have to sign players mid season because of an injury crisis like we did with Joey Williams & Nick Youngquest etc, that puts more financial strain on that amount. And then if you have to promote other players who are on match payments and you have already exceeded that 350k amount, then you might not be able to play certain players because you would exceed that 350k figure for players outside the top 25.

 

[Bull4life]

Thanks mate, so with so many injuries we must have come close to exceeding last year

 

[BankstownBulldog]

Thanks CK, now i get the jist of whats going on.

What a fuken nightmare that would be to try and recruit/retain quality players and stick to those caps.

 

[Magic Arrow]

Thanks for posting that CK. It should be a sticky for future reference. LMAO at the explanation of what the Salary Cap Auditor (Schubert) does and the role he plays. It should just say he watches Sesame Street while wearing a blindfold and that would be a slightly more accurate description of the role he plays.

I heard he has a good imitation of almo.

 

[steve_mortimer]

Long story short clubs will still find a way to cheat the cap no matter how big or small.