NRL 2022, NRL Unpacked, Deep dive into salary cap, Overview of third-party deals, breaches and more

In 1990, when the New South Wales Rugby League first introduced a salary cap, it ranged from $800,000 to $1.5 million depending on each club’s circumstances.

Some 32 years later, those 800,000 wouldn’t get you a marquee player, let alone a full roster.

Yet, just as the game has gone through incredible changes since Big Mal led the Raiders to back-to-back titles, the cap has also changed at a rapid pace throughout the journey. When the current collective bargaining agreement was signed in 2018, the salary cap for all clubs was set at $9.1 million and the size of the NRL’s top team was reduced from 25 to 30 players.

With the game recovering from two seasons heavily affected by the COVID pandemic and a 17th team joining the competition in 2023, the future looks bright for the Telstra Premiership.

And, as it has been for 32 years, the salary cap will be central to the game’s success. spoke to NRL Salary Cap auditor Matthew Faulkner to better understand why the game needs a salary cap, how it works, the introduction of a cap for the NRLW, deals with third parties and more.

Why do we need a salary cap?

A salary cap provides a mechanism for clubs to control their spending on players, their biggest expense. Without a cap, clubs could end up spending more than they can afford trying to win games and ultimately premierships.

The other aim of the cap is to equalize talent and by all accounts it has managed to achieve this with 15 different clubs making the top eight since 2014 and nine teams having played in the grand final – Bulldogs, Rabbitohs , Cowboys, Broncos, Sharks, Storm, Raiders, Panthers and Roosters.

“Even though there may be lean times for some clubs at times, they will get through them and be able to compete at the top and push for finals appearances and premierships,” said Faulkner, who succeeded Richard Gardham as auditor for the NRL’s salary cap at the end of 2020.

In 2022, the NRL’s salary cap stands at $9.4 million, with a new salary cap to be set as part of the new collective bargaining agreement later this year. The new cap will cover the 2023-27 seasons with the new CBA aligned with the game’s broadcast cycle.

“The $9.4 million is for 30 players and includes $9.118 million base salary cap, $188,000 veteran and developed player allowance and $94,000 motor vehicle allowance,” said Faulkner.

“These figures are agreed with the Rugby Union Players Association (RLPA) as part of the collective agreement.

A breakdown of the 2022 NRL salary cap, which totals $9.4 million.

“Since 2018, clubs have been required to spend at least 95% of their salary cap each year and this rule is in place to guarantee player payments.

“Contracts are submitted to the NRL by a representative of the club. At some clubs it’s the salary cap manager, at others it’s someone from accounting, legal or the football department. Submission is done through an online portal that we call NRL Gateway.

From salary cap officials to football managers to head coach, managing the cap is a complex process that requires almost daily attention.

A player’s age, position, potential, experience and marketability all come into play as clubs strive to make the most of their cap and find the perfect mix to ensure the Prime Minister’s success.

Jeremiah Nanai signs his new playing contract with the Cowboys this year.

Jeremiah Nanai signs his new playing contract with the Cowboys this year.

And when a contract has been drawn up to be offered to a player, the NRL forensically examines it to ensure that all the Ts have been crossed out and the Is dotted.

“A thorough review of the contract is carried out to ensure that all areas of the contract have been properly completed. This includes signatures, testimonials, statutory declarations and the player registration form,” Faulkner said.

“According to the rules, we have 10 days to decide if a contract can be registered. It can be long if it contains errors and needs to be redone, but on average the process takes around five days.

“A number of factors are then taken into account before the contract is approved, but most importantly, the value of the contract cannot put the club in breach of the salary cap.

“It must also be executed correctly and must be negotiated by an accredited agent or family member if the player is not self-representing.

“There is a mechanism in the rules that allows the auditor to rate a player,” he added. “The contract is a starting point for what a player is worth, but there are other mechanisms to help us determine if it’s fair.

“Some clubs will operate with a top model with multiple higher paid players, which means they will have more players at the bottom of their roster with minimum wages. Others will operate with a flatter structure and therefore have less minimum players and more players paid at or above the average salary, which is around $310,000.

“Whatever model a club uses, it must not exceed $9.4 million for its top 30 players.”

Agreements with third parties

Given the juggling that has to be done to get 30 players under the $9.4 million cap, it’s imperative that players can augment their revenue with outside deals, and that’s where the deal with a third party comes into play.

Any payment outside of a player’s contract is considered a third party agreement and is not subject to any type of cap.

According to Faulkner, any deal a player makes with one of the game’s sponsors like Telstra or Kayo is not capped as long as his club does not participate. Players are also free to wear whatever boots or headgear they choose and can promote these businesses.

NRL chief executive Andrew Abdo during a press conference with Telstra and Foxtel in 2021.

NRL chief executive Andrew Abdo during a press conference with Telstra and Foxtel in 2021.
©NRL Photos

“As a definition, a third-party deal is an agreement between a player and a third party. It could be a big business or a small business,” Faulkner said.

“The most common are arm’s length deals which are deals with companies that have no association with the player’s club and use the player in their own IP address, not the NRL or the clubs.

“Another type are game sponsor agreements, which are agreements with our main partners such as Telstra and Ampol.

“We also have appearance fees which can range from an appearance on the Matty Johns Show, NRL 360 or the local mall.

“TPAs are excluded from the salary cap provided they have no association with the players’ club and the club had no role in finding the deal. If there is a link, it will be included in the salary cap.

Faulkner said the most common misconception about TPAs ​​is that there is an endless supply of money that players can tap into.

“The market is not as big as people think,” he said. “It represents only about 3% of the total ceiling, compared to 5.5% in 2018”

“The TPA market crashed during COVID when players couldn’t make appearances or promotions, as a lot of our marquee players (such as Cameron Smith and Johnathan Thurston) left the game lately. “

Ensuring clubs remain compliant

Each NRL club is subject to an annual salary cap audit as well as six-monthly health checks, ad-hoc reviews, forensic audits, investigations and interviews.

“We also have a live system that tracks each club’s real-time salary cap position for current and future seasons,” Faulkner said.

If we see something wrong with a team’s salary cap, the starting point would be a conversation with the club.

Matthew Faulker
NRL salary cap auditor

“Depending on the seriousness of the issue, this could be a discussion with the salary cap manager, the financial director or the general manager. And depending on the outcome, we can continue to work and contact the player and the agent.

“Currently we have a team of three at the NRL which includes Ryan Deluca who is the manager of the team. football department ceiling and benchmarking.

“The other member of the team is James Richards, our third party contract and agreement registration guru. He handles this process and manages our online portal.

“James will also participate in the salary cap audits which take place between November and February each year.”

The key figures behind the NRL salary cap process.

The key figures behind the NRL salary cap process.

When the latest CBA was signed, a $5m cap was also introduced on a club’s football department – capturing all the costs associated with running an NRL team, from personnel costs and recruitment, travel and clothing.

“It was an important measure to control spending by football clubs which had the potential to explode,” Faulkner said.

“This cap ensures fairness and equity between the 16 clubs in terms of running your NRL programme.”

The salary cap in 2022 and beyond

When the NRLW returns later in the year for its 2022 season, it will be subject to a salary cap for the first time.

The introduction of the salary cap provides greater opportunity to structure deals to suit the needs of individual players, and the increased player payouts mean elite players could earn higher playing fees.

The cap has been set at $350,000 and will consist of 24 players per club, two of whom can be signed as marquee players.

“Big players can be offered a job and they have a maximum face value of $16,000,” says Faulkner.

“If a club chooses not to employ two players, their two highest paid players will be valued at $16,000 for capping purposes.