What it is - salary cap regulations
Given the latest scandal to hit Ericsson Stadium a brief outline of what the salary cap actually is might help people to understand what the NRL is currently trying to investigate in looking at the Warriors' books.
The NRL salary cap for 2006 is $A3.366m for the 25 highest paid players at each club.
If each player was paid an equal amount, they would get $A134,640 each. Each club can exercise its discretion in relation to how much individual players are paid providing that in total the payments do not exceed the $A3.3m cap.
The salary cap for 2003 and 2004 was a maximum limit of $3.25m for the 25 highest remunerated players at each club. All other players that play NRL in the current year must fit under a $300,000 salary cap. There is no cap on players who fall outside these two categories such as juniors.
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 2005 and now has a 2006 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 2005. His 2006 contract includes a $20,000 State of Origin bonus. This bonus will be included in the player's 2006 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.
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
There are two allowances that a club can use to pay players outside of the $3.366m salary cap for 2006. These are:
1. The sponsor servicing allowance - clubs can qualify to spend up to an additional $200,000 on players if they can prove that they have raised additional cash sponsorships through players providing additional services to these sponsors.
2. The long serving player or veterans' allowance - This allowance takes effect for the 2003 season onwards. The allowance provides an exemption of up to $100,000 for each club if they have a player or players that have been at their club for ten years since they first played grade for their club. For the Storm, Cowboys and Warriors the player must have been at the club since its inception.
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.
For season 2006 the NRL has also introduced an allowance for players who enter into third party agreements with club sponsors. Two of the top five players are allowed to earn up to an extra $50,000 each from sponsorship leveraging.
The NRL has a special team that looks after salary cap issues and monitors each club and each player on a yearly basis.
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. In addition 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