Any lawyers here?

[terry j]

the reason I ask is because I am pretty dumbfounded about a few things...

ok, it's only talk at the moment, but rumblings about 'getting rid of ewen'.

BUT, and here's the thing, 'the ARU could probably not afford to pay out his contract'. You know, just copped a hiding with robbie by paying out a contract and all that.

SOOoo, who writes these bloody contracts? (not really talking about ewen here). Surely when you or I enter into a contract it states 'what each party gets', at least I think that is the conceptual basis of a contract.

So, in these examples, if the coach does not give what he warrants he will give, then why does he need to be paid out? He did not fulfill his contract.

Ok, maybe the fools at the ARU are not savvy enough to give goals to be met in a contract?

I mean if my house extension is not going to plan, and there is work being done that I simply don't want, then I can get rid of the builder and get another without having to pay him for work not done? (ie the remainder of the build)

Just what is going on here? I mean state governments do these things all the time, someone gets/wins a tender to build 'the tunnel' and charge a toll. But also if they don't make enough then they get a payout. Who is making sure the people are not getting ripped off, why is it that the only one who does not lose is the contractor.

Is it a similar thing here, 'the only one who does not lose is the coach', I mean who in the aru would agree to that? What about 'us' (the people in this example), why do we always cop the raw prawn?

So what am I missing about these high level contracts?

 

[ACT Crusader]

I would think there would be both a guaranteed and incentive based elements to Link's contract. What percentage of the overall contract value is tied up with these is probably only known by the parties.

Similar to Government contracts/tenders, there is usually milestone payments for infrastructure projects. Built into the contract are timelines, quality of work etc. There is legal recourse for both sides if they think the contract isn't being met - ie builder hasn't met milestones or builder disputes not being paid if they believe they have delivered.

 

[I like to watch]

Two things
1) it's a bit early to be reviewing termination clauses in his contract.
2) they didn't get reamed by terminating Robbie early.
All that happened is they basically employed Link 2 or so months earlier than scheduled.so they "doubled up" on coaching costs for this period.

 

[Hugh Jarse]

I'd be very surprised if Link was terminated this year.

I don't think anyone on G&GR has even called for his head yet. There are a fair few who are not all that happy with performances so far, but most are prepared to concede that he is still in the honeymoon phase.

 

[Bardon]

Thankfully this isn't soccer, so Link should get at least until after the 2015 RWC.

 

[terry j]

as mentioned, it was more about the contract than ewen, and along with that the coffers are empty (with deans cited as one example)

 

[Antony]

...

I mean if my house extension is not going to plan, and there is work being done that I simply don't want, then I can get rid of the builder and get another without having to pay him for work not done? (ie the remainder of the build)

Just what is going on here? I mean state governments do these things all the time, someone gets/wins a tender to build 'the tunnel' and charge a toll. But also if they don't make enough then they get a payout. Who is making sure the people are not getting ripped off, why is it that the only one who does not lose is the contractor.

Is it a similar thing here, 'the only one who does not lose is the coach', I mean who in the aru would agree to that? What about 'us' (the people in this example), why do we always cop the raw prawn?

So what am I missing about these high level contracts?

I work in construction litigation, and it's really rare that anyone wants to know about what I do, so I'm going to seize this opportunity despite the total irrelevance of what I'm about to write to rugby.

As regards your first point, obviously you're right that you can (usually) cancel a contract if your contractor materially breaches its terms. But you'd actually be amazed at the ability of a contractor, even in a small-scale domestic setting, to recover costs for work done, if that work ultimately benefits the proprietor. It all depends on who made what representations to who, but long-story short it's a total clusterfuck.

As regards your second point, that complaint is a bit of a personal bug-bear of mine. Those tunnel deals are excellent for the state. The contractor/builder gets paid too, and the guy who really gets ripped off is the operator (and sometimes the financier(s)).

Typically a big public-private infrastructure project is project financed, which means that the funds comes from debt borrowed by the future owner/operator against the future earnings of the project. In the case of a tunnel that means toll-revenue, in the case of an electricity plant that means an off-take agreement with an energy provider, and in the case of a prison or hospital, that means an agreement as to future rent paid by the government (those ones are a bit riskier for government, but you don't really build hospitals to make a profit anyway).

So in the case of a lot of the big tunnel projects over the past few years, when it goes belly-up because the traffic projections were wrong, the owner/operator is left holding his dick having to fund huge debt (like up to 90% of the project costs) from toll-revenue that's way less than expected. As an example, some recent tunnel-operating rights have been sold for less than a billion dollars, when they cost three times that much to build.

That's a phenomenal deal for the state. We get a shiny new tunnel (it's not like it gets bulldozed when the operator goes under) and we barely pay anything for it.

As a result, operators have quite reasonably started refusing to develop those kind of projects without some guarantee of future income from the government. They still assume a large part of the risk though, so we're still getting a great deal (obviously, all this is ignoring the fact that's it not really great for the state when companies go under and huge debts go unpaid).

Now, in relation to rugby. I would be amazed if Link didn't have KPIs, with failure to reach them scrapping any (or most) entitlement to a pay-out. I'm sure the ARU does a lot wrong, but they're not short on lawyers. The only reason the ARU would it accept a deal without that kind of provision is if Link/Deans agreed to accept a lower salary, and give themselves a degree of security instead. Either way, the ARU has all/most of the bargaining power, so they would have done the maths and got the best deal available.

 

[Blue]

Ridiculous.

You want to dump another coach that is battling with the same crop of players?

Who's next in line then?

 

[terry j]

thanks antony, re the tunnels obviously there are always two sides! good to get the take from the operators side

As I said, it is not actually my thought ewen get's pulled or anything like that, and is not the question I was interested in.

I started thinking about it after a spiro piece http://www.theroar.com.au/2013/11/07/spiro-the-knives-are-being-sharpened-for-ewen-mckenzie/

The Wallabies loss to England at Twickenham, even though there were extenuating circumstances, has put pressure on Ewen McKenzie to win at least three out of the next four Tests on the European tour.
Anything worse than this will mean his position as the Wallabies coach will be under pressure from advocates within Australia rugby for Jake White or, if being an Australian is now the imperative for the coaching job, Michael Cheika.

This is despite the fact Cheika has made a promising start, only, as the coach of the Waratahs.

One of the strengths, if this is the correct word, of McKenzie’s situation is the ARU can hardly afford to pay out another Wallaby coach before his contract has expired.

The bolded is what got me wondering, not the rest which is probably just talk or rumblings. Another coach can refer to no-one but Deans.

I guess all it means is that there has to be some residual if the contract were terminated now.

 

[Rob42]

I'm no lawyer, but I would have thought there would be some agreed pay-out figure for early termination in a contract like Link's. If he was dumped (which won't happen, and shouldn't - the fact that Spiro is floating the idea only confirms that), he would pick up another job within weeks or months, so a full payout would obviously be ridiculous.

 

[ChargerWA]

I can't believe we are even discussing this. Ridiculous. Ewen (with a capital E) is not going anywhere until after the 2015 RWC and if they do well longer after that.

 

[Ash]

Spiro and Harris are well known Deans supporters and sympathisers, plus they also have a dislike for McKenzie for whatever reason. If you go back to previous articles, they've been attacking him as Reds head coach for a while.

Spiro and Harris are hardly objective sources on the head coach of the Wallabies. You can say the same for Wayne Smith arguably too, who was anti-Deans pro-McKenzie.

 

[I like to watch]

You don't need a lot of bias to find fault in a squad with a 25% win rate.
I have been puzzled by the relatively good run Ewen has received over the past 2 years.
Reading the press,you would assume the Reds have improved their performance steadily over the past few years,in regard to both results and style.
The opposite has been true.
Not saying he can't coach,just that generally,if anything,he has benefitted from bias in the past few years.

 

[Antony]

I think Ewen was considered a good coach at the Reds less because of consistent good results (although a title and couple of finals appearances isn't half bad) but because you could frequently see the game plan being adapted week to week depending on the opposition, and throughout the season as personnel changed. There were clearly some cogs turning upstairs, and that reflected itself in some innovative plans to cover what could be otherwise be weaknesses (Quade's defence) along with an ability to wring the most of out some solid but unremarkable players (e.g. the Fingers). I think the word "bias" is a bit pejorative to describe the stored-up credit that he's given (although I recognise that you weren't really having a go).

 

[terry j]

been thinking about your first post antony, re 'good deal for the state'

I could never understand it, so if I give my reasoning you might be able to say 'what you are missing is' or somesuch.

Say we build a freeway. In the old days that was usually done by some government department. Now it is put out to tender and some deal is done. I see now you are a kiwi?? Anyway, take the M4 in nsw here. I remember when the missing link was built, and then for twenty years (or whatever it actually was) a toll was charged.

Ok, but seein as how it was done by private enterprise, there HAS to be a profit element that is not there when done by the state. In other words, for the taxpayer it has to cost more than if done by the state, surely?

You gave an example of when the figures were done wrong and so the operator misses out. Not trying to belittle that (and of course the contractor has to do his own due diligence anyway) but would it not be true that those poorly done figures are in the minority?

So I am not sure what I am not seeing here, and you might help that, but 'logic' tells me that when done by private enterprise an infrastructure project MUST cost more for the taxpayer. I guess it can get a bit rubbery when arguments like 'the public service can never do as efficient a job as private enterprise', but that is more an issue of management rather than one being intrinsically better run than another?

Interested in your take.

 

[Antony]

All the points you make are right Terry, but the conclusion that I would reach would be different. Also, I live in Sydney now - I'm not just some super-keen Australian state government infrastructure enthusiast.

Taking the freeway example, say the government builds a freeway, and say it costs $1 billion (over the life of project, say five years).

The two key issues are, in such a case, the government:

a) gets an upfront expense; and
b) recovers its costs from future tolls over [x] years (say 20).

It makes more sense to consider them in reverse.

With regard to b), obviously, hopefully, traffic projections are right. But it's not really the role of government to assume that risk. If government can get an asset effectively for free, and all they have to forego is the potential to reap greater-than-cost income from the tunnel tolls, then they should take that option every time ahead of incurring a significant charge on the budget, and hoping they make their money back. Particularly as, if the traffic projections are over what was estimated, the government would be compelled to drop the toll. They're only ever going to lose money, or break even (with the only benefit in the latter case being some tax payers paying even less than they would be able or willing to).

I concede the point that a private operator would include a margin in its eventual toll, but market pressures prevent that toll ever being more expensive than any given individual is willing to pay (because as we've seen, that person will simply stop using the tunnel).

With regard to a), the cash-flow of state governments can't always absorb this kind of upfront expense. Obviously they have their own ways of distributing the costs over a number of years, but it's (reasonably) fair for a government to not incur huge present day deficits, while allowing future governments to reap the dividends of a sweet asset and free additional income.

Ultimately, it comes down to personal political preference. I'm fine with governments shipping out projects to people who are better at it than them, if it means they minimise risk and get to work on more projects more quickly (because of the availability of private finance). I understand the attitude of resenting profiteering at taxpayer expense though.

 

[Antony]

So in conclusion, Ewen McKenzie should keep his job.

 

[terry j]

maybe your last para is what it ultimately boils down to.

regards finance, I doubt the contractor for example has a billion in readies laying around, he'd need to raise it. Well the govt has just as much, if not more (?), ability to raise it. AND, if as you say the projections are well done, then can we really consider it a deficit?

I am not arguing with you btw, when it comes to finances and me well....let's just say I am pretty ignorant.

Maybe for me what lies at the bottom of my 'unease' is that there is a push nowadays to privatise everything. That push comes from somewhere, and as the police know the most fruitful avenue to investigate is 'who benefits'?

So what gets sold off? The entities that make money. It's kinda axiomatic when you think about it. What does the government get left with? The things that cost money, again axiomatic.

See I don't really get why having an entity for the benefit of the people is particularly a bad thing!

And when we have revolving doors with pollies retiring (with huge public funded benefits) then going into private business..well I get a bit uneasy when I consider that push mentioned earlier.

Appreciate you taking the time, cheers

 

[BDA]

I'd be very surprised if Link was terminated this year.

I don't think anyone on G&GR has even called for his head yet. There are a fair few who are not all that happy with performances so far, but most are prepared to concede that he is still in the honeymoon phase.

I agree Link will not, and should not, be judged on his results this year.

 

[Sidbarret]

Can I be the first lawyer to point out that this isn't a legal issue.

When Link was appointed there were only two, maybe three, realistic candidates for the position. Economically speaking the ARU have a monopoly on Wallaby coaching positions, the three candidates have far more bargaining power than is claimed.

No top level coach will accept the position without the having at least a portion of the salary being guaranteed.