ARU increase Super Rugby Salary Cap to $4.5 million for 2013

[TOCC]

ARU salary cap goes to $4.5m

• BY:BRET HARRIS
• From:The Australian
• May 26, 2012 12:00AM

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THE ARU has increased the salary cap for the Super Rugby teams to $4.5 million for the next two years, providing them with certainty in their player contracting negotiations.
An earlier proposal to increase the cap to $4.8m fell over when the ARU and the Rugby Union Players Association failed to reach agreement on a new collective bargaining agreement.
RUPA opposed a $4.8m cap because the ARU was not increasing its funding to the Super Rugby franchises.
It appeared the cap would remain at $4.1m, but after consultation with the five Super Rugby franchises -- the Brumbies, Melbourne Rebels, NSW Waratahs, Queensland Reds and Western Force -- the ARU agreed to increase it.
The ARU will maintain its current level of funding to the franchises, which will have to find the extra money themselves.
But a review of the total player salaries shows that four of the five franchises would have been in breach of the cap had it remained at $4.1m.

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Apart from an increased cap, the ARU has also increased the third-party allowance from $150,000 to $500,000 for player recruitment. The teams can also spend $200,000 on payments to Extended Player Squad members, which effectively takes the cap to $4.7m.
The changes will take pressure off the teams, particularly the Reds, as they attempt to retain and recruit players.
The Reds are still involved in protracted negotiations with star five-eighth Quade Cooper, who is believed to be demanding big money.
Reds halfback Will Genia rejected a $550,000 offer from the Western Force to stay with the Reds for $400,000.
Cooper is expected to demand at least as much, if not more, than Genia.
It would have been almost impossible for the Reds to keep both Genia and Cooper under the $4.1m cap, but they now have some breathing space.
The Reds already have lost Wallabies backrower Scott Higginbotham to the Melbourne Rebels and there has been speculation centre Ben Tapuai was looking to join him.
Meanwhile, Rebels coach Damien Hill has warned his players that anything short of their A-game won't be good enough against the Hurricanes.

So...

Salary Cap: $4.5million increased from $4.1million
Third Party top ups: $500'000 increased from $150'000
EPS Salary Cap: $200'000

So essentially, assuming they are able to secure max third party agreements, thats effectively a $5.2million budget clubs are allowed to direct towards players wages.

 

[waratahjesus]

Is there any actual punishment for breaking the cap?

 

[Inside Shoulder]

Is there any actual punishment for breaking the cap?

Has any franchise actually got access to this much money?
In 2011 the tahs "only" spent $3.2m on employee expenses - which would be $3.7m with all available 3rd party top ups.....

 

[waratahjesus]

Has any franchise actually got access to this much money?
In 2011 the tahs "only" spent $3.2m on employee expenses - which would be $3.7m with all available 3rd party top ups.....

I don't know he much money each franchise has, but seeing as only five teams in a comp of 15 abide by the cap, there not going to strip them of competition points like rugby league, it just seems like nothing more than a gentlemens agreement.

 

[TOCC]

Given the ARU has the ability to fine provinces for breaking the player negotiation rulings.. aka the Al Kanaar fiasco with the Western Force...

I imagine they would be able to financially fine a team for breaking the Salary Cap as well...

As for provincial access to the money.. Each Super Rugby club is granted $4.1million from the ARU, this was the major sticking point with raising the Salary Cap.. The ARU didn't want to increase the grant, thus they reached a mutual agreement where the Salary Cap was raised to $4.5million but the individual clubs were responsible for fronting the $400'000 difference...

 

[Inside Shoulder]

Given the ARU has the ability to fine provinces for breaking the player negotiation rulings.. aka the Al Kanaar fiasco with the Western Force...

I imagine they would be able to financially fine a team for breaking the Salary Cap as well...

As for provincial access to the money.. Each Super Rugby club is granted $4.1million from the ARU, this was the major sticking point with raising the Salary Cap.. The ARU didn't want to increase the grant, thus they reached a mutual agreement where the Salary Cap was raised to $4.5million but the individual clubs were responsible for fronting the $400'000 difference...

yes but there's no indication that the grant is spent on player salaries alone - hence the salaries are less than the grant....if you are not going to, or are not able because the amount involved in "other expenses", spend to the limit of the salary cap whats the point of having it?

 

[emuarse]

This all sounds like work to me - I leave my abacus at the office -

 

[Bowside]

The interesting bit for me is the EPS salary cap.

Will the squad size stay at 30 plus 5 EPS? Because I think either the squad or the EPS need to increase (by around 3 players) for next year to bring the allowed size in line with the amount of players used in a season.

 

[TOCC]

yes but there's no indication that the grant is spent on player salaries alone - hence the salaries are less than the grant....if you are not going to, or are not able because the amount involved in "other expenses", spend to the limit of the salary cap whats the point of having it?

Diving into semantics as far as im concerned, It's what the clubs asked for, so they obviously have measures/plans in place to meet this.

Looking at previous annual reports is a false indication given the salary cap has really only been enforced this year, last year they we're still filled with players on the $150'000/year max salary.

 

[Jiggles]

How would the ARU enforce the fine anyway? For example if some third party wanted to offer Pocock a massive amount to stay in perth which blew the Force's cap, sure the ARU could fine them, but could it force the force (no pun intended) to pay? They wouldn't kick them out of the comp would they. Considering that only 4/5 teams are subject to the cap, then it would be pretty easy for the Force to win if it got taken to court.

 

[TOCC]

The ARU gives grants of $4.1million, if a club refused to pay the fine, the ARU would just take it out of the grant..

Salary Caps arent a new thing to Australian sports, players can negotiate third-party contracts, but those can't be tied to a province or negotiated through the club as part of the recruitment/retention process. In the new agreement though, clubs can negotiate third party contracts of up to $500'000 accumulatively to help attract players.

 

[Inside Shoulder]

Diving into semantics as far as im concerned, It's what the clubs asked for, so they obviously have measures/plans in place to meet this.

Looking at previous annual reports is a false indication given the salary cap has really only been enforced this year, last year they we're still filled with players on the $150'000/year max salary.

Looking at what they spent on salaries under a salary cap of $4.1m and recognising that it is less is semantics?
I think you've totally missed the point: if you dont spend $4.1m when there's no cap how is it a cap?

 

[Bardon]

Good to see they finally agreed the cap so that franchises can get peopled signed up.

 

[Inside Shoulder]

Good to see they finally agreed the cap so that franchises can get peopled signed up.

Makes no difference for the reasons I have exposed: salary cap is an excuse for deeper seated management issues

 

[TOCC]

Looking at what they spent on salaries under a salary cap of $4.1m and recognising that it is less is semantics?
I think you've totally missed the point: if you dont spend $4.1m when there's no cap how is it a cap?

Semantics considering the salary cap wasnt official in 2011, it was only a point of consideration for clubs so they could factor it into future contracts..

Contracts finishing in 2011/2012 and even a few finishing in 2013 were negotiated under the old contractual structure which had a $150'000 limit with ARU top ups making the difference.

Thus annual expenditure on players wages in 2011 will differ from what expenditure will be in 2013 under the salary cap..

 

[Melbourne Terrace]

The reasoning for this caps introduction escapes me. I'm going to assume it is for wage capping reasons rather than equalisation as otherwise the aru would be much stupider than they look if they think they could get away with that in a global player market.

But even if you look at this measure in such a way, it still leaves holes. Why is melbourne restricted on this when they are privately owned? Surely if they can afford to spend and they aren't asking for a handout they shouldn't be restricted?
If the initial objective was to reduce spending by the teams why is it only wages that are capped and not things like football department spending? Couldn't something like a restriction on a franchises total losses be looked at like uefa's (european football) financial fair play restrictions?

 

[Sully]

private ownership or not where would they look for money if they ran into trouble? My guess first phone call would be to the ARU.

 

[Richo]

The reasoning for this caps introduction escapes me. I'm going to assume it is for wage capping reasons rather than equalisation as otherwise the aru would be much stupider than they look if they think they could get away with that in a global player market.

It's for financial sustainability reasons. After having the Tahs and Reds go broke, the ARU wants to keep a lid on spending.

 

[I like to watch]

Why is melbourne restricted on this when they are privately owned? Surely if they can afford to spend and they aren't asking for a handout they shouldn't be restricted?
If the initial objective was to reduce spending by the teams why is it only wages that are capped and not things like football department spending? Couldn't something like a restriction on a franchises total losses be looked at like uefa's (european football) financial fair play restrictions?

Don't want to nitpick,but they do get the grant of 4 odd million, same as the other franchises.
But i do agree that it is half assed of the ARU just to limit spending on player payments, rather than looking at the franchises p &l s/ments/budgets.
It is obvious a franchise can stay under the cap and still go broke.

 

[ChargerWA]

Do the Rebels get ARU funding? If so, they should be beholden to the same rules as the other franchises.

Edit: answered above. If they get the funding they should absolutley have to comply with the same conditions.