NO Salary Caps in Australia

[fatprop]

If Beale and JOC (James O'Connor) get major increases in wages, it would be madness to think that Genia and Cooper will not expect the same.

The Reds may have the lowest wage bill at the moment, but with success comes demand for the players, it will be an intersting juggling act.

 

[Jets]

You do realise that the top players will receive money from the ARU on top of the sallary cap? This allows for players to earn more based on how well they are going.

Also interesting in Grumbles artical in SMH that the Reds have the lowest salary bill in Australia.

 

[RedsHappy]

Totally against the salary cap for reasons that I've outlined many times before. All I think it will do in the end is reduce the tenure of players in Australia and send them overseas. It's a ridiculous idea. You can't enforce equality anyway. A good, well managed franchise will beat a mediocre one any day, even with the governing body trying to reduce their advantage. Everything I've seen in pro sport over the last 20 years points to it. EDIT: Bullrush, I agree with you. A coach is very important, which should surprise nobody.

TBH: We agree on something! This whole concept is extremely dangerous, however I see it as just another case of the (generally) hapless ARU responding to symptoms, not causes, or responding to the nature of its own mediocre performance as strategic code builder. Because at the end of the day, the really core issue that is driving the (strategically mad) cap idea this is: code-wide Aus rugby $ income, which is hardly in rude health, is in fact threatened and declining in numerous sectors (ARU admits this in its own Reports). Of course, average $ cost per elite player per head becomes a bigger and bigger concern if aggregate average code $ income per elite player is not growing equally, or ideally, faster than that core cost. If not, effectively the financial position of the code becomes more and more fragile over time. Much worse is in store if gross elite player income per head is effectively slowly shrinking. In these latter scenarios, the inevitable (rational but not useful) reaction will be 'cut/cap/contain player cost or we'll go broke'.

The corollary being, of course, quite simple: if the global market for the best rugby players continues to expand, and where the best teams/countries globally are expanding their total income per elite player head faster in country X than Y (which I believe is what is now happening in, for example, France v Australia), then the faster-income-growing country will over time be willing to pay more per player than the slower (or shrinking) income growing one (other variables being roughly equal). [Btw, a similar factor applies to elite coaches - for just the reasons you and BR here note, it is my view that the better elite coaches will become more and more (globally) valued, and their value will be grown exponentially in markets that are successfully expanding their income per elite player head. Hence, the best coaches will, at least to some degree and over time, follow the $s as is happening today in many top sports, and this core trend will place further performance and quality pressure on Aus rugby.] Finally, this same sort of point applies intra-Australia if, for example, it is only the NSW and QLD teams that can successfully drive up local code income over time, the risk then being that the other teams are just crushed out of medium-term viability.

For me, the overriding point in all this is: ultimately, the Aus-wide rugby code (and each Aus S15 team) has to get much, much better at income (i.e. real code enhancing and expanding, etc) growth than is the case today. If in fact this sustained growth does not occur, we will likely enter a highly dangerous downward spiral where salary caps and so on gradually but surely underpin the retention only of an averaged-down local player mediocrity in Aus vs a elite group of truly world-class players aiding, indeed driving, that very cause of sustained code expansion.

 

[cyclopath]

Undermine the product with a salary cap and potential loss of players off-shore, and watch the fans flock away. Just when we see the Reds getting some really good numbers through the gates as a result of a) winning and b) playing bloody attractive footy, it would be a shame to see negative factors at play. If we have at least 3 solid franchises, this local derby stuff could help build better and better crowds, if the footy is good. Maybe simplistic on my part, but I think it's a factor.
And before someone says it, no, I don't want to see all the good players at 2 or 3 franchises to achieve it, but reality is that we will struggle to have enough really good players to have 5 on anywhere near level footing. NZ and SA can't, and they are blessed with better resources than us.

 

[Hawko]

TBH: We agree on something! This whole concept is extremely dangerous, however I see it as just another case of the (generally) hapless ARU responding to symptoms, not causes, or responding to the nature of its own mediocre performance as strategic code builder. Because at the end of the day, the really core issue that is driving the (strategically mad) cap idea this is: code-wide Aus rugby $ income, which is hardly in rude health, is in fact threatened and declining in numerous sectors (ARU admits this in its own Reports). Of course, average $ cost per elite player per head becomes a bigger and bigger concern if aggregate average code $ income per elite player is not growing equally, or ideally, faster than that core cost. If not, effectively the financial position of the code becomes more and more fragile over time. Much worse is in store if gross elite player income per head is effectively slowly shrinking. In these latter scenarios, the inevitable (rational but not useful) reaction will be 'cut/cap/contain player cost or we'll go broke'.

I've deleted your next two paragraphs RH because this first stands on its own. When you run a business of any description, from a corner shop to a corporation, this is the primary focus of the business. Keeping costs under control so you don't go broke. There are three exceptions to this:

1. Firms that are going to go broke.
2. Businesses with some built-in too big to fail govt protection. Australian banks are one example but I would argue Cricket, League and AFL are three others in this category who have their facilities subsidised almost completely.
3. Shonky businesses where the controllers are basically thieving from shareholders. Ponzi schemes are an example but there are a lot of big corporations that also fall into this category.

It is very easy to say that you have to grow your revenue streams. But every business runs into the natural resistance of the market to growth and only those that can break through that grow. Rugby did that in 2003 and then tried to grow revenue through the ARC. It didn't work, mainly because it fought highly motivated entrenched interests. So now we are where we are. Reduced revenues from the world cup and the prospect of going broke unless the ARU take a haircut. The ARU cannot wait to grow revenue before addressing the costs issue. Like it or not cost cutting has to occur; and while it is going on the ARU has to work on growth. But cost control has to happen now because if its left any longer the cuts required will be draconian. There is an argument to be made that its already one year too late.

I see three paths to income growth:

1. Third party sponsorship of players. This should be excluded from the salary cap to force teams to go out and recruit extra revenue. Yes the successful provincial organisations will thrive at the expense of the others but that needs to happen. It can be reined in later before it becomes an elephant in the kitchen.
2. Use the World Cup in NZ to promote the game here through a full marketing campaign targetting the kids. What Union has and League and AFL do not is a vibrant international competition.
3. Sevens in the Olympics. This program should be an absolute focus and ALL games up to under 16 should be sevens. The mums would love it, because of its requirement for aerobic fitness it would even out the physical development issue, and its fast and exciting. Then we can tap in to govt money from Olympic development.

There's more that could be done but before anything else there has to be control of costs to ensure the fundamentals of the business are not destroyed.

 

[RedsHappy]

I've deleted your next two paragraphs RH because this first stands on its own. When you run a business of any description, from a corner shop to a corporation, this is the primary focus of the business. Keeping costs under control so you don't go broke. ....
I see three paths to income growth:

1. Third party sponsorship of players. This should be excluded from the salary cap to force teams to go out and recruit extra revenue. Yes the successful provincial organisations will thrive at the expense of the others but that needs to happen. It can be reined in later before it becomes an elephant in the kitchen.
2. Use the World Cup in NZ to promote the game here through a full marketing campaign targetting the kids. What Union has and League and AFL do not is a vibrant international competition.
3. Sevens in the Olympics. This program should be an absolute focus and ALL games up to under 16 should be sevens. The mums would love it, because of its requirement for aerobic fitness it would even out the physical development issue, and its fast and exciting. Then we can tap in to govt money from Olympic development.

There's more that could be done but before anything else there has to be control of costs to ensure the fundamentals of the business are not destroyed.

Hawko, may I thank you for a considered and really good reply (part quoted above). Many valid points, and great positive suggestions re code income improvement/growth.

I would just add: A part of what I do touches on the restructuring of businesses that are sound, but have hit serious difficulty. I can honestly state that I see far more (financial and commercial) crises through income decline and poor income growth management than ditto cost management and cost-driven problems. Yes, when income shrinks consistently, 'excess' costs self-evidently are revealed and, just as you say, need urgent lowering for survival in this instance. But, equally, after those costs are culled, no sustainable survival strategy is typically driven by cost management; the business has to quickly get back to building a viable, healthy revenue growth platform or stays a sick puppy and/or just has to be sold off to a better run business that has a formula for growth.

But in elite, people-based business I see with these problems, where the human capital is all (like coaches and players), you have to be extremely careful with cost-cutting strategies if that capital is mobile and has multiple other good income alternatives. Doubly true IMO with sports athletes that typically have at best an 8-12 years maximum earning cycle, and then (in most cases) have say 40-50 years after that to live with a much lower per annum income.

 

[RedsHappy]

Undermine the product with a salary cap and potential loss of players off-shore, and watch the fans flock away. Just when we see the Reds getting some really good numbers through the gates as a result of a) winning and b) playing bloody attractive footy, it would be a shame to see negative factors at play. If we have at least 3 solid franchises, this local derby stuff could help build better and better crowds, if the footy is good. Maybe simplistic on my part, but I think it's a factor.......

Not simplistic; rather, your argument IMO is absolutely, fundamentally accurate and sound. (Just take League SOO as a broad reference point, 3 games per year only, 60-70,000 per game in SYD, Suncorp 100% packed, plus economically lucrative TV audiences in NSW and QLD.)

 

[meatsack]

[*]Sevens in the Olympics. This program should be an absolute focus and ALL games up to under 16 should be sevens. The mums would love it, because of its requirement for aerobic fitness it would even out the physical development issue, and its fast and exciting. Then we can tap in to govt money from Olympic development.
[/LIST]

Nice post, but I disagree with 'all games for kids should be sevens'. Rugby (15s) is a game with a position for every body type, sevens isn't. Plus those 17 year olds are going to have a massive skill gap with proper lineouts and scrums that year they switch over.

I do agree that we should be pushing the sevens style game more than we are, but axing the 15 a side game is too far.

 

[Groucho]

The corollary being, of course, quite simple: if the global market for the best rugby players continues to expand, and where the best teams/countries globally are expanding their total income per elite player head faster in country X than Y (which I believe is what is now happening in, for example, France v Australia), then the faster-income-growing country will over time be willing to pay more per player than the slower (or shrinking) income growing one (other variables being roughly equal).

France has introduced a salary cap, although it is larger than the one proposed here: £7.1m. The Guinness Premiership clubs in England have a £4m limit.

 

[fatprop]

You do realise that the top players will receive money from the ARU on top of the sallary cap? This allows for players to earn more based on how well they are going.

Sure, but guys like Beale was getting the ARU wherever he played, the balance was from the Rebels.

My concern about this is management of the cap. Just how are they going to audit it? and 3rd party deals....................

It was my understanding that sides were not allowed to be part of that, and that there were no guarantees (firestone(?) again.

Why would players move for shed loads without some guarantees

 

[Bullrush]

You won't have to worry too much about a salary cap if you can do two things:

1. Make the Wallabies jumper the Holy Grail of rugby for players. Money isn't everything and players will take pay cuts to stay and play for something 'greater than themselves'. There are plenty of NZ players who could have gone overseas for big dollars but they want to wear the black jersey.

2. Build a strong national competition. Build depth in your players so that if Beale or O'Conner or Pocock were ever lured off-shore there isn't a massive gap between them and the next guy.

A salary cap will not lead to a massive player drain - there are not unlimited opportunities overseas. Most, if not all, of the big paying competitions have limited the number of imports a team can have and while you may lose a few guys, you will have the die-hards (TPN comes to mind) who will never leave while they believe they can contribute to Australian rugby.

And they are the guys you really want to stay anyway....

 

[Gnostic]

You won't have to worry too much about a salary cap if you can do two things:

1. Make the Wallabies jumper the Holy Grail of rugby for players. Money isn't everything and players will take pay cuts to stay and play for something 'greater than themselves'. There are plenty of NZ players who could have gone overseas for big dollars but they want to wear the black jersey.

2. Build a strong national competition. Build depth in your players so that if Beale or O'Conner or Pocock were ever lured off-shore there isn't a massive gap between them and the next guy.

A salary cap will not lead to a massive player drain - there are not unlimited opportunities overseas. Most, if not all, of the big paying competitions have limited the number of imports a team can have and while you may lose a few guys, you will have the die-hards (TPN comes to mind) who will never leave while they believe they can contribute to Australian rugby.

And they are the guys you really want to stay anyway....

The highlighted part is the key. People who do things purely for money are rarely the best at it. The application we have seen at the Tahs is an example IMO of people who are poorly motivated and lack a culture which strives for excellence. Throughout my working life I have been involved in the management of people and the motivation of staff to achieve under duress. I actually found that as people's pay packets rose so did their arrogance and the degree of difficulty which I had in engaging them to complete their tasks with a higher degree of enthusiasm and "ownership". As Bullrush points out so many players sacrifice huge sums to stay and play in the AB jersey and that is reflected in how they play. It is simple psychology and those who really want it go past a simple professional approach. I would in fact say that we saw amateurs with better skills, (if not better fitness) than many of those who call themselves professionals now.

It is simple for somebody from outside Oz to say build a National Competition. Few people from OS understand the logistical issues that entails or the financial constraints Rugby plays under in Oz. There is just no funding for a National comp in Oz. and I doubt that there ever will be whilst we compete with League and AFL.

I don't see a Salary Cap as a big concern. Yes I know players have a limtted life in the sport but there are heaps of opportunities that come with it as well. Like I have said before I am on my third career now, the idea of a job for life is history as should be the idea that if a person cannot be a player for life he gets to earn a life times wages in the 5 to 10 years they are a pro-sports person.

All that aside if I am building a team and you have players that are only interested in the contract price and not the team culture, improving their skills and all other life factors they won't be worth the dollars anyway IMO.

 

[Jets]

I seem to recall earlier in my life that guy's would play for the Wallabies and not get paid at all. A few were even offered money to play the other game and said no. There is a lot to be said about building a culture of success and challenging players to be their best. Most of the All Blacks could get huge money overseas but they stay in NZ because the pride and tradition in the jersey is worth more to them.

 

[fatprop]

I seem to recall earlier in my life that guy's would play for the Wallabies and not get paid at all. A few were even offered money to play the other game and said no. There is a lot to be said about building a culture of success and challenging players to be their best. Most of the All Blacks could get huge money overseas but they stay in NZ because the pride and tradition in the jersey is worth more to them.

The current Wallabies isn't the issue usually, it is the squaddies and the fringe guys, that is where depth and development is smacked about

 

[The_Brown_Hornet]

You won't have to worry too much about a salary cap if you can do two things:

1. Make the Wallabies jumper the Holy Grail of rugby for players. Money isn't everything and players will take pay cuts to stay and play for something 'greater than themselves'. There are plenty of NZ players who could have gone overseas for big dollars but they want to wear the black jersey.

2. Build a strong national competition. Build depth in your players so that if Beale or O'Conner or Pocock were ever lured off-shore there isn't a massive gap between them and the next guy.

A salary cap will not lead to a massive player drain - there are not unlimited opportunities overseas. Most, if not all, of the big paying competitions have limited the number of imports a team can have and while you may lose a few guys, you will have the die-hards (TPN comes to mind) who will never leave while they believe they can contribute to Australian rugby.



And they are the guys you really want to stay anyway....

Fair comments and there are plenty of guys recently who have stayed on to challenge for the Wallabies jersey (Moore, Horwill, Sharpe, TPN, AAC (Adam Ashley-Cooper), Mitchell etc). FP is right though, you need that strength in depth and guys who could be in the mix going overseas certainly doesn't help.

Moreover, you can't perpetually dangle the jersey in front of these young blokes. I heard the same arguments before pro rugby and plenty of the old guard saying that the players should be running out there for the love of it alone, professionalism be damned. That attitude nearly killed the game here with the prolonged exodus of guys in the prime of their careers to league. So we know how it ends up already from previous experience.

 

[Gnostic]

Fair comments and there are plenty of guys recently who have stayed on to challenge for the Wallabies jersey (Moore, Horwill, Sharpe, TPN, AAC (Adam Ashley-Cooper), Mitchell etc). FP is right though, you need that strength in depth and guys who could be in the mix going overseas certainly doesn't help.

Sorry TBH - the only one you could say really has shown his metal is Sharpe. He has been cast aside a couple of times and bagged more than any othe starting player I could think of to the point of not being offered an ARU top up. Yet he has stayed as has Phil Waugh. The rest are in their prime and their is little competition against them really if they are fit (Horwill) and they will always be in the 22.

 

[The_Brown_Hornet]

Mitchell was dropped last year. Horwill could have done what Madness did and go to Japan for an easier time. Moore is up against TPN for the starting jersey.

 

[Gnostic]

Mitchell was dropped last year. Horwill could have done what Madness did and go to Japan for an easier time. Moore is up against TPN for the starting jersey.

And all are certainties for the 22 if fit and they know it. With the very doubtful exception of Mitchell.

 

[The_Brown_Hornet]

On reflection, I'm actually not sure what we are arguing about here. My original point is that there are guys in the Wallaby squad who could probably command a higher salary elsewhere and yet stayed, thus lending to strength to the argument that they find the the jersey an incentive.

 

[Hawko]

And all are certainties for the 22 if fit and they know it. With the very doubtful exception of Mitchell.

You might drop Mitchell again if you live in Robbie's world, but not if you live in the real.