With news coming out of Melbourne that the seven Melbourne Rebels directors could be liable for the club’s tax debt to the tune of $1.65M each, I’d like to highlight some things that I think haven’t been talked about enough. Details of rugby’s salary cap are sketchy, and I’m not an accountant, so what follows is to the best of my knowledge a correct interpretation of events.
In 2017 when Andrew Cox returned the Rebels to Vic Rugby it had a clean balance sheet, there were no debts on it, all tax and other creditors had been paid. During the COVID-19 pandemic, RA reduced the salary cap for obvious reasons. In early 2023 RA, the state unions and RUPA agreed to set the cap at $5.5M. But RA, who had reduced payments to $3.9M decided to freeze their contributions at this amount because broadcasting revenue had dropped.
But critically, the requirement to spend 90% of the salary cap wasn’t altered, leaving the Super Rugby clubs about $1M short on funding as a minimum. The Rebels have spent up big on players, trying to lift their profile and winning percentage at the same time, so their shortfall would be higher. But, as I understand things, this comes with its own problems.
As an electrician the ins, and outs of tax law are a bit beyond me but, I’m informed that the tax on RA’s top-up for Wallaby players is paid by their Super Rugby club. So, by signing Taniela Tupou the Rebels increased their tax debt. Signing Lukhan Salakaia-Loto, who I believe is not on a RA top-up but would demand a significant pay cheque, would also stretch their spending.
I can understand the Rebels managements desire to get things right on the field and get the crowds and sponsor back at games. Unfortunately, they’ve fallen short. Having said that, I’ve always been sceptical of the thinking that the already overcrowded Melbourne sporting market had room for yet another team.
Adding to the Rebels woes is new RA boss Phil Waugh’s determination not to squander the BIL tour and men’s and women’s RWCs bounty on bailing out clubs in financial trouble. Phil was asked about funding and had this to say.
“No, I can’t commit to that because it is a direct correlation to the decrease in broadcast revenue in the most recent and current broadcast arrangements. While our funding decreased, our percentage of distribution of broadcast revenue increased significantly to our Super Rugby clubs.”
“Ongoing from ’26 and beyond will be dependent on what our next cycle of broadcast delivers, to then what we can afford to pass through to our Super Rugby clubs.”
So he’s not handing out more cash, but he could decrease that 90% spending requirement. To tell the truth, I can’t disagree with him. The cash from our last RWC was squandered on a bloated national competition, and I’d hate to see the same happen to the earnings from the next few years. It’s also great to see the RA boss take a longer term view of the game in Australia.
None of this helps the Rebels or their directors right now. I’m not going to give advice; frankly, I’m not qualified. All I can add is all the Rebels fans I’ve met have been fantastic people, while their management seem less so.