THE boom in football department spending could kill off the salary cap if it continues unchecked, AFL Players’ Association boss Matt Finnis has warned.
The AFLPA late last year delivered the AFL a paper on its ideas about player payment economics and equalisation, which Finnis said were linked.
The two bodies will this year conduct a mid-agreement review of player pay, with the current five-year Collective Bargaining Agreement to expire at the end of 2016.
Finnis said change needed to be made during the final two years of the current deal, with even more reform set for the next agreement.
He said the union was very concerned about the declining “share of wallet” that players were now receiving.
“Some clubs are below 50 per cent of football department spend which goes to players,” Finnis said.
“The trend is a decline of about 2 per cent or 2-and-a-bit per year, an across the board decline.
“Clearly there needs to be change, because if the current trends continue, you are going to have some serious issues to deal with down the track in relation to the labour market restraints such as the draft and the salary cap which the industry has relied upon, as ceasing to be valid because players get drafted to clubs and they have a dis-equal opportunity for success.
“It is a fact that the players in good conscience couldn’t continue to support a salary cap in a context where you’ve got such a perverse economic outcome occurring.
“There are a number of objectives through this whole equalisation process – which significantly includes the profitability of all clubs – but a critical piece is that the industry seeks to preserve the integrity of the salary cap, if indeed the industry wants to continue to have it.”
The cap on player pay in 2013 was $9.14 million and rises to $9.6 million this year.
Several clubs – headed by Collingwood at $22.5 million – spent more than $20 million on football expenses last season.
Finnis was on the AFL’s equalisation fact-finding mission to the US last year and said he had concluded that a combination of levers had to be pulled to arrest spending.
He said some equalisation mechanisms could be used to fund pay increases for players without adding to the burden of poorer clubs.
“You can look club revenue – and you can say what they do in the States is look at all the revenue generated by the teams as opposed to revenue from the AFL for example and say every team will have to pool a certain percentage of those revenues and then everyone takes out a 1/18th share,” Finnis said.
“What that gives you is net contributors and net receivers.
“What we say is the amount of money that you provide to the net receivers is used to increase the salary cap.
“What you are then doing is actually funding the salary cap increase for the teams that need it to be funded, but not funding those increases for the teams that can afford to spend it themselves.
“So that applies a break on this arms race in the football spend.
“If you had a view that if you wanted to keep attacking football spend, you can pull a second lever – which is your football expenditure lever, that’s where you hear us talk about a luxury tax.
“We think that is a natural lever to pull, but we would prioritise the revenue lever as the first one, but then bring that expenditure lever as well.
“And then the third lever is the AFL distributions … increasing the proportion of money which goes to the clubs dis-equally.”
AFL EQUALISATION MEASURES
In place now
The AFL sets a limit on total player payments
Works basically in reverse ladder order, aimed at ensuring the best players end up at teams with greatest need
DIS-EQUAL AFL DISTRIBUTIONS
The league gives financially struggling teams extra funding from the $144 million club future fund it introduced in 2011. From this year, the amount and purpose of that funding will be disclosed to the other clubs
What could be done
A percentage of all clubs’ non-AFL revenue such as gate receipts and membership is pooled. Each club then takes a 1/18th share. Used in the NBA and NFL
The AFL has investigated what amount clubs need to spend on football to be competitive. It could fund financially smaller clubs to this level from the club future fund
The AFL could impose a salary-cap style limit on football department spending. Has not received support from clubs and would be difficult to police
Imposed on football department spending above a certain amount, with the proceeds fed into a revenue sharing mechanism
This article originally appeared in the Herald Sun. To read the original please click here