The NRL Club Funding Agreement Saga

In August 2015, the Sydney Morning Herald reported that the NRL clubs want an increase in their annual NRL grant from $7.5 million a year to $12 million if the salary cap rises to $10 million a year in 2018 – or an annual payment of more than $2 million in excess of their total wages bill for players. The clubs are also expected to demand an increased say in the running of the NRL

At the same time, the clubs rejected News Limited speculation that the clubs were considering a breakaway competition, despite not having signed participation agreements beyond 2017.

Fairfax reported on November 17 that NRL clubs want their annual grants increased to 130 per cent of the salary cap and changes to the constitution to give them a greater say in the make-up of the ARL Commission.Those are the key points in a list of demands drawn up ahead of a potentially explosive meeting on Wednesday between a delegation of club bosses and the NRL’s negotiating team, headed by ARL chairman John Grant.The clubs have devised a list of demands, which include:

annual grants of 130 per cent of the amount for total player payments;
a 30 per cent share of NRL profits;
a review of the ARLC constitution;
NRL licences for an indefinite period;
an independent review of the NRL’s costs, and;
a say in approving the NRL’s budget;
Review of the ratchet clauses that link increases in the salary cap to increases in player wages;
A vehicle to share digital rights revenue based on the model used in Major League Baseball;
$3 million offered by the NRL but with no conditions attached.

On December 3rd, Fairfax media reported that the governing body has agreed to provide the clubs with an extra $100 million from 2018 to 2022, while the same amount will be invested in grassroots-to-elite funding. Clubs have also been granted their request of grants totalling 130 per cent of player payments over that period, plus $1.5 million per club from 2016 to 2022 to invest in their businesses.

There had been whispers of a breakaway competition being formed if club demands for more funding weren’t met, as the majority had not yet signed new participation agreements. However,Fairfax reported that franchises have agreed to hold a “perpetual licence” to play in the NRL competition after the parties agreed on how to divvy up the spoils of the broadcast bounty.

“I think all clubs would accept that we now have been given the tools to be self-sustainable and if, as boards, we are unable to take that opportunity and run with it then we need to be accountable for that,’’ Campbell said. “I would say 2018 would be a realistic time frame to expect the clubs to be profitable. Profitable is probably too strong because if they do go down the investment path, which is an absolute necessity for the game to go forward, then break even is not unrealistic.“The NRL don’t have to own clubs, they don’t have to prop up clubs and I think that’s probably a good thing from a competition integrity point of view. I understand why they do it and it’s a necessity but over time everyone will be able to be masters of their own ship.’’

On December 6, it was reported by Fairfax that NRL clubs will no longer receive financial compensation for playing home games on Monday nights or in other unpopular time slots under the new funding agreement with the ARL Commission.

As a result, clubs will not receive an extra $40,000 for each Monday night game they host as compensation for lower gate takings and sponsorship than matches played in other time slots. There will also be no compensation for hosting matches in the new 6pm Friday timeslot to be introduced from 2017, which Sydney clubs fear will be too early for fans to get to after work.

The Sinking Fund

In May, The Telegraph reported that the NRL had proposed a sinking fund at a meeting with club executives. One option which was flagged was that all club’s should pitch in as part of their license agreement to keep the club going. It was then mooted that a sinking fund be introduced. It would mirror the setup of strata apartments, where club’s would contribute an agreed upon financial amount which the embattled club could draw upon if needed. The fund would ensure money is not siphoned from the grassroots level and Country Rugby League.

On June 10, 2016 the Australian reported that the NRL had proposed the clubs establish either a sinking fund, or the ability to take money from the clubs, to support clubs in dire need of financial support, as the NRL sought to move responsibility for club finances from the league to the clubs themselves. According to the Australian –

The first, and more likely, proposal would involve each of the 16 clubs setting aside $150,000 a year ($2.4m in total from the 16 clubs) to safeguard against any of their rivals going belly up.
The other alternative would result in the NRL taking money from the clubs in the times of a financial crisis in clubland.

On June 14, the Australian reported that clubs were uneasy over the proposal to shift responsibility for failing clubs to the club themselves, believing its the leagues responsibility to ensure a 16 team competition.

In July 2016, it was reported that the clubs were meeting with lawyers over changes to the funding agrrement believing the league had moved the goalposts.

On September 2nd, The Australian reported that the clubs had put forward an alternative proposal suggesting that the club support funds should come from the upcoming sale of the Knights and Titans.

On November 23, it was reported that club executives had walked out of a meeting with Greenburg and Grant after the NRL had declared that no discussion on the club funding agreement would be had until the players CBA had been agreed to.. The club chairmen – the Cowboys’ Laurence Lancini, Sharks’ Damian Keogh, Bulldogs’ Ray Dib and Storm’s Bart Campbell – turned their back on the meeting barely half-an-hour into the negotiations after being told an in principle agreement for club grants had been scrapped. They also had the support of Roosters supremo Nick Politis, who was unable to attend the meeting.

“We met [on Wednesday],” Campbell said. “Nothing was agreed. The clubs and state leagues remain united on the best way forward. We are considering our next steps and will meet again shortly.”

On November 24th, it was reported that the all 16 clubs intended to sign a letter, which was to be delivered to the ARL’s independent commissioners, to act as the trigger for the club-inspired push for an extraordinary general meeting and Grant’s removal.

The Australian reported that the letter also called on the commission to honour the memorandum of understanding signed late last year and make changes to the constitution that would result in the states losing their right of veto — again, the QRL abstained — but receiving a seat on the commission as compensation.

Todd Greenberg was quoted defending Grant –

“John’s a good man who works very hard and always puts the game first. He’ll continue to do that as the chairman, I have absolute faith in that,” Greenberg said. “It’s not a new phenomenon that the head body of a sport and its clubs will have differing views on funding and we’ll continue to have those discussions. There’ll be more discussions in the next week or so, I would anticipate, with the chairmen of the clubs, and we’ll work together to find a resolution.”

The letter was delivered about an hour before Grant announced he intended to stay another 5 years, and had appointed John Coates to look into the leagues constitutional issues.

On November 25th, The Telegraph reported that club bosses were concerned about the way the game is being financially managed at a time the game has never been more prosperous. The clubs have no faith in the Commission chairman to run the business properly. Hundreds of millions more have been invested into the game and there is no discernible difference from when David Gallop ran the game with a secretary, three staff and an old typewriter.

On November 26th, the Australian reported that the clubs were considering not attending a meeting with the ARL the following week, and were looking at possible legal questions over the leagues right to abandon the previously agreed to club funding agreement. The Australian reported that Grant said

“When we finished the meeting last Wednesday with 14 chairs (12 clubs plus the NSWRL and QRL) there, they said we have to get together soon,” Grant said. “That’s what we’re doing. There is no doubt we gave them a difficult message not as well as we could have. In my role I have to accept responsibility, which I have done in my letter to them. It’s not good for anyone to retire to their quarters. Business won’t work that way. I hope that doesn’t happen. If it does happen, we will deal with it as we have to deal with it. In the clear light of day, I think common sense will prevail. I hope that is the case. If it is not, there is a process under the constitution where the clubs can seek to remove a commissioner. I hope they come back to the table because there is an opportunity to do what they wanted to do. I promise to them that we will be completely open, transparent and respectful.”