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NRL contracts – what are they really worth?

This NRL season has seen it’s normal amount of  controversy over players’ contracts.  Notably the the Daly Cherry Evans backflip, and Chris Sandow ‘s abrupt release from the Eels.   But the Wests Tigers Robbie Farah news last week takes the cake as a clear indication that the a Contract of Employment in the NRL is worth less than the paper it’s written on.   Farah was instructed by the club on Tuesday that he was no longer a feature in their future plans, to look elsewhere for a new role, and that if he remained at Wests Tigers in accordance with his $900,000 per annum contract he would be playing reserve grade next year.

From a footballing perspective the madness of this decision is outside the scope of this blog – and that issue is best left for the sports journalist to discuss further, as no doubt they will.

But it’s the business and employment perspective of this decision that baffles me, and yet another occasion this year as both an employment specialist and NRL fan that I’ve observed the business practices of these clubs being far below acceptable contemporary standards.

If Farah finds a new club in this short time frame the Tigers will, in the best case scenario, be subsidising  his salary in the region of $500,000 to have Farah play against them instead of for them.  All of this for a ‘fresh start’ and to free up relatively insignificant $400,000 in their salary cap.  In leadership terms, they will also be depriving themselves of one of their only senior players, and have no hope of recruiting anyone else at this late stage.  There is also the fact that publicly breaking promises to a loyal employee, to allow you to make new promises to other employees, is more than just morally flawed.  It’s strategically weak.  Employees are not that stupid.   If this action has led to a bad taste in the mouths of the fans and the wider community, what is it like in the locker room.

One way or another, it seems that between the 30 June cooling off period that allowed DCE to backflip, the provision for bilateral release like Sandow’s, and then this remarkable repudiation of Wests Tigers provides us with just three examples in as many months that demonstrate that NRL contracts are basically meaningless.  They are aspirational documents,  the only purpose of which is to create media attention around the re-signing of players.   This needs to change if the NRL clubs are serious about player retention and fan satisfaction.

Within the executive world, it is standard practice to allow unilateral termination of employment at will, with often as little as one month’s notice provided.  The NRL need to think about this as an option going forward, but with robust protections for players and fans.  For example, termination at will of a player’s contract by either party should be allowed, provided that a deadline half way through the season for all contract alterations for the following year should be observed.  This would prevent clubs from cutting players loose when there were no other opportunities, and likewise protect clubs from being stuck unable to find replacements.   If the  club exercises the right to terminate, a termination payment (preferably salary cap exempt) could be provided under the contract.

This bizarre eleventh hour move from the Tigers leads to an assumption that the true extent of their salary cap crisis is at the point where rational decisions are no longer possible.  This begs yet another question to the administrators of this sport.  How hard is it to manage the salary cap?  The rest of the business community deal with a range of compliance tasks every day of the week which are far more complex.   Why do NRL clubs find this so difficult to manage in advance?  With the discovery of numerous breaches in recent years, it’s clearly time to insist that clubs make all player contracts  publicly available.  This would provide for a industry wide self regulation system.  The clubs, aided by the media and other stakeholders, can regulate each other much more effectively than the hit and miss audits currently performed by the integrity commission.

Everyone else in the economy is finding creative ways to meet their business goals and maintain compliance.  It’s high time that the NRL followed suit.

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