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Thursday, November 03, 2005

[Sport] That's a lovely cap you've got

Those who regularly read this blog may have come to the belief that I am solely interested in the affairs of men who play children’s games for a living. This is not so.

I also read (currently the mammoth 730 page Fear and Loathing in America, the first part of Hunter S Thompson’s collected letters, I assume the second part is another 730 pages); enjoy the arts; discuss architecture; and listen to music, both recorded (currently Sweet 69 by Babes in Toyland) and live (this Friday Module at Cabaret, next Friday Hollie Smith at Indigo).

However, despite all of these, this morning’s post (it was supposed to be posted yesterday morning but I had stuff to do) is on rugby.

The New Zealand Rugby Union (NZRU) has signed a collective agreement with the New Zealand Rugby Players Association (NZRPA) to much hooplah. Deputy Chief Executive Steve Tew represented the NZRU and signing for the NZRPA was Executive Director Rob Nichol.

Here are the bullet points:

  • A revenue-sharing agreement with players
  • Guaranteed retainers for players
  • A provincial union salary cap
  • Rob Nichol is officially declared to be (but not have) a penis
  • The deal is for three years from 2006 to 2008

I suppose that I should mention that the rugby situation is much more difficult that the American Football situation (which I am going to compare to often). We have three levels: International (including Sevens); Super 12 14; and Provincial. International and Provincial level games have an overlap period however Super 14 is separate and should always be dealt with as such (the NZRU hasn’t quite figure that out yet).

Right let’s get into it.

The revenue sharing agreement is weird. [From NZRU] Professional players will have a new revenue-sharing arrangement with the NZRU which will see 32.4 percent of all player-generated revenue go into an annual player payment pool to be used for player payments and initiatives. Player-generated revenue includes all NZRU broadcasting revenue, sponsorship and match-day revenue

[From Stuff] With broadcasting, sponsorship and ticket sales predicted to earn $320 million from 2005 to 2008, an average of about $26 million a year will go into the players' back pockets, excluding bonuses.

All professional players get access to this pool. (Actually the figure quoted above seems to be incorrect. 32.4 percent of $320 million is $103.7 million.)

So what is non-player generated revenue? Merchandise and… Personally I fail to see how broadcasting rights are “player generated”.

Surely it would be smarter to put ALL the money in a pool and give it to the Provincial Unions, and then the Unions can give it to the players. What is scary is this quote:

While having a uniqueness relevant to New Zealand rugby, the revenue-sharing model is similar in concept to that used by many other professional sports organisations …, including … the National Basketball Association (NBA), National Hockey League (NHL) and Major League Baseball (MLB) in the USA.

Do we really want our rugby to be like the “richest always win” MLB and NBA? (ignore the White Sox).

"We are saying to the players if you want to stay in New Zealand you won't be subject to that selection anxiety on an annual basis. If you sign for X dollars for three years, you will get paid X dollars."

These are also known as “guaranteed contracts”. In the NBA teams trade players away for a negative gain just to get out of guaranteed contracts.

There is no word on how the money will be divvied up.

On to the retainers.

Under the new agreement, a player’s base remuneration (or “retainer”) will now be guaranteed to be paid for the term of his NZRU contract. The minimum base remuneration level for Rebel Sport Super 14 players, established under the previous Collective Agreement, will remain at $65,000

Remuneration used to depend on the player being selected to a, then, Super 12 team. Under the new deal if a player isn’t selected for the Super 14 but is still under NZRU contract then they will get their retainer.

I suppose I have no beef with this. It’s similar to the bonus system in the NFL (except those are paid as a lump sum). A player who is dropped after a bad season or injury has a bit more financial security. However the NZRU may a little bit more careful about whom it puts under contract.

There is a similar deal for NPC players worth $15,000 and any player selected to the All Blacks is eligible for a $100,000 bonus should they win the 2007 World Cup ($35,000 for winning the semi and $65,000 for winning the final). Again I have no beef, though I would prefer slightly smaller bonuses to be paid “if New Zealand is World #1 at the end of each year”. Oh and only pay them if they win it all, there is no respect for second place.

I have also noted that there is no money in here for the women. Yes, yes, I know. The women generate very little revenue (like broadcasting). But they are the bloody world champs! I would expect that the women should at least be offered bonuses (rather than the retainers) similar to the men.

Here’s my favourite bit: the Provincial Union Salary Cap (Note: the NPC is now called the Air New Zealand Cup).

The new Collective Agreement will set a salary cap on total annual player payments made by each of the 14 Air New Zealand Cup provincial unions. The level of the cap will be set at $2 million for each provincial union for 2006 and will be adjusted by the CPI (Consumer Price Index) each year thereafter.

Within the cap limit of $2 million (for 2006), there are certain discounts and additional values that will be built into an Air New Zealand Cup team’s total salary cap value under the proposed salary cap.

Here are some brilliant quotes from what must be one of the smartest people ever (you probably can’t tell but I was writing sarcastically).

"I'm not aware of another professional sport anywhere in the world that has ushered in such significant change as we have today, particularly around a salary cap, without considerably more pain and, in most cases, industrial disputes”

But then…

Tew conceded the cap would do little to spread talent in its first year with the top unions already just below the $2 million, but it would stop the big unions from simply throwing money at top players from other unions and stockpiling talent

Ahh, realism meet the NZRU, NZRU this is realism. Also has Tew never heard of the NFL? Their cap regualtions stopped the days of the football dynasties (like Dallas) and has made the competition very even, all without player stand-offs.

I was all excited when I first learnt of the Salary Cap. Then I found out it would be $2 million. Given that the NZRU estimates a Super 14 player will have a base salary of $65,000, a team could contract 15 of these players and still be miles under the cap. It could even contract 15 All Blacks worth $100,000 and still have $500,000 to play with.

But it gets better. Some provinces will allowed more money on their cap. This is the above mentioned “discounts”.

Discounts will apply to current or former All Blacks. They will also apply for provincial players who have played for the same provincial union for eight years or more.

This means all Black-stacked provinces, like Auckland and Canterbury, will have a higher cap limit because of the All Blacks in their squad.

I can only hope that these are cancelled by the “notional values”.

“Notional values for all NZRU-contracted players in an Air New Zealand Cup team (ranging from $10,000 to $50,000 depending on a player’s current playing level) will be included within that team’s total cap value, in addition to the actual payments made to those players by their provincial union,” Mr Tew said.

I take this phrase to mean that a players NZRU contract value will count against a team’s salary cap. I hope that’s right.

Stephen Tew is an idiot though. The $2 million dollar salary cap will do nothing to stop rich teams (Canterbury) poaching off smaller poorer teams. (Note: Auckland has been doing well recently drawing mainly from its actual population base.) After the departure of incumbent halfback Justin Marshal, Canterbury just offered a truck-load of money to the next best halfback in the country (or at least the one who would move from his province).

The NZRU would do better to set the cap at $2M then lower it over the next three years (as an introduction period) and then start to increase it again after that (or rather have it fixed to some other measure, such as: salary cap for the year is 75% of total provincial revenue of previous year). They also need to help the smaller provinces actually have enough money so they can get anywhere near the cap. The cap should (but won’t at its current level) force teams to make decisions about who will and won’t get contracts.

Let’s use Rico Gear as an example. Last season Gear signed with Nelson Bays so that he would be in the catchment area for the Crusaders Super 14 team. Gear is an All Black and as such played on a handful of games for Nelson Bays. Recently Gear said he wanted to move from Nelson Bays to the (All Black-stacked) Canterbury provincial team. Currently Canterbury could take him in the blink of an eye, under the salary cap they might have to think, but could still take him. Under a real cap they would not even be able to think about it. Gear is a starting player and would have too large a hit on the cap for Canterbury; however, Gear could earn a mint at Nelson Bays because they don’t have any other big players to worry about.

The money being thrown around might tempt some players back from overseas (and I truly hope it does) but will the competition be any better? Exciting games are what bring in fans and sell merchandise. The final of this year’s NPC (the most unexpected pairing of teams for a long while) was hideously under-attended. Camera shots revealed half-full stands with giant gaps everywhere. Exciting games come from equally matched teams.

Even under the best league system teams will fail miserably and other will succeed brilliantly but if it is run right then it will be a boom and bust cycle. Take the San Francisco 49ers for example. Five time winners of the Superbowl (ties for the most with Dallas), for the last two seasons the 49ers have been struggling to win games. But, they do win them. No one batted an eyelid when Northland lost all of its games this season.

By the way, shouldn’t New Zealand Rugby be ashamed that Australian Rugby League (that’s the sport of rugby league) has a better system.

Finally here are the wise words of NFL columnist Gregg Easterbrook:

(Sept. 13, 2005) -- This week's goods news includes indicators that the league and the NFL Players Association are optimistic a new agreement will be reached soon. But should either the players or the owners hesitate to make reasonable concessions, let them bear this in mind: basketball's warning to football.

Remember early in the 1990s, when professional basketball was going to be "The Game of the New Century?" NBA ratings and attendance were skyrocketing. Supposedly, pro basketball could do no wrong. Since then, NBA popularity has nosedived. This year's ratings setting lows in almost every category. The core reason for pro basketball's decline is deterioration in the quality of play. Regardless of why that happened, just keep the sequence in mind. Pro basketball seemed on top of the world; quality of play went down, viewers and ticket buyers took their eyes and their dollars elsewhere. The NBA thought it could do no wrong, and discovered otherwise.

This is a powerful cautionary tale. Right now the NFL looks invincible. Everything about pro football keeps soaring: popularity, ratings, gate receipts, licensing. The reason is product quality -- NFL games are fabulous. But could the NFL take a basketball-style tumble? Sure. Should the owners or players damage the product by failing to preserve competitive balance, there is nothing in the laws of nature that says the NFL must remain so popular.

In the last 12 years, payments to NFL players have zoomed 125 percent in real dollars. That represents an extraordinary increase in player wealth and shows the NFL system is working to the benefit of players. So players: Don't ask anything that tampers with the basic structure of the goose that lays the golden egg. By the same token, owners should keep in mind how well the NFL system works for them. While pro basketball, baseball and hockey have all kinds of financial problems, NFL income keeps setting records. The network, cable and satellite deals recently inked by the league will bring in about $3.7 billion annually beginning next year -- close to half again the NFL's already-hefty television proceeds. So owners: Don't do anything that tampers with the basic structure of shared revenues, because that is what keeps NFL quality, and hence revenue, so high. Should either the players or owners fail to preserve competitive balance, there is nothing in the laws of nature that says the NFL must remain so popular.

Learn NZRU, learn.

Tags: Rugby Sport Salary Cap New Zealand


Gibbs said...
This comment has been removed by a blog administrator.
Gibbs said...

I dont know Hadyn. Its possible the cap will sort itself out relatively quickly.
I dont think All Blacks are the ones you should be worried aboot. They hardly ever play NPC anymore anyway. Its going to take a few seasons but eventually the NPC may start to even out as the talent stays in the provinces rather than shifting to the Super 14 bases. The smaller provinces may start to get more money from revenue etc, and the odd crazy upset. Everton, a thoroughly hopeless EPL football team had a cinderella season last year, got lots of money and bought some good players. Okay they suck right now, but the opportunity to secure their future has been taken. The same may happen with the NPC - I hope.
I have argued both sides of this with you and others and i think it comes down to two main points.

1: Provinces wont want to buy too many All Blacks because they never play anyway. Why would they want to pay some one who doesnt play. and they can only take one All Black transfer per season anyway.

but on the other side:
2: Why would a top young prospect stay in, say new plymouth, when all the chicks (or guys, you never know) are in the main centres. Lets face it, living in wellington or auckland just appeals to the small town kids dreams of a flahsy lifestyle seen on TV.

The small provinces are fighting a losing battle but its not really against the big unions. Its against changing times. No amount of salary capping can change Gisborne into Christchurch.