TPAs and the Market Rate

BY DAN

The National Rugby League (NRL) to the admirable step of reporting on third-party agreements this week. It was an important step by the competition that has already facilitated important discussions about equity across the competition. It also highlights some important problem areas in the effectiveness of the salary cap the NRL will have to think long and hard about for the good of the game. 

courtesy NRL.com

First off the positive. I am pumped the NRL decided to do this. This is an positive step for transparency of an area that most fans have always blamed for the inequality in the game.  I’m glad they did it on a team-by-team basis, rather than single out individual players – although given these payments are generally for advertising something, I think we can work out who is earning the majority of coin at certain teams (related: I hate those damn Billy Slater powerade ads). 

Secondly it showed us where the money is, and that is apparently in one-team towns. Melbourne and Brisbane’s third-party agreements were so staggeringly greater than anywhere else. The Cowboys overcame their relative lack of corporate money to outperform many, though I would suggest (as does NRL.com’s Chris Kennedy) this is largely due to the pulling power of Jonathon Thurston. 

Make no mistake. This is an advantage for those clubs. As the NRL reports this data over the coming years, we will get a better idea of the systematic nature of this advantage. While most fans assume this exists, we are now going to have the information that shows it. Reporting this advantage is an important step for the integrity and transparency of the game.

Beyond this Storm/Bronco advantage it highlights other important issues in the game that need to be addressed. For a long time, most fans had assumed that the Roosters were able to put together such a star-studded side on the regular through generous third-party agreements. However, the Roosters approximately 200k number, broadly similar to the Raiders, is astoundingly low. As Chris Kennedy pointed out on twitter, the Roosters had next to no third-party agreements in 2017, so this number come largely from the addition of James Tedesco and Cooper Cronk. 

This makes sense for Mitchell Pearce and Blake Ferguson, whose off-field behaviour had made their names less lucrative. It’s less clear why Boyd Cordner, New South Wales captain and seemingly all-around good guy is accounted for in this explanation. Latrell Mitchell is another player who’s star rose in 2018, but marketability didn’t. 

But if the Roosters, the number one team in the richest area (corporation-wise) in Australia can’t get more third-party agreements, then I would suggest the NRL has a wider problem of the appeal of their players, even the supposedly ‘less marketable’ representative players like Boyd Cordner, Latrell Mitchell or  Jared Warea-Hargreaves.  

The Roosters low third-party payments also suggests either the third-party arrangements don’t capture enough agreements, or players are taking significant pay-cuts to play in Bondi. 

The former is possible but without knowledge of what counts and what doesn’t, it’s hard to consider. Regardless, while the Roosters low number certainly has been noticed by the wider rugby league public, it hasn’t drawn any interest from the NRL, who seem happy with the integrity of the system. Many would suggest this is because of power dynamics between player agents, clubs and the NRL. I won’t address this here because all I could add was speculation. 

Another issue is if players are taking significant ‘unders’ to play in Bondi. At an individual level I can understand this. Players may want to live in Bondi. They may see an opportunity to make a name for themselves by playing for a side that consistently goes deep in September. I would argue that for a job that lasts at best 10-12 years, you need to make all the money you can in the short time you’re employable. But for some premierships and lifestyle may be more improtant than money (and marketability, apparently). 

One might also be concerned this willingness to take less money to go to Bondi undercuts the earning potential of like-players across the league. If one player is willing to take less to go to the Roosters, it reduces the bargaining power of players elsewhere to get raises. If NRL players’ wages don’t go up, the relative ability of the league to attract the best athletes in Australia diminishes. If the NRL doesn’t have the best athletes (which I think it does), then its product is worse. 

This is also a perilous situation for the effectiveness of the salary cap. The purpose of the cap is to equalise talent. But this only works if players take their market value. I always considered third-party agreements as potential workaround to keep players, or attract them, to clubs trying to keep talented sides together. If players are simply taking less money to go to the Roosters, then it reduces the ability of the cap to equalise talent, and could result in the situation where the same clubs are at the top of the ladder every year.  

Sidebar: One might suggest the moving on of Blake Ferguson for more money is evidence that the cap is working.

Another convincing suggestion is the Roosters superior management is better at getting value-for-money in player contracts, jumping off when the value is high (e.g. Blake Ferguson) or getting on when the value is low. 

The NRL doesn’t have many levers to pull to ensure players are paid their market rate. They can hardly punish the Roosters for being well-run and near the beach. But there’s no doubting that Melbourne and Brisbane get a free million to work with and a cap may reign their advantage.

Expanding the definition of third party agreements might be one option to provide greater clarity of how the Roosters achieve so much with seemingly so little. Systems like arbitration (as used in Major League Baseball) or increased minimum wages, might be useful steps of varying degrees to ensure players are earning what they deserve. Both would be significantly long-term options that would be negotiated in the next collective agreement. A short term option would be to publish individual player salaries, something that I support, but this is fraught with privacy issues, and would possibly be opposed by not just the Players Association, but very powerful player agents. 

Regardless, this is a positive step by the NRL. Even in publishing these numbers, we are able to have conversations about the inequity of payments that exists horizontally (between clubs) and vertically (between certain players). It highlights that the NRL has more to do to make the wider pool of players more marketable (finding a way to stop the off-field controversies that mar the sport would be a good start, for the good of society as well as pay-packets). But it shows that the NRL is confident in its systems, and mature in its outlook. 

It may take longer for fans to agree. 


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