AFL salary cap

The Australian Football League has implemented a salary cap on its clubs since 1987, when Brisbane and West Coast were admitted, as part of its equalization policy designed to neutralize the ability of the richest and most successful clubs, Carlton, Collingwood, Essendon and Hawthorn, to perennially dominate the competition.

The cap was set at A$1.25 million for 1987–1989 as per VFL agreement, with the salary floor set at 90% of the cap or $1.125 million; the salary floor was increased to 92.5% of the cap in 2001, and to 95% of the cap for 2013 onwards due to increased revenues. The salary cap, known officially as Total Player Payments, is A$10,600,000 for the 2016 season with a salary floor of $10,070,000 except for Greater Western Sydney, whose salary cap is $10,886,000 with a floor of $10,336,000.

Both the salary cap and salary floor has increased substantially since the competition was re-branded as the AFL in 1990 to assist in stemming the dominance new interstate high membership clubs Adelaide and the West Coast Eagles.

Certain payments are excluded from the cap, and concessions are available for some players, in particular "veteran" players (those over the age of 30 and/or who have completed 10 seasons with their current club) and "nominated" rookie list players, who are discounted by 30% or 50% for purposes of the cap, depending on the number of these players at each club.

The AFL Players Association negotiates for players with the AFL on the topic of average salary.

Success of the cap

The VFL/AFL's salary cap has been quite successful in terms of parity: since the cap was introduced in 1987, each of the 17 teams (this excludes the Gold Coast, who have not yet qualified for a finals series) has played in a Preliminary Final, 15 teams have played in a Grand Final, and 12 teams have won the premiership.

Another major statistic in regards to the success of the VFL/AFL's cap is that the three richest and most successful clubs, Carlton, Collingwood and Essendon, who won 42 of the premierships between them from 76 Grand Finals ^[1] in the 91 seasons between 1897 and 1987 (83.5% of all Grand Finals for a 46.2% premiership success rate; this includes Carlton's premiership in 1987, the first year of the cap), have only won five of the premierships between them from ten Grand Finals ^[2] between 1988 and 2015 (34.5% of all Grand Finals for a 17.2% premiership success rate).

Of note in this regard is that Sydney have been in the finals in 18 of the 21 seasons (a finals success rate of 85.7%) since 1995, playing in five Grand Finals and winning the premiership in 2005 and 2012, having previously not won a premiership since 1933, having not played in a Grand Final since 1945 (both as South Melbourne), and mostly struggling in the 50 seasons between 1946 and 1995, making the finals on just four occasions in that time (a finals success rate of just 8%).

Criticism of the cap

The AFL salary cap is occasionally controversial, as it is a soft salary cap and therefore can sometimes be slightly different for each club. Clubs in poor financial circumstances (e.g. the Western Bulldogs, North Melbourne, Melbourne) have not always used their full cap, in some circumstances not even reaching the salary floor, to ensure they reduce costs.

The AFL has also used the cap to pursue its policy of supporting clubs in non-traditional markets such as Sydney and Brisbane.

Football department cap

Originally, the cap was only for the Total Player Payments of each club and not the club's football department. This has caused concern in recent years; for instance, three of the four top-spending clubs played in the Preliminary Finals in 2012 and 2013, and the last team to win the premiership outside the top eight spending teams was North Melbourne in 1999.

There had been calls for a separate cap for the football department, or to reform the salary cap to include football department spending, but these had been opposed by the wealthier clubs, with Sydney CEO Andrew Ireland saying that the AFL needed to examine the gap between football department spending for these teams.^[3]

In 2014, the AFL and its clubs accepted a luxury tax on football department spending (excluding the salary cap) to take effect in 2015 and an overall revenue tax to take effect by 2017. Clubs that exceed the football department cap will pay the AFL the lesser of $1 million or 37.5% of the excess, and repeat offenders will pay the lesser of 75% of the excess or $2 million.^[4][5]

Breaches

The breaches of the salary cap and salary floor regulations outlined by the AFL are exceeding the TPP, falling below the salary floor, not informing the AFL of payments, late or incorrect lodgement or loss of documents relating to player financial and contract details, or engaging in draft tampering. Trading cash for players and playing coaches, formerly common practices, are also prohibited in order to prevent wealthier clubs from circumventing the restrictions of the salary cap and salary floor.

Penalties for players, club officials or agents include fines of up to one and one half times the amount involved and/or suspension. Penalties for clubs include fines of up to triple the amount involved ($10,000 for each document that is late or incorrectly lodged or lost), forfeiture of draft picks and/or (since 2003) deduction of premiership points. As of 2015, no club has been penalised for breaches of the salary floor regulations, and no punishment has included the deduction of premiership points.

Breaches of the salary cap regulations are as follows:

• In 1987, Sydney were fined the maximum of $60,000 and forfeited their first round pick in the National Draft after a VFL investigation found that they had exceeded the salary cap by $1.15 million during the season.
• In 1992, Sydney were fined $50,000 after it was found that they had failed to disclose payments made to former player Greg Williams during the 1990 season; Williams was suspended for six matches and fined the maximum of $25,000 for accepting the payments.^[6]
• Hawthorn was fined $28,500 in 1992 for a minor breach in relation to benefit payments.
• Three clubs were fined for minor breaches in 1993: Melbourne ($13,450), Carlton ($9,750) and Footscray ($2,700).^[7]
• In 1994, Carlton were fined $50,000 after it was found that they had exceeded the salary cap by $85,000 during the 1993 season.^[8]
• In 1995, Sydney were fined $20,000 after key documents relating to player financial details and star full-forward Tony Lockett's contract details were lost in the post by club officials, forcing the club, who had won the last three wooden spoons, to scratch from the 1995 pre-season draft and play the season two players short.^[9] The club officials responsible for this error were fired by the Swans one week later.
• In 1996, Essendon were fined a record $638,250 ($250,000 in back tax and penalties, $112,000 for draft tampering and $276,250 for breaching the salary cap regulations), forfeited their first, second and third round picks in the National Draft and were excluded from the 1997 rookie and pre-season drafts after a joint Australian Tax Office and AFL investigation found that they had committed serious and systematic breaches of the salary cap regulations totalling $514,500 between 1991 and 1996, including $110,000 in 1993 when Essendon won the premiership.^[10]
• Ten other clubs were fined in 1996 for minor breaches in a crackdown following the Sydney incident the year before: Fitzroy, St Kilda and North Melbourne ($30,000 each), Richmond ($20,000), and Brisbane, Collingwood, the Western Bulldogs, Fremantle, Hawthorn and the West Coast Eagles ($10,000 each).
• In 1997, Port Adelaide was fined $50,000 for late lodgement of documents relating to the contract and financial details of five players.^[11]
• In 1998, the West Coast Eagles were fined $100,000 and forfeited their third round pick in the National Draft after an AFL investigation found that they had exceeded the salary cap by a total of $165,000 during the 1997 and 1998 seasons.
• Five other clubs also fined for exceeding the salary cap in 1998: Geelong ($77,000 and excluded from the 1999 pre-season draft), Collingwood ($47,500 and excluded from the 1999 pre-season draft), Hawthorn ($45,000), Richmond ($21,000 and excluded from the 1999 pre-season draft) and the Western Bulldogs ($5,300).^[12]
• In 1999, Melbourne were fined $600,000 and forfeited their first, second and third round picks in the National Draft for two years after it was found that they had committed serious and systematic breaches of the salary cap regulations totalling $810,000 between 1995 and 1998. Fremantle were handed Melbourne's first round pick for the 1999 National Draft as compensation for losing ruckman Jeff White to Melbourne.
• Two other clubs were fined in 1999 for minor breaches: Carlton (fined $43,800 and excluded from the 2000 pre-season draft) and Geelong ($20,000).^[13]
• In 2000, Fremantle were fined $54,400 and excluded from the 2001 pre-season draft for a string of minor breaches. Fremantle's poor 2001 season (in which it won the wooden spoon) has been put down to this penalty.
• Four other clubs were fined in 2000 for minor breaches: North Melbourne ($35,000), Richmond ($10,000), Brisbane ($7,500), and Melbourne ($5,000).^[14]
• In 2001, Carlton were fined $125,150, forfeited their second and third round picks in the 2001 National Draft, and were excluded from the 2002 pre-season draft after it was found that they had failed to disclose payments totaling $239,900 to captain Craig Bradley and incorrectly lodged an additional services agreement document during the 1998 and 1999 seasons.
• Three other clubs were fined in 2001 for minor breaches: Richmond and North Melbourne ($20,000 each) and Melbourne ($5,000).^[15]
• In 2002, Carlton were fined an AFL record $987,500 and forfeited their priority picks in the 2002 National Draft, their first and second round picks in the 2003 and 2004 National Draft and were excluded from the 2003 pre-season draft after an AFL investigation found that they had committed serious and systematic breaches of the salary cap regulations totaling $1.37 million between 1998 and 2001; ruckman Matthew Allan was suspended for five matches and fined $10,000 for accepting undisclosed payments from club officials. Carlton struggled for seven years as it recovered both on and off the field from these significant penalties, finishing no higher than 11th in 2004 and winning their first-ever wooden spoons in 2002, 2005 and 2006. After the draft ban expired, Carlton received a multitude of priority and first round draft picks.^[16]
• Fremantle were fined $80,000 in 2002 for late and incorrect lodgement of documents relating to the financial and contract details of eight players.
• In 2003, Brisbane were fined $260,000 for late lodgement of documents relating to the contract and financial details of 26 players, while Essendon were fined $85,000 but did not have any points deducted after it was found that they had exceeded the salary cap by $106,000 during the 2002 season, and the Western Bulldogs were fined $30,000 for late lodgement of documents relating to the contract and financial details of three players after a crackdown in light of the Carlton scandal the year before.^[17]
• In 2004, Melbourne were fined $30,000 for incorrect lodgement of documents relating to the contract and financial details of three players.^[18]
• In 2005, St Kilda were fined $40,000 for a minor breach in regards to minor sponsor Xbox providing players with the game machines.^[19] Brian Waldron, Matt Hanson and Cameron Vale, the club's CEO, CFO and Financial Officer at the time, were also involved at the NRL's Melbourne Storm when their salary cap scandal was brought to light.
• In 2006, St Kilda were fined $40,000 for late lodgement of documents relating to the contract and financial details of four players.^[20]
• Richmond was fined $10,000 in 2007 for late lodgement of a document relating to the contract and financial details of a player.^[21]
• Two clubs were fined in 2008 for minor breaches: Adelaide ($20,000) and St Kilda ($10,000).^[22]
• In 2011, Richmond were fined $10,000 but did not have any points deducted after it was found that they had exceeded the salary cap by $13,000 during the 2010 season.^[23]
• In 2012, Collingwood were fined $20,000 for late lodgement of documents relating to the contract and financial details of two players.^[24]
• In 2012, Adelaide were fined $300,000 and barred from the first two rounds and from taking any father-son selections in the 2013 National Draft but did not have any points deducted after an AFL investigation discovered that they had made unauthorised payments of $170,000 to and illegally agreed to trade forward Kurt Tippett to a club of his choice for a second-round draft pick when his contract expired at the end of 2012; Tippett was suspended until June 30, 2013 (11 matches plus the pre-season) and fined a player record $50,000 for accepting these conditions. Three Adelaide officials were also penalized: CEO Steven Trigg (suspended until June 30, 2013 and fined $50,000), former football manager John Reid (no longer directly involved in the AFL, but suspended until June 30, 2013) and current football manager Phil Harper (suspended until June 30, 2013).^[25]

State and regional leagues

Apart from the AFL, several regional leagues also have salary caps which although widening between them and the AFL and overall less than national competitions, are substantial enough to dictate the movement of semi-professional and professional players between states and the overall playing quality and spectator attendance of the state leagues.

There are a significantly higher number of AFL reserves in the Victorian Football League due to affiliations with Victorian clubs, but player payments for these appearances is apparently not included in the VFL's salary cap.

References