ARU contract system 'possibly illegal'

ARU contract system 'possibly illegal'

By Bret Harris
August 22, 2007

WHILE the ARU is investigating Western Force over possible breaches of its contracting system, the protocols which underpin the recruitment process may well be illegal.
Rugby Union Players Association chief executive Tony Dempsey said the protocols were a potential restraint of trade.

Under the ARU's contracting system it is believed the four Australian Super 14 teams - Brumbies, New South Wales Waratahs, Queensland Reds and Force - have agreed not to pay players more than $110,000 a season, although allowances for relocation, car, travel and accommodation are permissible.

The ARU then tops up the salary of players who represent Australia.

The "gentleman's agreement" not to pay players above $110,000 has always existed unofficially, but it is understood it was committed to paper a couple of years ago after the advent of Force created greater competitive tensions between the states.

At this time, restrictions on third-party sponsorships were also introduced.

RUPA does not support any mechanism which caps player earnings, but it is possible to interpret the protocols as an imposition on what the players can earn by curtailing the free market at the state level.

"Our advice is the protocols are in contravention of the collective bargaining agreement," Dempsey said.

"We have never endorsed or supported the protocols. We need to be consulted.

"Rugby unions cannot collude to fix or manipulate the market for player salaries. The current system limits what the states can pay."

Dempsey said he had written to the ARU about the protocols 12 to 18 months ago, but was yet to receive a response.

"We are not rushing to court over this," he said.

"We want to work out a model which is workable for all. We have sent them an alternative model to resolve the problem."

Dempsey emphasised the contracting system did not penalise high-profile Wallabies, but it hurt mid-tier Super 14 players, who did not receive an ARU top-up.

"The good state player is the one who is getting hit with this," he said.

"We have to be careful, by capping them we run the risk of losing them to overseas.

"Over the last three or four years a heap of Australians have left to play overseas. We are losing their experience and intellectual property."

Not surprisingly a lot of 'contracts' related to sports and profesional games is bordering on 'illiegal' in business terms.
The whole salary cap process is in effect a price fixing scheme, but its tolerated as a device to improve competitions, not competition.

As is the issue of what athletes can do in their own (private life) time, such as drinking with who they want, where they want, and when they want. If other employers tried that they'd be hauled into court for bullying, intimidation etc.

The professional sports have only mimicked some aspects of corporate activity. They are not really open market players. I tend to think of a competition (ie: AFL) as a single entitiy, with branch offices in 16 locations - there is some 'internal' competition (that we pay to watch) but they make in-house rules to restrict branch stacking.

If you apply corprations act regulations to each club you'd have something more like English Soccer - where the richest 5 or 6 clubs dominate everything in sight.