Inside story: How $68m payment to clubs saved the NRL’s PNG expansion deal
The NRL’s expansion into PNG almost collapsed the night before the historic announcement, before the clubs signed off on a monster payment. This is the dramatic story of how the deal was sealed.
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The NRL’s existing clubs have been told they will each receive a $1.75 million windfall next year – part of a $68 million golden handshake over the next five years – in return for welcoming a Papua New Guinean team into the premiership in 2028.
This masthead can reveal that club bosses were updated on expansion at a meeting on Thursday morning only moments before the PNG bid was confirmed at a briefing involving the Prime Ministers of Australia and PNG.
A sizeable chunk of the $600 million investment from the federal government, which paved the way for expansion to take place, will be shared with the game’s 17 clubs in return for diluting their membership of the ARL Commission.
Club bosses have been told they will each receive $1.75 million in 2025, another $1 million in 2026, $750,000 in 2027 and then $250,000 in 2028 and 2029.
All told, clubs will receive $4 million each over the next five years as head office looks to assuage their concerns over expansion of the game and ensure they receive financial compensation for allowing another team to become a member of the ARL Commission.
Confirmation on Thursday of PNG’s addition to the competition caps a journey stretching back more than decade that hung in the balance until the very end.
This masthead can reveal that the clubs were told on Wednesday morning that the announcement was on the verge of being postponed as the parties haggled over the final pieces of the deal.
Club bosses were originally scheduled to meet to discuss expansion but their powwow was cancelled at the 11th hour after they were told that there were issues that still needed to be resolved.
It is understood the club advisory committee, which was recently set up to act as a conduit between head office and the clubs, had spoken to NRL bosses via South Sydney chair Nick Pappas on Tuesday night and the Rabbitohs boss walked away with the understanding that the PNG announcement was on hold.
“Sorry for the inconvenience, but Nick was contacted late last night to say that there remain issues between the parties, and the agreements with PNG and Australian governments have not been concluded,” Souths chief executive Blake Solly wrote in an email to his fellow club bosses on Wednesday morning.
“There will be no announcement tomorrow – and on that basis our call today will be postponed. As soon as we hear anything more from the ARLC, we will organise another call.”
As late as Wednesday evening, talks were still ongoing between the NRL and officials from the PNG government over their agreement. This masthead was told that the Australian government was acting as a mediator between the two parties to try to get the deal done.
Sources with knowledge of the negotiations confirmed to this masthead that the NRL was ready to call off the planned press conference unless the loose ends were tied up because they were wary of losing their bargaining power.
Late on Wednesday night, those loose ends were indeed resolved and PNG’s entry to the NRL was confirmed.
Club bosses were told of the developments early on Thursday morning, this time via text message after NRL chief executive Andrew Abdo informed Pappas that the planned announcement had been given the green light.
“Gents – very sorry for the late text,” Solly wrote.
“Andrew just called Nick to say that …. the ARLC and PNG Governments have resolved their issues and will be announcing the new team in the NRL …
“Sorry for the lack of notice for the call, but Nick only heard from Andrew at 9.30pm.”
It is understood the clubs were told at the Zoom meeting on Thursday morning that the PNG government will spend up to $200 million on building a compound to house players who join the new team.
The ARL Commission will retain control of the club for at least the first five years, with four members of the commission on the board along with three representatives from the PNG government, one representative from the Australian government and one independent.
While the clubs are largely supportive of expansion to PNG given the financial implications for the game in the Pacific region, there remain deep concerns with aspects of the plan.
Most of that concern centres around the idea of tax concessions for players and officials who move to PNG to be part of the club in its formative years.
At the heart of those issues is the perception that tax incentives will create an uneven playing field by damaging the integrity of the salary cap.
It is an issue the NRL will need to delicately work through in coming years as the PNG team begins to piece together a roster by siphoning players from the existing teams.
The other bone of contention for the clubs is the ongoing negotiations with the West Australian government over adding a new team, which will be based in Perth.
The clubs were willing to accept being kept in the dark over the progress of negotiations with PNG because it involved the federal government and a significant sum of money, some of which would find its way into their pockets.
The WA bid will be a different story.
There has been unconfirmed speculation in recent days that the NRL is close to striking a deal with the WA government over the 19th team but the clubs want to be kept abreast of the situation given the ramifications it will have for their playing stocks.
The likelihood is that a Perth side will enter the premiership in 2027, meaning 60 players will need to be found for PNG and Perth in the space of two years. The existing clubs are likely to be ravaged.
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