AFL makes it financially easier for clubs to sack contracted senior coaches

Stuart Dew was the only senior coach sacked last year, but the AFL has now made it easier for contracted coaches to be given the flick. Here’s how.

Stuart Dew. Picture: Getty Images

The AFL has halved the tax rate for clubs which spend more than the $7 million football department cap in a move that will reduce their payout fees if they sack contracted coaches.

The AFL’s decision to allow clubs to pay 20 per cent of their senior coach’s salary outside their football department limit has been warmly received by clubs.

The league increased the football department cap to $7.275 million in November and also allowed clubs to save $100,000 of soft cap space and spend it in the following season.

But the extent of the tax cuts is also significant after clubs felt they were being harshly penalised as soon as they spent over the football department limit.

Until last year clubs spending up to $100,000 over the cap paid 75 per cent tax – so handed over a total of $175,000 to the league for that decision.

Stuart Dew was the only AFL coach to be sacked last year, but there could be more to come. Picture: Getty Images

Clubs spending $100,000 to $25,000 over the cap were taxed at 100 per cent, clubs spending $250,000-$500,000 over the cap paid a 150 per cent tax and those spending $500,000 or more were hit by a 200 per cent tax for every dollar over that figure.

Clubs now are taxed at only 25 per cent for overspending by up to 100,000, by 50 per cent for spending $100,000-$250,000 over the cap, 75 per cent for spending $250,000-500,000 over the cap and 100 per cent for spending $500,000-$1 million over the cap.

It will allow clubs in the window to make prudent decisions on when to pay up for extra coaches or football department investment.

But it will also mean clubs who are keen to move on contracted coaches can make that decision without it being financially crippling.

Clubs can pay up to $500,000 every year over the football department limit and only pay an extra 75 per cent in tax.

But if they spend over $500,000 in the cap year on year the tax rate grows to 150 per cent in the second year and 200 per cent in the year in a multiplying effect.

The Eagles elected to keep Adam Simpson on as coach. Picture: Getty Images

West Coast could have had to pay millions in extra football department tax if it sacked Adam Simpson with two years on his deal, but eventually had its board “unanimously” endorse him for 2024.

If the Eagles moved him on this year the new rules would minimise their tax impost.

Fremantle just signed Justin Longmuir to the end of 2025, amid speculation it was not a thorough endorsement of his tenure.

But he said last week after having a six-month exit clause on a deal as part of the AFL’s Covid provisions, he now had a much more substantial payout for the 2025 season.

He has also renegotiated the 2024 contract, presumably on more favourable terms, so in effect has a new two-year deal with concrete payouts that provide financial security.

It has been reported he also has clauses to win more years on his contract if he meets certain performance triggers.