Clubs to tell NRL of $100m hole in revenue over next two years
Stricken clubs are expected to inform the NRL on Friday that they are facing a $100m hole in their revenues for 2021 and 2022.
Stricken clubs are expected to inform the NRL on Friday that they are facing a $100m hole in their revenues for 2021 and 2022 — a figure that seems certain to impact on how much the players are paid as the game weighs up a reduction in the salary cap.
The NRL has asked each club to provide their financial projections for the upcoming two years, as it attempts to shape its plans leading into the next broadcasting deal.
The salary cap is the biggest issue and it will be contingent on the projections provided by the clubs as the NRL attempts to gain a more accurate picture of expected revenues for 2021 and 2022. The players are entitled to 29.5 per cent of any revenue and while ARL Commission chair Peter V’landys has already spoken of his desire to retain the current salary cap, there is an acknowledgment among the clubs that it may need to be reduced given they are facing a significant drop in revenue.
Club bosses spoken to by The Australian suggested revenues could be reduced by as much as 30 per cent over the next two seasons as the impact of COVID-19 translates into a reduction in sponsorship and corporate support.
The clubs generate about $160m between them each year, meaning a 30 per cent dip in revenue would leave a hole of close to $50m in 2021 and the same again in 2022.
It seems hard to believe the players won’t be asked to share the pain. There were suggestions early on that the cap could be sliced by as much as 40 per cent, although those claims have now disappeared as the game begins to regain a sense of normality.
The return of crowds and the prospect of clubs returning to their home grounds in coming weeks should mitigate some of the damage. V’landys has also promised to slash costs at head office to ease some of the pain felt by the clubs and players.
Regardless, there will be some financial damage and the cap is likely to take a hit over the next two years.
There is a school of thought that rather than a significant reduction in the average cap, the game could slice the cap by as little as 10 per cent but mitigate some of the damage to salaries by reducing squad numbers.
That would have the effect of ensuring player contracts would not need to be reworked and maintain the average salary, which currently stands in excess of $300,000.
It would also protect the highest earners from being forced to take significant cuts to their salaries.
The football cap is also expected to undergo a reduction over the next two years, although clubs are likely to be given time to work their way under any new limit.
The changing landscape with the salary cap is expected to hit some clubs more than others. St George Illawarra, for example, have room to manoeuvre as they are yet to replace the departing Tyson Frizell, who will join Newcastle next season.
The Dragons are also facing the imminent departure of experienced Englishman James Graham, who the club on Thursday confirmed had received an offer from his homeland to make an immediate switch to Super League.
The Dragons dug in their heels and insisted they would not countenance a release until they had secured a player to replace him.
“The Dragons will consider this option for Graham on the merit a replacement player is secured by the club prior to his release,” the club said.
Graham is expected to play against Gold Coast this weekend but it seems hard to believe he will pull on the Red V again after the game against the Titans, given his indifferent form this year and the service he has provided to the club.
His departure will be a blow to coach Paul McGregor given Graham has been one of his most vocal supporters in and out of the dressing room. The club has already begun scouring the NRL for replacements, although they may already have someone in their ranks given Jack de Belin’s impending court date and the suggestion that he could have aggravated sexual assault charges dropped.
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