Hugh McGahan: Cap rise little help to clubs

The recently announced NRL salary cap rise from A$3.36m to A$4m will unfortunately raise more questions than resolve problems for club and player.

Firstly, the main beneficiaries from the increase will be the players and the agents. The club receives little benefit and will need to seek extra funds to cover the increase in demands from those who are or will be in negotiation before the June 30 deadline.

My initial question is: Are we burdening the clubs who will be negotiating without knowing whether they will have approximately A$600,000 extra for next year and beyond?

Can the clubs afford the increase, especially those clubs within the Sydney metropolitan area where the sponsorship dollar is scarce and crowd numbers are not showing signs of increasing significantly?

There are still very few clubs, if any, showing a profit at the end of a season even if they are successful and make the top 8.

Returning to the question of the players - has the increase in the salary cap been to counter the movement of players from rugby league to union?

And, has the increase been for the right reasons?

As I have previously stated, the cap was introduced to prevent the clubs from financial ruin as they were guilty of spending more than they could afford and were continually relying on Leagues clubs to top up the shortfall at the end of the year.

In a majority of the cases, the Leagues clubs themselves were struggling to turn a profit with the football club spending ridiculous sums on the playing roster.

It will be interesting to see if the sums of money that may have been directly paid to players and outside of the cap will now be brought onto the books officially and prevent clubs dicing with danger and risking fines.

How do the Warriors fare with this adjustment in the cap? A$4m equates to approx NZ$5m depending on what the NRL lock in as the exchange rate for the club. Will this help the club?

Will they use the full amount in their future seasons?

If I am correct, I think this increase will give them some breathing space in relation to their early season indiscretion. The club forwarded some of the contracts into the 2007 season, which was allowed by the NRL, and this increase will certainly help. With the release of some experienced players at the end of this season combined with the recent departure of Richard Villasanti, the club will have some savings to recruit in the areas needing most attention.

I appeal to the club not to rely too much on the Bartercard Cup for recruitment. The salary cap increase may well be a blessing in disguise for the club which enables them to look at higher profile recruits.

Speaking of recruits, will the salary cap now play a significant role in retaining Mark Gasnier in rugby league? Only time will tell.