Rugby: Pay proposal promises to be a boon

The switch to direct contracting next year should see the Highlanders close the current pay gap between them and the other four New Zealand franchises.

Currently the total salary pot paid out to the Highlanders squad is $3.8 million - $1.2m less than the payments made to the Hurricanes and Crusaders. It is also significantly less than the $4.3m wage bills of both the Chiefs and Blues.

The difference is not the result of the Highlanders being able to afford less - the money is paid out by the NZRU - but a consequence of having fewer All Blacks than the other franchises.

Under the model being proposed, all franchises will be able to contract players directly up to a certain value. The value has not yet been set, but is expected to be somewhere between $150,000 and $200,000.

That means franchises will not need the NZRU's permission to offer a contract to any player earning less than the set figure.

That budget is the value of the maximum autonomous payment multiplied by the number of players contracted.

For those players valued in excess of the discretionary limit, the franchises will have to negotiate with the NZRU.

As an example, a leading All Black such as Conrad Smith could be valued by the Hurricanes at $400,000. They would then need the national body to agree to that figure and help them meet it.

The Hurricanes might have to use some of their core budget to fund the deal, which will impact on how much they can afford to pay other players.

That scenario opens the way for the Highlanders to be better placed to attract talent as, in theory, they should have more room in their core budget to put together attractive packages.