Australian Rugby Union boss John O'Neill targets third-party pay deals
By Wayne Smith
June 02, 2009 Australian Rugby Union boss John O'Neill has admitted the issue of third-party payments has become a major problem and must be brought under control by the end of the year.
O'Neill was responding to a report in The Australian last Friday that the chief executives of three of the four Super 14 franchises believed the contracting protocols were being widely flouted.
On Monday he said the mechanisms for restoring trust among the four Super 14 sides had not yet been sorted out. However, he warned there needed to be an audit trail and appropriate penalties for non-compliance.
"That's what the NRL has been doing, the AFL has been doing by way of salary caps and, in the years to come, that's where we may end up, with five or six professional franchises each with a salary cap, and they'll live within their salary cap with the ARU as the competition owner," O'Neill said.
He even invoked the name of the most feared man in the NRL, salary-cap scrutineer Ian Schubert, as an example of what the ARU would need to put in place to ensure the Super rugby franchises don't play fast and loose in obtaining third-party deals for players.
"We'll have an auditor to ensure there are no breaches of the protocols," he said. And O'Neill warned there could be an even more terrifying prospect in store for those officials who try to cover up such deals - an Australian Taxation Office audit.
"There are always smoke-and-mirror ways of disguising these things. But certainly I know the Tax Office would be as interested as we are in ensuring that whatever remuneration benefits a player receives is taxable," O'Neill said.
"I'm sure the Tax Office does regular audits of sporting associations and doesn't just look at straight remuneration."
While O'Neill acknowledged the ARU had other priorities - most notably playing its part in this month's SANZAR presentation to the broadcasters and finalising where the 15th team in the expanded Super rugby competition will be based - he stressed he would not allow the suspicion and mistrust surrounding third-party payments to continue to poison the code.
"It's decision time for the ARU and the provinces. We either regulate or put in place some form of self-regulation," O'Neill said.
"I want to keep it very explicitly high on the agenda as an issue that must be resolved in unanimity by the end of the calendar year."
He said any settlement of the problem would involve the players union, RUPA, particularly as the ARU and RUPA are renegotiating the collective bargaining agreement later this year.
"We've got to work with RUPA," O'Neill said. "I'm almost positive that (RUPA president) Rod Kafer and (CEO) Tony Dempsey are as one with the ARU in saying that a salary explosion outside the central system is just not sustainable."
Certainly the game's economy is faring no better than the broader Australian economy and while O'Neill denied rumours the ARU might need to come to the rescue of Rugby WA and even the Queensland Rugby Union, he admitted he was monitoring the financial health of all four Super rugby franchises very carefully.
"We have a very good relationship with all four franchises that they keep us informed and if any of them have cash-flow issues, we're able to help them through difficult times," he said.
Still, the ARU itself is hardly awash with money, certainly not to the extent of keeping all of its existing Super rugby franchises on an even keel while also funding the creation of a fifth team, assuming, of course, that SANZAR awards the expansion licence to Australia.
"That's one of the reasons we announced early last year that the ARU had to bring in private equity, because we recognised that we couldn't continue to fund the professional game and the community game without bringing in some other parties to share in the risk," O'Neill said.
While O'Neill said the ARU was not prepared to unveil a discussion paper on precisely how a private equity-based franchise might work, he revealed that analysis undertaken by LEK Consulting on competition and team-ownership structures showed that in most major professional sports around the world, the sport owned the league but teams largely were owned by private investors.
Certainly O'Neill envisaged the ARU having some measure of control in the formative stages of setting up a new franchise, but he did not necessarily see the national union being the major shareholder.
"It's all about the formative years and getting it off the launch pad in a way where the rigours, controls and discipline ensure it's successful but without diminishing the strength and playing ability of the other four (franchises)," he said. "And that might mean we only have a 10 per cent holding."
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