Whenever parity or clubs being under financial pressure is discussed, the NRL talking heads (led by Dennis Fitzgerald) rehash the same arguments. Raise the salary cap. Lower the salary cap. As chief executives or media personalities, this appears to show minimal imagination and economic nous for people in the high profile roles that they enjoy. First I intend to show the flaws in the current structure, and then I aim to outline a counter strategy designed at providing some parity in the game. Unlike most of my posts, there will be an element of seriousness.
Anyway, to the current system. Lets look at the finalists for the past five years. Many of the games talking heads make a lot of the fact that of the 16 teams currently playing in the NRL, only the Gold Coast, in their second year of playing - have made the finals at least once in the past 5 seasons. This does not account for the fact that South Sydney, Cronulla and the Tigers have made just one appearance, compared to the 5 trips made by Melbourne and Brisbane. What is a far more revealing indicator of a lack of parity, look at the average table positions for the 16 teams over the past five years.
Brisbane & Canterbury: 5
North QLD, Parramatta, St George, Sydney: 7
Penrith, Canberra, NZ, Tigers: 9
Cronulla, Newcastle: 10
Gold Coast: 12.
Taking Gold Coast out of the equation, the differential between the top and the bottom is astounding for a game that preaches parity and assures that the salary cap has created this. Moreover, we can conclude that the notion of many teams making the finals is a flawed manner to grade the current system in terms of parity. It is clear that average/below average teams can make the final 8. Looking at the results from the 1v8 and 2v7 finals in the past five years gives us:
Top seed wins: 9
Bottom seed wins: 1
Average Winning Margin by top seed: 20.3
So, the only upset in this round was by the red-hot Cowboys in 2004. The average winning margin at greater than 20 points makes this clear that the notion of a finals appearance is no measure of parity.
So what to do about parity???
There are a number of complementary regulations that I would advocate in order to achieve parity or competitive balance. Lets start with the removal of the salary cap in favour of a "soft cap."
The Soft Cap:
Spend what you want!! At least in theory. You have a lot of financial resources at your club. Fine. Spend away. However, once you reach some salary figure, you pay a tax on your payroll. Say you have a cap of $2M. Spend $4M and you pay 50% of your excess payroll into a fund that gets distributed amongst poorer clubs. This ensures that clubs with limited resources stay viable. Also means that if you want to spend your way to a premiership, it hurts a lot more. The abolition of the salary cap as a hard cap allows players to be paid a figure closer to their market value. Yes, this figure is distorted by a tax. However, the distortion is less than under a price ceiling.
Free agent compensation:
Lets start with a basic and obvious change. No midseason deals on free-agents-to-be. The club that owns the rights to a player, controls that player until the end of the season. Letting a player sign elsewhere halfway through a season has no parrelels in the sporting world.
Onto the notion of free agent compensation. If you control your player until the end of the year, you should get something for him if he leaves. This is a response to the widely held view that clubs see their own developed prospects leave for other clubs after the club spends a lot of time and money on their development.
At the moment, it can be argued that clubs are actually being offered a disincentive to develop their juniors. This would need to be addressed.
Under the Compensation scenario, if a club loses one of its free agents to another club, that club is compensated by picking up a player from the signing club (outside the signing clubs top 25). Again, this compensates the club for the resources spent on developing a young player. Obviously, tiers of free agents would need to be agreed upon. For example, a club that signs a mediocre free agent would have to only offer a restricted list of juniors/reserve graders to choose from. Otherwise, second tier players would be disadvantaged. However, signing a marquee free agent would expose your best youngsters. This would shift the demand for free agents leftwards - so whilst players would feel that the abolition of the salary cap would pay them market value - the combination of leftward shift (due to the tax) and the further shift (due to the opportunity cost of signing players) could actually depress players wages!!!
The final complementary policy that would need to be worked in would be a draft of junior players. Much of the dominance of Melbourne and Brisbane can be put down to their ability to sign young players. A draft that worked in reverse order of standings (similar to the AFL model) would benefit the parity debate greatly.