https://www.nzherald.co.nz/section/story.cfm?c_id=4&ObjectID=10370072
26.02.06
By Michael Brown
A desire for honesty and playing by the rules is why new Warriors chief executive Wayne Scurrah opened the books to the NRL, leading to the club's salary cap arrangements erupting into controversy.
Scurrah told the Herald on Sunday that the club chose to take cap irregularities to the NRL, in spite of likely damaging repercussions. Warriors chairman Maurice Kidd said Scurrah and the Warriors' financial manager Dave Curran "came across stuff they didn't think looked right. They talked to the NRL auditor [Ian Schubert] and then talked to me and it went from there," Kidd said, adding that the Warriors board and management were working closely together on the issue.
However, Herald on Sunday inquiries with sources close to the club have uncovered a feeling that the Warriors went too far in putting salary cap information in front of the NRL. The sources say that the situation could have been contained as a minor breach before more information was passed to the NRL.
One source said: "Some in Cullen Sports are saying they've been done over by a perfume salesman." Scurrah was managing director of Schwarzkopf New Zealand before moving to North Harbour Stadium as general manager and then to the Warriors.
The controversy is all part of the strange and secret netherworld which surrounds the NRL's much-abused salary cap. Many NRL clubs have many different ways of paying players so that the cap is circumvented. Whatever method is chosen, the clubs keep it secret - ensuring payment stays off the balance sheet.
The Herald on Sunday has spoken to NRL and club sources. None, for obvious reasons, wanted to be named but all maintained that salary-cap tricks were part and parcel of the business of most NRL clubs.
"Every other club has been doing this sort of stuff since the start of time," one source said. "There are usually only one or two who don't breach the cap," said another source, "but that is usually because they don't have the money or can't attract the players."
It's also not clear whether there will be casualties in the corridors of the Warriors. The chief executive and the entire board of the Bulldogs resigned when cap infringements surfaced in 2002.
"That's very unlikely here," said Kidd. "The management are all new and weren't here in the times this happened. They are not to blame for this. They have done the right thing to come clean."
When Scurrah started to uncover problems at the Warriors, he asked NRL auditor Schubert for advice and clarity.
While some argue Scurrah's actions may have been naive, he has consistently said since he came into the position that he wanted to be transparent with the fans, media and sponsors.
"We saw no reason for this to be a secret," he said. "We are a play-by-the-rules club and that's why we want to solve it. Regardless of what may or may not be happening at other clubs, we will play by the rules. I want it to be a club New Zealanders are proud of and hopefully it will galvanise fans behind us. We would never want to be labelled as cheats, and nor are we."
Scurrah said he has the board's fullsupport. However, one source said some within the club were angry because the salary-cap breach need never have come to the attention of the NRL.
"Clearly the way we've managed things [in the past] hasn't helped us win games," said Scurrah. "You only have to look at our record over the last couple of seasons to see that. It's clear proof we haven't used it [the cap]) to our advantage."
Scurrah replaced Mick Watson in November.
Scurrah was told he would receive a $200,000 bonus if he trimmed the Warriors' operating deficit from about $2m to under $900,000 and began a search for ways to achieve this. It was his investigations into ways to improve the running of the club that brought to light "irregularities".
"I was assured by the outgoing management that we were on or below the cap," Scurrah said. "The board was also never aware there were any cap issues."
It's understood information found included handwritten notes, outlining the extras surreptitiously added on to each player's contract. These were allegedly among documents handed to Schubert. They are believed to include details of payments funnelled through to players through Cullen Sports, promises of employment after retirement (which needs to be taken into account under the tough provisions of the salary cap) and paid mobile phones and travel across the Tasman for agents and families.
There have been as many as 10 clubs breach the cap in the past four years, with the Bulldogs the most prominent example when they were docked 37 points and fined $500,000 in 2002.
In fact, every club, except Canberra, Souths and Manly have been fined for minor breaches since the start of the NRL in 1998.
While the club has said it will honour all existing contracts, they will need to defer payments until next season or beyond to ensure they are under the salary cap this season.
"We actually haven't confirmed the figure [that we are over the cap] but there are things that we have calculated into the cap that don't need to be there so there are debits and credits we are trying to reconcile," said Scurrah.
The Warriors are still facing strong censure from the NRL, even though there have been noises of compromise coming from the NRL on the subject of docking points and torpedoing the club's 2006 season and, possibly, even casting its future as a viable enterprise into doubt.
They stand to lose as many as six competition points before the season starts, along with a $500,000 fine for breaching the AU$3.36 million cap by more than $500,000.
The Warriors' season will be heavily hit if they are docked points. They would have little chance of qualifying for the playoffs which would, in turn, affect crowd numbers. It also has the potential to affect sponsors, existing and new.
Vodafone, a major sponsor of the club since 1999 whose current deal expires in 2007, have vowed to stick with the embattled club. Vodafone spokeswoman Leigh Owens said: "We are committed to the club and the team as they manage their salary cap investigation. We trust the current management to work through these issues in a professional and transparent manner and we remain an unconditional supporter of the club. It would depend on the outcome of the investigation but we always review sponsorship every time it comes up for renewal."
While some have questioned whether this could spell the end of professional rugby league in this country, much depends on whether owners Eric Watson and Mark Hotchin stick by the club.
Watson made encouraging remarks when he said earlier this week: "I am committed to the Warriors. I believe in the team and the ability of the new management and their ability to drive the club forward and make sure the team is a force to be reckoned with."
The club has until end of business tomorrow to submit their written response to explain the player payment irregularities.
Despite threats about player deregistration, it's unlikely action will be taken against players. However, player agents could come under increasing pressure.
Cap is still working say the NRL
In 1998 when the NRL was created after the Super League wars, the salary cap stood at $3.25m. Today, that figure stands at $3.366m.
While this doesn't seem like a significant increase, there is an additional $700,000 in allowances for sponsorships ($200,000), veteran players ($100,000), third party agreements for two players ($100,000) and a second-tier salary cap for lower-grade players who make appearances in the NRL ($300,000). There is no cap on players who fall outside of these.
Perhaps given the number of salary-cap infringements in recent years, there have been calls for the cap to be increased.
This is due to be thrashed out at the next collective bargaining agreement and, while outgoing Rugby League Players Association chief executive Tony Butterfield has called for this to be as high as $5m, it's more likely to increase to closer to $4m in a couple of years.
Despite suggestions all clubs fiddle the books, the NRL is adamant the cap is working and points to the high number of clubs caught in recent years. Only three clubs have escaped punishment since 1998.
"The fact there have been a lot of breaches is evidence the cap is working," NRL spokesman John Brady said. "The arguments for it are so overwhelming. There have been seven different premiers in the last eight years. The closeness of the competition is there for all to see.
" You can never have cast-iron guarantees that no one is busting the rules. But our track record on it suggests it's a hell of a gamble."
Perks are a part of the game
What started as brown paper bags slipped across tables at cafes has become a sophisticated process but rorts aren't new in professional sport.
Current Warriors development coach Tony Iro ruffled a few feathers when he said live on Sky TV in 2002 in the wake of the Bulldogs' salary-cap breach that all clubs were rorting the system.
Iro was immediately challenged by then Warriors chief executive Mick Watson and told to apologise just minutes later, but it left a spectre hanging over rorts and the effectiveness of the salary cap.
There is general acceptance that its abuse is widespread but it's a subject that's usually swept under the carpet and finding evidence is something the NRL normally find difficult to obtain.
Organisations across all sports have become more creative in the way they siphon off additional payments to players above their standard contract.
This might include:
* A radio station could be a sponsor and is billed for advertising that doesn't run and involving a player. The money is then paid to the player.
* A player might 'own' a house that goes up for auction. The player then gets the money from the sale, which someone has invariably paid over the odds for. If it is in New Zealand, this money is then tax free.
* A subsidiary company of an organisation's owners can also be billed for product that's not delivered which goes to players.
* Payments can be directly made to accounts in places like the Isle of Man which cannot be accessed.
26.02.06
By Michael Brown
A desire for honesty and playing by the rules is why new Warriors chief executive Wayne Scurrah opened the books to the NRL, leading to the club's salary cap arrangements erupting into controversy.
Scurrah told the Herald on Sunday that the club chose to take cap irregularities to the NRL, in spite of likely damaging repercussions. Warriors chairman Maurice Kidd said Scurrah and the Warriors' financial manager Dave Curran "came across stuff they didn't think looked right. They talked to the NRL auditor [Ian Schubert] and then talked to me and it went from there," Kidd said, adding that the Warriors board and management were working closely together on the issue.
However, Herald on Sunday inquiries with sources close to the club have uncovered a feeling that the Warriors went too far in putting salary cap information in front of the NRL. The sources say that the situation could have been contained as a minor breach before more information was passed to the NRL.
One source said: "Some in Cullen Sports are saying they've been done over by a perfume salesman." Scurrah was managing director of Schwarzkopf New Zealand before moving to North Harbour Stadium as general manager and then to the Warriors.
The controversy is all part of the strange and secret netherworld which surrounds the NRL's much-abused salary cap. Many NRL clubs have many different ways of paying players so that the cap is circumvented. Whatever method is chosen, the clubs keep it secret - ensuring payment stays off the balance sheet.
The Herald on Sunday has spoken to NRL and club sources. None, for obvious reasons, wanted to be named but all maintained that salary-cap tricks were part and parcel of the business of most NRL clubs.
"Every other club has been doing this sort of stuff since the start of time," one source said. "There are usually only one or two who don't breach the cap," said another source, "but that is usually because they don't have the money or can't attract the players."
It's also not clear whether there will be casualties in the corridors of the Warriors. The chief executive and the entire board of the Bulldogs resigned when cap infringements surfaced in 2002.
"That's very unlikely here," said Kidd. "The management are all new and weren't here in the times this happened. They are not to blame for this. They have done the right thing to come clean."
When Scurrah started to uncover problems at the Warriors, he asked NRL auditor Schubert for advice and clarity.
While some argue Scurrah's actions may have been naive, he has consistently said since he came into the position that he wanted to be transparent with the fans, media and sponsors.
"We saw no reason for this to be a secret," he said. "We are a play-by-the-rules club and that's why we want to solve it. Regardless of what may or may not be happening at other clubs, we will play by the rules. I want it to be a club New Zealanders are proud of and hopefully it will galvanise fans behind us. We would never want to be labelled as cheats, and nor are we."
Scurrah said he has the board's fullsupport. However, one source said some within the club were angry because the salary-cap breach need never have come to the attention of the NRL.
"Clearly the way we've managed things [in the past] hasn't helped us win games," said Scurrah. "You only have to look at our record over the last couple of seasons to see that. It's clear proof we haven't used it [the cap]) to our advantage."
Scurrah replaced Mick Watson in November.
Scurrah was told he would receive a $200,000 bonus if he trimmed the Warriors' operating deficit from about $2m to under $900,000 and began a search for ways to achieve this. It was his investigations into ways to improve the running of the club that brought to light "irregularities".
"I was assured by the outgoing management that we were on or below the cap," Scurrah said. "The board was also never aware there were any cap issues."
It's understood information found included handwritten notes, outlining the extras surreptitiously added on to each player's contract. These were allegedly among documents handed to Schubert. They are believed to include details of payments funnelled through to players through Cullen Sports, promises of employment after retirement (which needs to be taken into account under the tough provisions of the salary cap) and paid mobile phones and travel across the Tasman for agents and families.
There have been as many as 10 clubs breach the cap in the past four years, with the Bulldogs the most prominent example when they were docked 37 points and fined $500,000 in 2002.
In fact, every club, except Canberra, Souths and Manly have been fined for minor breaches since the start of the NRL in 1998.
While the club has said it will honour all existing contracts, they will need to defer payments until next season or beyond to ensure they are under the salary cap this season.
"We actually haven't confirmed the figure [that we are over the cap] but there are things that we have calculated into the cap that don't need to be there so there are debits and credits we are trying to reconcile," said Scurrah.
The Warriors are still facing strong censure from the NRL, even though there have been noises of compromise coming from the NRL on the subject of docking points and torpedoing the club's 2006 season and, possibly, even casting its future as a viable enterprise into doubt.
They stand to lose as many as six competition points before the season starts, along with a $500,000 fine for breaching the AU$3.36 million cap by more than $500,000.
The Warriors' season will be heavily hit if they are docked points. They would have little chance of qualifying for the playoffs which would, in turn, affect crowd numbers. It also has the potential to affect sponsors, existing and new.
Vodafone, a major sponsor of the club since 1999 whose current deal expires in 2007, have vowed to stick with the embattled club. Vodafone spokeswoman Leigh Owens said: "We are committed to the club and the team as they manage their salary cap investigation. We trust the current management to work through these issues in a professional and transparent manner and we remain an unconditional supporter of the club. It would depend on the outcome of the investigation but we always review sponsorship every time it comes up for renewal."
While some have questioned whether this could spell the end of professional rugby league in this country, much depends on whether owners Eric Watson and Mark Hotchin stick by the club.
Watson made encouraging remarks when he said earlier this week: "I am committed to the Warriors. I believe in the team and the ability of the new management and their ability to drive the club forward and make sure the team is a force to be reckoned with."
The club has until end of business tomorrow to submit their written response to explain the player payment irregularities.
Despite threats about player deregistration, it's unlikely action will be taken against players. However, player agents could come under increasing pressure.
Cap is still working say the NRL
In 1998 when the NRL was created after the Super League wars, the salary cap stood at $3.25m. Today, that figure stands at $3.366m.
While this doesn't seem like a significant increase, there is an additional $700,000 in allowances for sponsorships ($200,000), veteran players ($100,000), third party agreements for two players ($100,000) and a second-tier salary cap for lower-grade players who make appearances in the NRL ($300,000). There is no cap on players who fall outside of these.
Perhaps given the number of salary-cap infringements in recent years, there have been calls for the cap to be increased.
This is due to be thrashed out at the next collective bargaining agreement and, while outgoing Rugby League Players Association chief executive Tony Butterfield has called for this to be as high as $5m, it's more likely to increase to closer to $4m in a couple of years.
Despite suggestions all clubs fiddle the books, the NRL is adamant the cap is working and points to the high number of clubs caught in recent years. Only three clubs have escaped punishment since 1998.
"The fact there have been a lot of breaches is evidence the cap is working," NRL spokesman John Brady said. "The arguments for it are so overwhelming. There have been seven different premiers in the last eight years. The closeness of the competition is there for all to see.
" You can never have cast-iron guarantees that no one is busting the rules. But our track record on it suggests it's a hell of a gamble."
Perks are a part of the game
What started as brown paper bags slipped across tables at cafes has become a sophisticated process but rorts aren't new in professional sport.
Current Warriors development coach Tony Iro ruffled a few feathers when he said live on Sky TV in 2002 in the wake of the Bulldogs' salary-cap breach that all clubs were rorting the system.
Iro was immediately challenged by then Warriors chief executive Mick Watson and told to apologise just minutes later, but it left a spectre hanging over rorts and the effectiveness of the salary cap.
There is general acceptance that its abuse is widespread but it's a subject that's usually swept under the carpet and finding evidence is something the NRL normally find difficult to obtain.
Organisations across all sports have become more creative in the way they siphon off additional payments to players above their standard contract.
This might include:
* A radio station could be a sponsor and is billed for advertising that doesn't run and involving a player. The money is then paid to the player.
* A player might 'own' a house that goes up for auction. The player then gets the money from the sale, which someone has invariably paid over the odds for. If it is in New Zealand, this money is then tax free.
* A subsidiary company of an organisation's owners can also be billed for product that's not delivered which goes to players.
* Payments can be directly made to accounts in places like the Isle of Man which cannot be accessed.
