Salary Bubbles, contract lengths and front-loaded contracts

[pitchfork 181]

Reports that Frawley has been offered a 7 year contract bring up important questions regarding contract formulation.

1. There is a salary bubble that is going to burst - or simply shift talent to other clubs when present heavy hitters are unable to fit stars under their cap.

Or

2. Front-loading has to be regulated by the AFL. Either the entirety of the contract should be distributed across the length of the contract (you can still pay a player more in year 1, but on the cap it will appear uniform over the length of contract) or the practice is regulated in some fashion. It is totally ridiculous that a player can make close to 2 mil in year 1 and 25% of that number in year 4,5 of a deal. There are instances where this may be ok (i.e. a contract signed when someone is 29 includes years 33,34 at reduced rates) but young players taking on contracts that merely allow the club to creatively account for unfair advantage has got to be fixed. It's in the interest of the league, the players, and about 10 clubs.

[Bluey's Dad 3,419]

In a world where every club could afford to pay 100% of the salary cap, every club would have the same opportunity to structure player payments in this manner. I see no issue with that.

IMHO, your argument only makes sense because poorer clubs cannot pay the full cap and therefore have a diminished ability to structure payments like this as compared with the larger clubs.

[Beats 190]

Reports that Frawley has been offered a 7 year contract bring up important questions regarding contract formulation.

1. There is a salary bubble that is going to burst - or simply shift talent to other clubs when present heavy hitters are unable to fit stars under their cap.

Or

2. Front-loading has to be regulated by the AFL. Either the entirety of the contract should be distributed across the length of the contract (you can still pay a player more in year 1, but on the cap it will appear uniform over the length of contract) or the practice is regulated in some fashion. It is totally ridiculous that a player can make close to 2 mil in year 1 and 25% of that number in year 4,5 of a deal. There are instances where this may be ok (i.e. a contract signed when someone is 29 includes years 33,34 at reduced rates) but young players taking on contracts that merely allow the club to creatively account for unfair advantage has got to be fixed. It's in the interest of the league, the players, and about 10 clubs.

Not really sure what the point you’re making is? The sort of contracts we’re talking about are a guaranteed sum of money over a guaranteed term. You have to pay it – how and when you pay it is agreed between the two parties.

I can guarantee it’s regulated – not for the purpose you want it to be, but it is. The AFL regulates all contracts to ensure that everything is above board, otherwise there would be wide-spread salary cap rorting. An example of this is the most recent Franklin contract – the AFL went through it with a fine tooth comb to ensure that it was a feasible contract.

A few points that may help:

· Clubs have been able to sell players the idea of team success over money (Geelong/ Hawthorn/ Sydney), why won’t this continue on in the future?

· The TV rights deal is up at the end of next year – this is why a large number of players come out of contract at the end of 2015/ why big names are delaying contract talks/ extensions. There’s speculation that the TV rights payments could increase by up to 50% and the players are demanding a percentage of revenues (which they nearly got last time around). Essentially, if you sign a contract before the new deal is negotiated you are potentially doing yourself out of a serious amount of money.

· Players taken in a draft who have not played at AFL level are placed on a two year guaranteed contract consisting of a base payment (based on where you were drafted) and match payments. The second years base payment is based on the first years total payment.

You say creative accounting for an unfair advantage – it’s available to and is used by everyone – there is nothing unfair about it. I’m assuming you’re looking at this from a Sydney/ Hawthorn perspective, eg they manoeuvre contracts to allow them to get Frawley in, despite having a tight cap. The MFC has used front and back-ending to ensure that we pay 95% of the cap every year (because every team has to pay between 95-100%), despite having a list worth way less than this – eg. We’re tracking at about 90%, we front end Frawleys contract to make sure we pay the minimum amount for the year.