The NRL did not declare $60 million in TV money in early revenue-sharing talks with the RLPA, undermining trust between the players and the game’s bosses and precipitating accusations of a lack of financial transparency by NRL clubs.
The RLPA hired a forensic accountant and discovered that a forward payment to the NRL from broadcasters had been excluded from calculations of lost revenue as a result of the pandemic. The NRL agrees there was an error but denies it was revealed by the RLPA audit.
Players had accepted pay cuts totalling $98 million after being told COVID-19 had caused revenue reductions that could be as high as $450 million.
However, the exclusion of forward payments of $60 million from broadcasters Channel Nine (the publisher of this masthead) and Foxtel for the years 2020 to 2022 inflated anticipated revenue losses, therefore potentially increasing the pay cut players agreed to.
The RLPA says forensic accounting firm PKF discovered the error, after which the NRL more than trebled an initial offer of $11 million to players of what it calls “outperformance money”, a term used to describe cash owed to players as a result of the NRL faring better than it had forecast.
An email sent to a working group of NRL club representatives on June 8 by former Nine Entertainment boss Hugh Marks, who the NRL hired to head up funding negotiations with the RLPA and clubs, conceded the error of the omission of the forward payments.
Former Nine chief executive Hugh Marks led the NRL’s negotiations with clubs and players over funding.Credit:Louie Douvis
In the email, which has been seen by the Herald, Marks wrote: “This [excluded payment] was picked up by the RLPA and the auditor.”
The excluded payment of $60 million referred to by Marks comprised three payments of $20 million, part of $100 million advanced by the broadcasters when the NRL faced financial difficulties.
“The NRL initial estimates had excluded the amortisation of these [broadcaster prepayments] which was not correct,” Marks wrote.
“Current estimate of the total outperformance payments to players has grown from an initial estimate of circa $12 million to more like $30 million.”
The estimate, calculated to be $11 million, was, in fact, later revised to $38 million.
It has been a simmering issue with the players from the time the protracted and bitter CBA talks began, with delays in making the payments further aggravating the RLPA.
It has led to demands from clubs for the NRL to “open up your books”.
South Sydney chief executive Blake Solly, one of three representatives of NRL clubs negotiating with the code’s administration over funding for the next five years, said: “The RLPA and [forensic accountant] PKF’s experience with the calculation of the outperformance payment under the CBA [collective bargaining agreement] just confirms why it is essential the NRL provide sufficient detail on their proposed OpEx [operating expenses].
“The NRL intends to spend $415,000 a day every day for the next five years and refuses to provide the clubs and players sufficient detail as to what this is going to be spent on. The NRL also keep telling us they can’t afford to meet the funding requests of the clubs and players but won’t share the OpEx information. If the NRL truly wants to build trust, just share the information.”
However, one source familiar with the legal agreement on outperformance money said there was ambiguity about whether the pre-payments from TV should have been included in the figures and therefore suggested the omission should not be seen as a basis for mistrust and outrage by the players.
The Herald has been told that, at Marks’ behest, the NRL agreed to adopt an interpretation favourable to the RLPA.
While the NRL acknowledges there was a difference of view in the calculation of outperformance money on a number of matters – not just the TV money – it insists the omission was picked up internally rather than by the RLPA’s forensic auditor.
NRL chief executive Andrew Abdo told the Herald last month the outperformance payment of $11 million was a projection at the end of 2021, updated to $38 million when revenue further improved in 2022. He pointed out that if costs had been factored in – the NRL spent $50 million relocating the entire competition and players’ families to Queensland in 2021 – the players would have received considerably less. “If the outperformance was linked to net position, it would not have been as favourable,” Abdo said.
RLPA chief executive Clint Newton, commenting generally about the stalled CBA negotiations, said:
“Didn’t players demonstrate the respect and passion for the game and its future by willingly accepting reductions of $98 million to save the game and protect the clubs they love, or have the NRL now erased that from history?
“Players were not contractually obligated to take any cuts, but they did, and that can’t be forgotten. They have received some partial payments but only because players secured a revenue share in the revised agreement, not out of some goodwill gesture.”
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