The “luxury tax” idea put forward by the AFL Player’s Association does have some merit in the National Basketball Association in the United States. The luxury tax means that a team is allowed to pay over and above the salary cap to a certain point, but beyond this the team will be forced to pay a fine to the AFL equal to one dollar for every dollar over the tax threshold. Such a method works in the NBA due to the ‘soft’ salary cap in place which allows teams to breach the salary cap with re-signings of players, to the point of the luxury tax threshold.
However, the AFL implications are far more difficult. What the AFLPA are in reality suggesting is that teams should be allowed to breach the salary cap. Furthermore, teams should not be punished as overtly as in the past for doing so, instead simply paying this ‘tax’ to the AFL.
There are a couple of problems with this system. Firstly, the AFL salary cap provisions have something none of the American sporting leagues have, in a minimum spend of the salary cap, set at 95% from 2013 onwards. This forces teams to already spend a certain amount, and a breach of the cap would not be hard for them to do as a result due to “star” contracts of the like being touted for Travis Cloke. The result is that top-end clubs are further advanced, as the lower end cannot cut wages beyond a certain point in order to assemble a “Moneyball”-style team as has been done by the Oakland Athletics in Major League Baseball.
Second is the tax itself. In the NBA, the luxury tax is paid by the owners of the club. NBA teams are run as for-profit enterprises, with any extra dollars going into the owners’ pocket and losses coming from the owners’ wallet. The owners pay the tax in order to advance their own teams and promote both success and fame, but do so out of their very deep pockets. The AFL teams are not run as for-profit entities. Owners were decided against after the failed Edelstein experiment with Sydney in the 1980s, and new team licenses have since been issued to the state leagues or set up by the AFL itself. As such, all teams put any extra revenue back into their respective sides rather than keep it themselves. This is good for the game, as it fosters teams striving to expand and improve with extra funding for their own benefit through the development of players and facilities, as well as for events like clinics for juniors.
Instead, clubs who are at the rich end of the spectrum could elect to simply hoard any extra funds and use them towards extra player payments and the luxury tax. In addition, club sources of revenue outside of game day, such as property ventures and poker machines, would become even more important, as this would be the difference maker for those seeking to grab the upper hand on-field. This would be both to the detriment of the game and the wider community, with the noted problems of poker machines already being tackled by the AFL.
Other proposals may also be looked at. The idea of a ‘marquee player’, similar to the concept run in the A-League and whose payments are outside the cap, is another. However, this creates a similar problem with the top echelon of stars suddenly demanding exorbitant wages and pricing out smaller sides. Furthermore, it is a concept that works for the A-League due to the international nature of soccer, where players can be grabbed from the other side of the world to put bums on seats. In a closed market like the AFL, all it does is create a separate market for top-end players among those clubs that can afford to pay outside the cap.
Ultimately, too, the AFLPA has to give for the good of the game. The new CBA boasted the rise in the minimum total player payments to 95% as well as a rise in the actual amount of player payments. However, there is ultimately a cost to the AFL and to clubs in such an idea. The removal of a salary cap and the introduction of things like marquee players works for the AFLPA as ultimately they are aiming to deliver to their members, the players. The broader footballing public and the AFL also have a say though, and with the wages that these players are already on, any adjustment of the restrictions does not really mean benefits for those not included under the AFLPA ‘deal”, including clubs, grassroots efforts and the development of the game. Furthermore, as long as average salaries rise, the AFLPA may not even care about the good of the game, and if a lopsided competition like that in the NBA achieved results for their members, they support it regardless of the impact on the broader footballing public.