Management: Foundations & Applications, 1st edition
Ethical behaviour & social responsibility
Melbourne Storm salary cap scandal
Summary
The influence of culture on ethical behaviour is increasingly an issue as businesses and individuals travel the world. Cultural relativism suggests that there is no one right way to behave; ethical behaviour is determined by its cultural context. Early in 2010, the Melbourne Storm Rugby League team was heavily penalised amid charges of fraud, cheating and unethical behaviour. The NRL salary cap is designed to prevent big-spending clubs gaining an unfair advantage in the competition, and Melbourne Storm has been charged with breaching this cap by almost $2M. This report discusses the scandal, and the consequences for management, players, fans and the game itself.
Transcript
Kerry O’Brien, Presenter: Scandal once again has rocked Rugby League today. This time it's not the players but some officials at the Melbourne Storm, a team wrapped in success and adorned with many of the biggest names in the game.
The team was hit by the code's administrators the NRL (National Rugby League) with a $500,000 fine, forced to pay back more than a million dollars in prize money and stripped of the 2007 and 2009 premierships after it was revealed that salary caps to players had been breached to the tune of $1.7 million across five years.
The salary cap is designed to prevent big-spending clubs gaining an unfair advantage in the competition.
News Limited, publishers of newspapers around Australia and a 50 per cent owner of the team, has alleged fraud and referred the affair to police.
This is undoubtedly one of the biggest scandals in league history, bigger than the salary cap breaches conducted by the Canterbury Bulldogs eight years ago.
To analyse the impact on the game, I'm joined now by veteran sports journalist and author Ian Heads, who co-wrote the official centenary history of rugby league and also was a judge on the panel that picked the team of the century.
Ian Heads, did this come out of the blue for you and what was your reaction?
Ian Heads, Sports Historian: Well, it certainly came out of the blue for me, Kerry. I think it's one of those days that Rugby League fans will probably remember where they were when they heard the news. It is that big a story.
I've been around the game for quite a few years obviously and I think it's probably one of the three or four biggest stories in the whole 103 years the game's been played.
Kerry O’Brien: So how does it compare with the scandal of the Canterbury Bulldogs?
Ian Heads: Well, it's bigger really because of the historic fact of the club having premierships taken off it. I mean, that's what clubs play for, they play to win the title each year.
Melbourne won two and they have lost those two. That has never happened in the past so that - in one way that is a very historic thing. I do commend the NRL on the hard-nosed nature of what they did. I think they had to make the point strongly. It appears to be a severe breach and they certainly came down heavily.
Kerry O’Brien: And how does it impact on the game? I mean, rugby league certainly has had its ups and downs in the last 10 or 15 years. Storm have taken a long time. I mean, they've been very successful very early in their 12 years in the game but it has taken them a long time to build any kind of real fan base in Melbourne.
Ian Heads: Yeah, it has been a real battle, Kerry and this is obviously not going to do it any good at all. I think it's a shattering thing for the game, really, because it is about trust, it's about fair dinkumness, it's about a club obviously doing the wrong thing completely and not just at club, it's a club with three of probably the five best players in the game in their ranks. And a club that have been the champions - a claim for the way they play game - so that's got to hurt any game, obviously.
Rugby League will get through because it is, I think Ken Arthurson said, former president, once said it was a tough old boot and it is but today is a shattering day for the game.
Kerry O’Brien: You have to ask the question of how it's going to impact on the club itself because players are going to be asked to turn up week after week for the rest of the season. They have lost all their point so far, they're not going to accrue points even if they win, so what is the incentive for them?
Ian Heads: Yes, I noticed David Gallop suggested he hopes they play for pride. Well, that may or may not be, but these are professional sportsmen. I really don't know what the outcome of that's going to be. It is not an attractive proposition for the fans of the Melbourne Storm.
They may vote with their feet by staying away I don't know.
Kerry O’Brien: Well, that's possibly even a bigger issue even if the players find some incentive - even if they're going to be paid. And there's another question I suppose - those players who have been receiving money that they shouldn't have been getting under the cap, presumably won't be getting that money now so they will be playing for less but the fans are going to be asked to turn up for the pleasure of watching them play for nothing.
Ian Heads: Exactly, yeah, and I think the fans of a lot of clubs probably feel cheated. I mean, Melbourne have been terrific club. They have beaten a lot of clubs on the way to their titles. Now, the people who follow those clubs are going to be thinking, "Well, we got beaten by a team that was cheating the rules" and that's really damaging stuff for the game.
Kerry O’Brien: You've got no doubt that the club will survive this nonetheless but it must be an enormous setback for them.
Ian Heads: Well, it's a huge setback. I don't know the future of Rugby League in Melbourne. It's been a really solid effort to try to get a toe hold there, it is not easy. Rugby League has been trying to do that since about 1914 and it's never succeeded to a great degree but there did seem as if there was something moving down there with this team but this is a setback of an enormous nature.
Kerry O’Brien: How hard is something like this to hide? They talked about two sets of books. I heard someone commenting this afternoon that this has been a BBQ conversation for a number of years - that the Storm have had so many of these big name glamour players who do not come cheap, that something must have been going on?
Ian Heads: Yeah, there's been rumours around ever since the... I mean, the salary cap was introduced in 1990, Kerry, and it was regarded then as being a very difficult thing to police, which it certainly is.
In fact, the team that won the premiership that year was fined subsequently, Canberra, for salary cap breaches so what happened today is not a new story it's just a lot bigger than anything that has ever happened before.
But the rumours, as you suggest, they do circulate about this club and that and money paid under the table and... You know, very hard things to pin down. That's why this appears to be black and white, it makes it sort of unique too.
Kerry O’Brien: Well, the players themselves, there is not going to be any penalty against players themselves who might have been receiving more money than they were supposed to under the cap but wouldn't they and/or their agents know if they were being paid money under the lap on top of what was in their official contract?
Ian Heads: They would certainly know that. If they were paid a certain amount and didn't know the total picture I suppose they could argue "Well, we knew nothing about it" and some clubs have worked on that basis over the years, where the great St George team that won 11 straight premierships, the players in that team always said they didn't know what the man next to them was getting. You know, that was private business.
Whether that applies, I don't know, but there's going to be a heap of questions asked and a lot of contracts looked at I would imagine.
Kerry O’Brien: The Chief Executive of News Limited, which owns - John Hartigan - and News Limited owns 50 per cent of Storm. John Hartigan was at the press conference today. He actually used the word "Fraud" and News Limited are bringing police in. This must be embarrassing for News Limited.
Ian Heads: I think it is, Kerry. You know, they've been such a big driver of that club. It's - as John Hartigan said, it's not the way they do business or want to do business and a painful exercise for them, particularly at a sort of fragile time in the game where they're looking at stepping away with some grace and the game going into difference hands, being controlled by an independent commission. This has muddied the waters considerably, I would think.
Kerry O’Brien: Although they have been stripped of the premiership for those two years, the two clubs who were the other grand finalists - the Parramatta Eels and the Manly Sea Eagles - they're not going to actually get the premiership and on the one hand I suppose you would say that is fair enough, but they're entitled also to feel robbed, aren't they?
Ian Heads: Well, I suppose they are, and it's a pretty hollow feeling, isn't it, to say that because of the rules we did really win that comp but they're not going to get anything for it. I think that's absolutely right. That is the way it should be. They wouldn't - probably wouldn't want it that way.
Kerry O’Brien: Rugby League is not the only code or even the only sport where the salary cap applies. I just wonder what impact - how this might impact on other sports.
Ian Heads: I think all sports are having a look at how they operate the cap, which, its motivation is pretty good, I think. It's to create an evenness in the competition and to sort of stop clubs becoming their own worst enemies by spending too much money, so the motivation for it was pretty good, but as I said, it's always been a dreadfully hard thing to police.
Kerry O’Brien: Ian Heads, thanks very much for talking with us.
Ian Heads: Thanks, Kerry. Pleasure. Thank you.