Much has been made of the financial mismanagement at Portsmouth FC. (Pitch Invasion has a pretty good summary of the reactions here.) As big as the scandal surrounding that bankrupt Premier League club is, however, it still might not be as bad as the scandal that’s now threatening to destroy one of the biggest clubs in the National Rugby League.
The Melbourne Storm, who won the NRL Premiership in 2007 and 2009 and the Minor Premiership (a/k/a the regular season title) for three years from 2006 to 2008, have had all of their honors stripped after it was revealed that they violated salary cap rules. These violations weren’t small either. The NRL salary cap is only $4.2 million a year for 25 players, and the Storm managed to pay players an extra $1.7 million during its successful five-year run.
What’s more, the club used some dubious dual-book accounting to record these under-the-table payments, paying a marquee used for corporate entertainment $20,000 per game — despite the fact that the marquee was already provided under their ground hire agreement. That sort of financial shiftiness will get you in trouble with the tax man. News reports in Australia are suggesting people will go to prison for this.
Perhaps the worst thing about this story is that the Storm are the only NRL club in Victoria, which is an AFL stronghold. Ten NRL clubs are based in New South Wales, and nine of those clubs are based somewhere in Sydney. By contrast, ten of the AFL’s 16 clubs are based in Victoria, with nine of them in Melbourne.
So if the Storm end up getting shut down over this — and that’s not out of the question yet — what do all those rugby league supporters in Melbourne do? Do they go back to the AFL? Do they start supporting the Melbourne Victory of the A-League? Do they pick another club? Do they try to get a white knight to step in and start a new club? Clearly, there’s a market there, and markets, like nature, abhor a vacuum.
It also begs the question — what would have happened to an NFL team that violated salary cap rules? If this old news report about the Denver Broncos was any indication, not nearly as much as what the Storm are facing.
(Thanks to Jeff H for the skinny.)
