Perth Glory Salary Cap Saga

By Paul F Carr

The Perth Glory Salary Cap saga came to a dramatic conclusion this week with the resignation of CEO Jason Brewer and the later acceptance by the club to accept the FFA decision and sanctions.

Genesis of the Salary Cap Saga

 

At the beginning of the 2014/15 A-League season, Perth Glory shifted two players to marquee status which placed the players legally outside of the salary cap. It would appear that only the club and the administrators at the FFA knew of this decision. It also appears to contradict the club’s public position made clear in May 2014 that it would not have marquee players.

 

In December 2014 Fairfax Media reported cars, housing and agent fees had not been reported for four seasons.

 

Coach Kenny Lowe considered eastern seaboard journalists were conspiring against the club which was then on top of the A-League table. Owner Tony Sage was even blunter. He told News Limited that it was “bulls**t” and that an individual had an axe to grind against him personally. He further stated there were no documents ever showing what was in the newspaper because they don’t exist.

 

Although at that stage the FFA had no concerns regarding Perth Glory’s salary cap compliance they did initiate an investigation.

 

The FFA investigation resulted a Show Cause notice being issued on February 12^th, 2015 relating to alleged offences in the 2012/13, 2013/14 and 2014/15 seasons. The FFA alleged that the club failed to disclose reportable payments made in those seasons. The FFA advised it did not allege these payments resulted in the club exceeding the salary cap in any of the relevant seasons. The FFA also advised the salary cap audit was ongoing.

 

In response, Brewer advised he was confident the club would escape with a small fine and not lose any of its competition points. He further advised the club believed the relevant FFA disclosure regulations were unclear and said the club had not sought to deliberately mislead in its reporting documents.

 

Brewer said the FFA would be visiting in the next week and he aimed to have the matter resolved during the week.

 

The FFA visit to Perth Glory and the ongoing audit resulted in the issue on April 1^st, 2015 of a second Show Cause notice which related to the current season. The Show Cause notice alleges failure to report payments and exceeding the salary cap. The “failure to disclose” breaches involve:

 

• Payments outside of the Standard Player Contract
• Payments to a player’s family member
• Payments of agent’s fees
• Payment of a third party sponsorship
• Pre-payment to a player
• Payment of travel costs
• Accommodation allowances
• Provision of motor vehicles

 

The FFA advised these payments would place Perth Glory significantly in excess of the allowable salary cap of $2.55 million. The club was given until 5pm on April 8^th to respond to the Show Cause notice.

 

On April 10^th, the FFA announced Perth Glory will be excluded from the 2015 Hyundai A-League Finals Series after being found to be in breach of the salary cap in the order of $400,000 for the 2014/15 season. The unreported payments and benefits were made to at least six players.

 

The club would also be fined a total of $269,000 for reporting breaches over three seasons as follows:

 

• $26,000 for the 2012/13 season
• $43,000 for the 2013/14 season
• $200,000 for the 2014/15 season.

 

The fine for the current season reflected the total impact of the sanctions including exclusion from the finals and the subsequent prospect of qualifying for the 2016 Asian Championships.

 

In a further twist, the FFA later announced the club would be issued with a third Show Clause notice no later than April 17^th. The third notice alleges the club failed to disclose reportable benefits and payments in excess of $100,000 paid during the current 2014/15 season.

 

Perth Glory Reacts

Following the FFA announcement of the sanctions, Perth Glory issued a statement that advised the club had forecasted their total salary payments for the 2014/15 contract year would be less than the salary cap and that all payments made to all staff and players were independently audited and reviewed by the FFA.

 

Perth Glory responded to their sanctions by filing a Supreme Court injunction on April 10^th. In the judgement issued that night Justice Robert Mitchell suggested both Perth Glory and the FFA had perhaps not gone through the proper grievance channels as under the Club Participation Agreement the club was obliged to go through the FFA grievance procedure before attempting to resolve the grievance in a court of law.

 

As a result, Perth Glory suspended the Supreme Court action and announced they would now proceed with an appeal through the FFA’s independent disciplinary committee. The club announced on April 15^th that the appeal had been was scheduled for hearing at 3:30pm (WST) that day. The hearing was closed to the media.

 

The following afternoon Brewer announced his resignation. Brewer said it was in the best interests of the club to resign immediately and before the appeal findings were handed down. He reiterated there had been no “secret” of “third party” arrangements.

 

The Fans React

 

The Perth Glory active supporter group, The Perth Terrace, have demanded Sage and Brewer leave the Club. The group have threatened to boycott future games until their demands are met. They believe many members will not be renewing their memberships.

 

The fans anger appears to be directed at club management rather than the players and coaching staff.

 

The Breach Details

 

While the FFA have presented the breaches in a dry legal fashion the actual details of the breaches are more enlightening.

 

It is believed the provision of motor vehicles relates to 18 cars of which at least half were allocated to players. Most of the foreign players as well as some Australian players received a car. It seems the cars were used as part of the recruitment process.

 

The accommodation allowances appear to relate accommodation being provided for players but not reported for all of those players. In some cases, players were listed as living in the club office. One of these players also received payment for accommodation costs.

 

The club also listed two players sharing a flat owned by Sage. Fairfax has confirmed both players lived separately.

 

The payment to a player’s family member relate to payments into a bank account held by a family member of the player. WAtoday.com.au reported on April 10^th that sources close to the investigation suggest the transactions for these payments were listed as relating to the Perth Fashion Festival, of which Sage is a director. The report also states that less than half of the player’s believed salary was reported to the FFA.

 

The Appeal Outcome

 

Late on Thursday of this week the club and the FFA issued a joint statement. This followed the club’s attendance at the independent Disciplinary Committee. The club has provided the following undertakings to the FFA:

 

• Perth Glory accepts the FFA determination of 10 April including the sanction, which excludes the club from the 2015 Hyundai A-League Final Series and imposes a fine of $269,000
• Perth Glory accepts the authority of the FFA to make determinations, including sanctions and fines, in relation to the salary cap
• No actions will be pursued against FFA in respect of its determination. This includes discontinuing proceedings before FFA’s independent Disciplinary Committee and the West Australian Supreme Court
• Perth Glory recognises the importance of the Total Player Payments rules and regulations to the integrity of the Hyundai A-League and undertakes to comply strictly with the rules in the future.

 

In the joint statement, the FFA advised the matters in the foreshadowed third Show Cause notice were of the same nature and fall within the same period covered by the current sanction. No further sanction will be applied.

Image courtesy of The Guardian