The Parramatta Eels club is under fire for rorting the salary cap.
The Parramatta Eels club is under fire for rorting the salary cap. JOEL CARRETT

EXPLAINER: Why Parramatta Eels fell foul of the rules

ONLY someone with an intimate knowledge of the workings of the salary cap and third-party agreements could conceivably comprehend the debacle unfolding at Parramatta.

Clearly the problem for the Eels has been third-party agreement payments to players (TPAs), which are legitimate payments not included in the salary cap. But it's obvious few fans have any idea of the complexities of these agreements.

A mate recently asked me to explain third-party payments. He assumed a bloke who has spent most of his adult life involved in rugby league should have a simple answer.

But my clumsy response didn't cut the mustard. I confessed I really had no idea about TPAs and decided to ask some questions of those in the know. And I was fascinated by what I learned.

First and foremost, there is absolutely nothing dishonest about third-party payments, as long as they are sourced through the correct channels. And, no limit is placed on the number of TPAs a player can access, the amount remunerated or the number of players at a club receiving TPAs.

Someone of the ilk of Johnathan Thurston or Cameron Smith could, for instance, earn $1 million under the salary cap and another $1 million or more from TPAs.

But the major stipulation is the player's club cannot be involved in promising or guaranteeing TPA payments while negotiating contracts with players or their agents. And that is where it appears the Eels board has infringed.

A club may introduce a third party sponsor to a player and his agent, but the connection must end there.

And before registering a third-party agreement with the NRL, a player or his agent needs to obtain approval from his club regarding the relationship of the third party. It must be a non-associated entity - so if a club is sponsored by Nike for example, Nike could not be involved in a TPA agreement as the company is already an associated entity of the club through its sponsorship.

The TPA contract is exclusively between the player and the business entity, and as such is a non-NRL aligned partnership. If, for instance, a player is paid $100,000 a year to promote Bob Smith Coffee, he cannot endorse Bob Smith Coffee while wearing his club NRL clothing.

Each NRL club has 25 players on registered NRL contracts, and there is no limit to the number of players who can receive TPAs, and no limit on how many TPAs each player can receive, or how much each one is worth. Each TPA must, however, be approved by and registered with the NRL. But, as Eels fans have discovered, once the club becomes actively involved in facilitating these TPAs, that is when the muck hits the fan and the salary cap is impacted.

Simple really, isn't it?

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