An interesting article from Saturday's Financial Review for those who missed it. Saturday, 02 August 2008 The Australian Financial Review Story Neil Chenoweth A legal challenge to the salary cap could be the trump card Sonny Bill Williams needs. The first hints of catastrophe trickled out late last Saturday. Rugby league's golden boy, Sonny Bill Williams, had secretly flown out of Sydney - gasp - to play a little footy in France. It was too soon to grasp all the dire implications this dastardly move had for Williams's Canterbury Bulldog teammates, the National Rugby League, for sporting culture, the innocence of children, the Australian way of life and indeed civilisation itself. But even in those first dark hours, the hard men and women who write about News Ltd's football code knew exactly what to do. This was a fight between good and evil; between the forces of rugby league Niceness, and loathsome Sonny Bill Nastiness. Sonny had broken his five-year contract with the Bulldogs to play rugby union for French club side Toulon merely because they (reportedly) wanted to pay him an extra $1.1 million a year. Was there no end to Sonny Bill's depravity? The Daily Telegraph splashed with the story for four days running, from the tragedy of an eight-year-old child who missed out on an autograph; to lengthy quotes from a miffed nine-year-old with a remarkable grasp of complex English syntax. The Australian's Greg Sheridan was a broken man as he wrote of his grief. League coverage is a tasteful affair so they didn't mention Sonny Bill's toilet tryst with Candice Falzon last year more than a dozen times. There was no point bringing up his previous troubles urinating in an alley, or breaking a photographer's camera - that's just footballers and their waggish ways. The International Rugby Board must be compelled to force Sonny to go home to honour his contract, NRL chief David Gallop fumed. If Sonny did not honour his contract his assets could be seized, others argued. He should be arrested and sent to the Big Sin Bin, as they call it in NRL. The world's wackiest boxing agent, Khoder Nasser, had set up the Toulon deal for Sonny - and then it turned out he hadn't. Meanwhile, Sonny's barrister threatened to challenge the legality of the NRL salary cap that had thwarted Williams' attempts to raise his contract. Where had all this come from? Could one man's Qantas ticket really bring down the football world? Whatever else might be said of Sonny Bill, he showed a fine sense of history. His simmering dispute with the Bulldogs over pay and conditions came to a head in May, when he sought a release to play in France but was refused. From that point he disavowed any intention to leave the Bulldogs, while he made his plans in secret. It's deja-vu. Back in February 1995, the simmering dispute over a rebel competition called Super League backed by News Limited came to a head. When the Australian Rugby League rejected the idea, News Chief Ken Cowley told them: "Whatever happens we will not start up a rebel league." Any further approach would be "through the front door of the Australian Rugby League." His refusal to damage the game came above his corporate ambition. How Sony Bill of Him. The next month News Limited began a secret operation to sign players and clubs to break their loyalty contracts to the ARL, beginning with a late-night session with Bulldogs players. Players were told to fob off journalists: "I have a current [ARL] contract which I am obliged to honour." As Super League lawyer, Gallop was company secretary to the string of new SL clubs he set up. News eventually emerged with a half share with the ARL in a new competition, the NRL. It was so 1990s. Times have changed, and Sonny Bill Williams has become the line in the sand, the army deserter who should be punished pour encourager les autres, as his new teammates might put it, to stop a wave of other offshore desertions. Who exactly will this hurt? Losing top players reduces the quality of the competition, but football followers are tribal. The best games are often played with great passion rather than skill. The rugby league economy is a delicate flower. News Ltd has most at stake, beginning with the estimated $700 million it lost on Super League and setting up the NRL, of which $560 million is still on its books as an asset. Then there is the $1 billion investment that News has with James Packer's Cons Media in Premier Media Group, which operates as Fox Sports and owns half of Foxtel. It's the prospective growth in Premier that drove Lachlan Murdoch's abortive bid for Cons Media earlier this year. And rugby league is the key driver for both Fox Sports and Foxtel. News can milk the system at all levels. The salary cap allows the NRL to limit the clubs' share of revenue. News, in turn, can limit the NRL's revenue from broadcast rights. During the C7 court case over the Seven Network's failed bids to win NRL and AFL rights in 2000, part of News Ltd's defence was that there was no need to conspire to defeat C7 because News had decided to veto Seven's bid for NRL rights even if it was higher. Currently, Fox Sports pays $42 million a year for five NRL games each week, compared with $50 million for four AFL games - and NRL rates the socks off AFL. Of a reported $126 million NRL revenue last year, clubs received only $52 million while News regularly creams off an $8 million dividend. Fox Sports earned $100 million before interest and tax last year, much of it from NRL, with another $34 million from Premier's half share in Foxtel. There's even something in it for the News Ltd newspapers - the C7 case revealed the practice of charging Foxtel for "editorial support" for football. You can see why they're upset. By week's end, the NRL had eased off on the anti-Williams rhetoric and Gallop was in damage control, wooing clubs by cancelling plans to drop some Sydney teams. His embattled appearance on The Footy Show on Thursday showed the wounds from Super League were still raw. For this is the real threat - not from one broken contract, or a wave of other players heading overseas, but from any growing consensus that the corporate embrace of a media group is stifling a community game. Inevitably, in a celebrity sporting culture, the power shifts to the players. UK soccer has shown that contracts don't mean as much as they once did. That means more money for players at the cost of News. And then there is the legal challenge to the salary cap. Any court ruling that the cap is a restraint of trade for players (as the courts found the ARL's player draft system was in the 1990s) would have a devastating effect not just on rugby league, but on union and soccer, blowing costs sky high and turning the sports into a rich man's domain where the wealthiest clubs buy all the talent. This is surely a case that NRL can't risk fighting because it can't afford the risk of losing. It's Sonny Bill's get out of jail card. The Bulldogs, the club that ran into so much trouble for breaching the salary cap in 2002, now could be sued for sticking to it. But rugby league has always been an irony-free zone. How News Ltd runs Rugby League Step 1 News directors on NRL board sell TV rights to News Step 2 News sells NRL TV rights to Fox Sports, owned by News and ConsMedia Step 3 Fox Sports sells NRL programming to Foxtel, 50% owned by News and ConsMedia Step 4 With broadcast fees, NRL pays $8m dividend to News Step 5 NRL pays $52m of $127m annual earnings to NRL clubs, 2 of which are controlled by News Step 6 News's newspapers contract to provide editorial support for NRL.