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News Limited today received a report of summary findings of the forensic investigation by independent accounting firm Deloitte into the salary cap breaches by the Melbourne Storm Rugby League Football Club.
As a result of Deloitte's report, News Limited estimates that the total value of salary cap breaches by the club between 2006 and 2010 is up to $3.170 million, an approximate 83% increase on the original NRL estimate of $1.735 million.
This amount could be lower or higher because players, managers and other third parties opted not to provide information to Deloitte or News Limited during the investigation. However, News Limited believes it is most unlikely that the amount will be materially lower.
The breaches are significantly higher than first estimated by the NRL in each year between 2006-2010, including in 2007 and 2009 when the Melbourne Storm won the NRL Premiership.
The original estimated breach for the 2010 season by the NRL of $700,000 has blown out to a possible $1,027,968, an increase of 47%. This amount could be lower or higher if further information is provided.
The estimated likely excess of player financial commitments over the salary cap of $4.1million for 2011 is $1.325 million, and again, as not all parties have fully co-operated this number could be higher or lower.
Player financial commitments for 2011
Based on information available to it, Deloitte examined the club's financial commitments to the proposed top 25 players to be paid for the 2011 season. Player commitments for 2011 are those required to be included in the club's top 25 salary cap calculations under the NRL rules.
The Melbourne Storm has financial commitments in place with players for 2011 of possibly $5,425,188, which is $1,325,188 in excess of the salary cap of $4.1million. These calculations are based on work performed by Deloitte as at 4 June 2010.
Recent NRL Salary Cap Changes
On 22 June 2010, the NRL announced an increase in the salary cap of $100,000. If this change is taken into account, News Limited expects that the Melbourne Storm is forecast to be a possible $1,225,188 over the salary cap in 2011.
The 2007 and 2009 Premierships
There have been media reports that people associated with the club believe the NRL should reinstate the 2007 Premiership, based on a belief that the estimated breach of the salary cap in 2007 was about $273,000.
Those calling for the reinstatement of the 2007 Premiership have noted that the club's salary cap breach in 2007 was similar to the breach by the club in 2003 of $261,912 and that the penalty for that breach was a fine of only $130,956.
Following the forensic investigation, it is News Limited's view that the actual breach in 2007 was an estimated $551,032, 110% higher than the breach in 2003.
Similarly, News Limited now believes that the actual breach in 2009 when the Storm won the Premiership was an estimated $964,877, higher again than the breach in 2007.
Combined with the fact that the breaches occurred over 5 years, the findings made by Deloitte reinforce News Limited's view that the penalties were appropriate.
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