Over 25 years ago, the National Basketball Association (NBA) made a groundbreaking decision to introduce maximum contract lengths, a move that has since shaped the financial landscape of professional basketball. This decision came in response to the 1990s trend of excessively long contracts, which often hampered teams for years. A notorious example is Juwan Howard’s 12-year, $42 million contract with the Washington Bullets, a deal that remains infamous in NBA history.
The NBA’s current rules limit contracts to five years for players re-signing with their current team, and four years for those joining a new team. This mechanism serves as a safeguard for teams, preventing them from making long-term financial commitments that could backfire. Despite this, poor signings still occur, but the damage is contained within a shorter timeframe.
Lessons for the AFL
As lengthy extensions gain popularity, the Australian Football League (AFL) faces similar challenges. Since the 2024 season, AFL teams offering contracts longer than six years must seek written approval from their president and CEO. This policy aims to protect clubs from their own potentially detrimental decisions.
The case of Brodie Grundy, who signed a seven-year deal with Collingwood only to be traded twice in two years, highlights the pitfalls of long-term contracts. Grundy’s contract, which runs through 2027, underscores the risks involved in such commitments.
The Harley Reid Dilemma
Currently, the West Coast Eagles are grappling with a similar situation as they attempt to retain their young star, Harley Reid. Despite the team’s struggles, Reid is seen as a future All-Australian player, making him a valuable asset. Since being drafted first overall in 2023, Reid has attracted interest from Victorian clubs, escalating his market value.
Reports suggest that Reid’s management is negotiating an 11-year extension worth $20 million. This unprecedented offer has raised eyebrows across the league, particularly given Reid’s inconsistent performance in his early career.
“The AFL hasn’t seen numbers like this before, so understandably, there is apprehension around the competition.”
The Eagles, however, view the deal as a strategic investment, hoping Reid’s potential will eventually translate into on-field success. Yet, the risks are evident: should Reid face injuries or fail to develop as expected, the Eagles could be left with a burdensome contract.
St Kilda’s Strategic Moves
Meanwhile, St Kilda is navigating its own contractual challenges. The club is pursuing Tom De Koning with a lucrative offer of $1.7 million per season, while Nasiah Wanganeen-Milera is leveraging this to increase his own asking price. St Kilda’s willingness to invest heavily in these players reflects a broader strategy to enhance its star power, a necessity given the club’s lack of marquee players since the Nick Riewoldt era.
However, such financial commitments could restrict the club’s future flexibility, echoing the broader concerns about long-term contracts in the AFL.
“People in power at each of these clubs are trying to appease their members as quickly as possible. If that means handicapping the club in the long run, it’s a decision they’ll make every single time.”
The Need for Reform
This issue is not unique to the AFL. Across various sports, clubs often make short-sighted decisions that jeopardize their long-term prospects. The AFL’s current Collective Bargaining Agreement (CBA) runs until 2027, but discussions about contract lengths should be a priority in future negotiations, especially with potential league expansion on the horizon.
The AFL administration has shown a willingness to adopt ideas from the NBA, such as play-in tournaments and in-season cups. Introducing maximum contract lengths could be another valuable lesson to ensure the league’s financial health and competitive balance.
As the AFL contemplates its next steps, the experiences of other sports leagues offer a cautionary tale. By implementing measures to limit contract lengths, the AFL can protect its clubs from the pitfalls of overly ambitious financial commitments, ensuring a more sustainable future for the sport.
