Glamour NRL club stripped of premierships

The Storm celebrated their grand final win last year, but the honour has been stripped from them after the discovery of their salary cap rort. Photo / Getty Images

NRL premiers Melbourne Storm have been hammered with the harshest penalties in Australasian sporting history after the discovery of secret files revealing breaches of rugby league's tough salary cap rules.

The team, among league's most successful after a meteoric rise since their first season in 1998, have been fined A$1.6 million ($2.07 million), stripped of their 2007 and 2009 premierships and three minor premierships, and lose all competition points for this season.

"The most damning indictment is the systematic attempt by persons within the club to conceal payments from the salary cap auditor and it would now seem certain from the club's board and from its owners, on an ongoing basis," said NRL chief executive David Gallop.

"It was through this system that they were able to attract and retain some of the biggest names in rugby league."

Gallop said the Storm had exceeded the salary cap by at least A$1.7 million ($2.21 million) over five years in a methodical and covert breach of the cap.

"They had a long-term system of effectively two sets of books and the elaborate lengths they have gone through to cover this up have been extraordinary," he said.

Last night, the Storm - which have eight New Zealand players and Kiwis coach Stephen Kearney on their staff - apologised to its fans and sponsors, saying it accepted the NRL's findings. They pointed the finger at former members of management.

"Today is a most unbelievable blow and this is the lowest day in the club's history," a statement said.

Melbourne Storm coach Craig Bellamy said: "This is an absolute shock to myself, to our football staff, to our players. Personally, I am heartbroken."

Kearney did not return calls but former Kiwi league star Dean Lonergan said the assistant coach would not have known anything about it.

He said salary issues were left to the club executives.

But Lonergan told Campbell Live people didn't have to be rocket scientists to figure out it had been going on for a long time.

"In the last five or six years they have had so many State of Origin players, so many Australian players," he said.

The Melbourne Age quoted the chairman of Storm owner News Ltd, John Hartigan, as saying that "at this early stage" the architect of the elaborate payment system was former chief executive Brian Waldron, now the boss of the new Super15 rugby union team Melbourne Rebels.

Last night, Waldron was said to be "taking advice". The Australian Rugby Union said it would be monitoring the situation.

Mr Hartigan said the company had referred the matter to police.

Acting chief executive Matt Hansen had been stood down and rugby league administrator Frank Stanton appointed as caretaker chief executive.

"This club has had a couple of rats in its ranks," Mr Hartigan said.

The deception had been concealed from News Ltd.

"Quite frankly, I feel sick in the stomach by it."

Lonergan questioned how News Ltd could have missed the rort, which was reportedly brought to the NRL's attention by a Storm staff member.

"They are one of the biggest media companies in the world, probably have some of the best accountants in the world, they own half of the NRL ... how can they not know about it?"

In a written statement last night, Warriors chief executive Wayne Scurrah said: "The NRL is dealing with this matter. It would be inappropriate for us to make any further comment about it at this stage."

In addition to the loss of its titles, the Storm were fined A$500,000 and ordered to return A$1.1 million ($1.43 million) in prizemoney, to be distributed among the other 15 NRL clubs.

Individual players will not lose their awards. Neither will Manly and Parramatta - the sides the Storm beat in 2007 and 2009 - be given the premiership titles.

Gallop said the Storm had to act quickly to rectify the situation if they were to have any chance of regaining their status in the competition.

"Certainly by the 2011 season they need to be operating within the salary cap and how they do that I'm not sure at this stage."

The NRL last month ordered the club to open their books to salary cap auditor Ian Schubert after concerns over issues involving player payments, including a third-party television agreement between captain Cameron Smith and FoxSports.

The Age said that under salary cap rules, third-party agreements did not count as long as the club played no part in negotiating the deal.

The newspaper's website said the deal had been queried because the Storm were wholly-owned by News Ltd and FoxSports was part-owned by News.

Last week the Herald-Sun said Schubert had also insisted three other third-party deals and a termination payment to player Dallas Johnson must count under the Storm's salary cap.

Gallop said the club confessed yesterday after the discovery of the secret files.

"This morning the Storm representatives have come in and confessed to a well-organised system of paying players outside the cap," he said.

"On what we know, this amounted to A$1.7 million in the last five years, including about A$700,000 ($909,090) in 2010.

"The breakthrough in the investigation was the discovery by the salary cap auditor and his team of a file in a separate room at the Storm to the room that contained the file with the players' contracts."

No other teams have been hit so hard with penalties for salary cap breaches.

The Canterbury Bulldogs were fined A$500,000 ($650,000) in 2002 and stripped of 37 competition points for salary cap breaches of more than A$1 million ($1.30 million) over two seasons.

The Warriors lost a place in the 2006 finals after having four points taken from them.

- ADDITIONAL REPORTING: AGENCIES