Hawthorn are confident that their football operations and budget will not be impacted by the estimated $900,000 payout to Alastair Clarkson in the next two years, after taking an early hit and paying a small tax to the AFL for exceeding the soft cap in the year Clarkson left.
The Hawks, who struck a deal with Clarkson after deciding that the handover to Sam Mitchell should be brought forward 12 months, have avoided a hefty tax under the soft cap on football spending, despite a hit to the bottom line of close to a million dollars for the payout of Clarkson’s contract.
The Hawks say they will pay less than $50,000 in the tax for exceeding the soft cap, in an arrangement with Clarkson, who will be paid about half of the amount owed in two instalments over approximately 12 months.
Former Hawks coach Alastair Clarkson. Credit:Getty
But the Hawks’ major objective has been to ensure that the Clarkson payout – which embarrassed the club when he moved on earlier than planned – did not cause them to shed football jobs or compromise their football operations under Mitchell, who is obviously not remunerated at anything like the level of four-time premiership coach Clarkson.
The entire payout (not counting any entitlements) was counted in this year’s financial position, reducing the club’s profit from over $1m to $255,474.
The Hawks say they have re-jigged their football department to ensure that the payout – which is allowed to be spread over three years – does not hinder them from spending on football in 2022 and 2023. Next year, the soft cap will rise slightly to about $6.5m.
Hawthorn’s revamped post-Clarkson football department will allocate more resources to development, in a reflection of their younger list profile and greater investment in the draft. Their coaching numbers will increase by one.
Hawthorn chief executive Justin Reeves said the club had accounted for Clarkson’s payout in the 2021 financial year, which ended on October 31.
“We dealt with all this financially in the year just over,” he said.
“There will be no impact to our football program in 2021-22. We’re confident there will be no or minimal tax moving forward.”
Under the AFL’s socialised regime, clubs that exceed the soft cap pay a fine or tax of 75 cents in the dollar if they exceed the cap by less than $100,000 in a given season.
But this tax rises steeply once clubs exceed the soft cap by more than $100,000 in more than one season, ballooning to fines of150 and then 250 per cent if they go over the cap by between $100,000 and $250,000 in a second and third season, and much more if they go over by $250,000-plus. Clubs have been unwilling to spend much over the soft cap since its introduction.
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