Special Feature: Why the salary cap is being violated — and how to fix it

Anthony Watson is a world class winger who, due to the way the salary cap works, can't find a club for next season. Getty Images/David Rogers

If there's one word to describe the Premier League rugby salary cap, it's 'illogical'. This word comes up again and again in conversations with leading figures in English rugby. The salary cap is, as one prominent executive said, «riddled with controversy.»

A system designed to produce England players penalizes clubs that produce too many. A system designed to control costs has an inflationary mechanism built in while two clubs have gone bankrupt this season.

If the ultimate goal is to create a sustainable league that ensures a successful England team and Premier League clubs challenge in Europe, then, according to the latest data, it is failing. So what are the main problems?

Don't develop English

The incentive for clubs to produce as many England internationals as possible is at the heart of the Professional Games Agreement between Rugby Football Union and Premiership Rugby. At least that's the theory.

In practice, as Jack Willis recently mentioned, the England players are nowhere near the attractive offer they should be. 'Being an England international… doesn't appeal to clubs at the moment because you're out for half the season and [the club] doesn't get financial rewards for it' — Willis, who signed for Toulouse after the departure of Os «. bust said. “You kind of get stuck between that zone. You are almost less valuable to them.”

This is due to several shortcomings in the salary cap system. On top of the base £5m, clubs receive £50,000 for each homegrown player on their team and an additional £40,000 for each player provided to England's elite squad. Clubs then receive an additional £5,000 for each England match they play.

All this should encourage clubs to release as many players from England as possible. However, the maximum loan a club can claim per player is £80,000. This means that if the homegrown player plays in every England Test during the season, the club will only receive £30,000 in compensation for his absence.

This leads to a perverse situation where Northampton Saints, for example, will receive the same recognition from Fraser Dingwall, an EPS member unused by England, as Lewis Ludlum, who has played in every Six Nations match this year.

Northampton Saints were effectively fined for having the ubiquitous England international Lewis Ludlum playing for them. Photo: Getty Images/David RogersLet's say the average England player receives £300,000 from his club. As they will miss at least half of the league due to testing and mandatory rest periods, the club will have to budget for a replacement, but will only have £30,000 extra to do so.

Meanwhile, they continue to pay £270,000 for an international who can only play 10 or 12 games in a season. In addition, the maximum credit limit for local players is £600,000 and for EPS players it is £400,000. So the more England players a club provides, the less money they have left to replace them

«From a purely economic point of view, it is illogical to release players for the England national team, lose them and not be able to replace them within the limit,» said one of the club's managers. “Given the way the system is set up, it is not financially feasible or cost effective for clubs to release English players. It doesn't reward them. It actually punishes them.

“There are many intangible benefits to producing English players, but it costs you competitive money within the limit to have a large number of English players on your team. The more you develop, the more you are penalized in terms of the limit.”

If a club has one or two England internationals, the financial hit can be paid off within the limit. However, for teams that find that the «golden generation» is passing through their academy at the same time, this presents a major challenge.

This can be seen as a major causative factor in the Saracen salary cap scandal and the dissolution of Exeter's English contingent.

Leicester Tigers and Sale Sharks, who have a plethora of young players seeking England recognition, will eventually face the same problem.

>It's understandable why clubs don't go out of their way to sign England internationals who enter the market, especially as they are no longer eligible for a homegrown £50,000 loan once they leave their academy club, in while 50 percent of the EPS payment is paid. shared with the former team.

This puts personalities like Willis and Anthony Watson from England in an envious position. Any club looking to sign Watson can only get around £25,000 in player credit, which could only be available for eight league games in the World Cup season. So you have the ridiculous situation of a world-class English winger struggling to find a home in the Premier League.

If you were a club leader with purely utilitarian motives, you would want to have 12 academy players on your senior roster to claim maximum homegrown glory, hoping that one or two of them would be called up to the elite player team without getting paid for the England team. . You can then fill the rest of the team with affordable non-international South Africans and Pacific Islanders available all year round.

Indeed, it can be said that some clubs have already adopted this idea. . The London Irish team, despite its thriving academy, has 25 non-English qualified players in a squad of 50, while Exeter will have more active Welsh internationals than England internationals next season.

Prominent Players: Delusion

When the late Lord Myners prepared his comprehensive report on the 2020 salary cap, he concluded that the outstanding player rule, which exempts a player's salary from the overall cap, served no positive purpose.

“Speaker- the release of players is completely contrary to the goals of equality and competition and creates a needless inflationary pressure on wages. The time has come to reconsider their future usefulness,” he wrote.

The designer of the 2008 financial crisis bank rescue package also made it clear that its recommendations should not be “considered as a menu of options from which to choose.”

You'll never guess what Premiership Rugby is . did next. Yes, he acted like a seven-year-old at Woolworths, ignoring Meiners' explicit recommendation.

The essence of the top player rule was that it allowed clubs to bring in high-profile rock stars, put slackers in their seats, and raise the overall level of the league. Former All Black Charles Piuto, the first million-dollar player to leave the Bristol Bears, is a symbol of politics. To be sure, the Bears used Piutau's talent to increase their average net, but the domino effect in the league is debatable.

Former All Black, and current Bristol Bear Charles Puteaux, the first £1 million prize pool player, exemplifies the big top player policy. Photo: Getty Images/Michael Steele

«It's a misconception, big players don't put homeless people on seats,» said Sale chief executive Sid Sutton. «The results are attracting slackers to the field.»

What is certain is that the big players have raised wages at the top end of the market. An outstanding player's salary may be separated from the ceiling, but once his salary is known to the club, every high-profile foreign player will be knocking on the door of the chief executive asking for parity.

While this has led to a feast for the top 10%, it has led to a famine for the «squeezed middle», with clubs across the league reducing team sizes to accommodate the wages of their high-paid players.

«If you have a superstar who gets paid four times the average player is not good for a team culture,” Sutton said. «I can't think of any benefit from the selection rule.

“If you have a budget to put together the best team and you forget about the salary cap for a moment and you spend £800-900,000 of that budget per player and then that has to be squeezed in somewhere else on the rugby team out of 45.»

Increasingly, allocated slots are being used less for these stellar foreign signings and more to subsidize the club's highest paid player from England.

Constant tension

Wasps and Worcester Warriors went bankrupt. The London Irish and at least a couple of others are teetering on the brink. Covid recovery loans are falling down the mountain like a boulder. Yet the Premier League salary cap will rise from £5m to £6.4m in 2024/25. Discuss.

«I just don't think the game is in a post-Covid position to increase costs,» Sutton said. “While some clubs may well do this, I prefer that we all start collectively cutting our clothing accordingly. One of the most important parts of a successful league is making sure it's competitive. Why we are adding this additional cost level is not entirely clear yet. This is contrary to common sense.”

Here is Pat Lam, director of rugby at the Bristol Bears, to argue for the defense of Exeter, England's only representative in a European Cup semi-final in the past three years. “For English rugby to be sustainable and in demand, you cannot be considered the fourth best competition,” he said. “You strive to be the first. I believe that in the Premier League it was once. But if the England team is not winning and English clubs are not at the forefront of European competition, it is very difficult to call your competition one of the best.

0905 Champions Cup Teams

Bristol is, coincidentally, funded by Steve Lansdowne, who has an estimated net worth of around £1.9bn. However, to emphasize Lam's point, several agents confirmed that Benetton, the Italian unified rugby championship team, had a larger budget than any Premier League team. Ultimately, the choice is between success and sustainability.

Premiership Rugby insiders are keen to refute the idea that there is a wage gap in France, where the cap is £9.4m. This is a hard ceiling that includes all academy players who do not count towards the Premier League limit.

Decisions

Any change in the salary cap will create winners and losers. Raising the salary cap will improve the competitiveness of English teams in Europe by increasing the already strained financial situation of the club. Modernizing the credit system could jeopardize the league's competitive balance sheet. Removing the top player rule would affect the wages of the highest paid, which could make France more attractive as a possible destination.

All you have to go back to is knowing what the priorities are.

“If you take it all back and get all the stakeholders in the room and write on a sticky note that you want, most answers will be: we need as many good English players as possible in the premier league and by design. for selection and for England,» the club's chief executive said. «The current system does not allow this.»

It is a perversion that some clubs feel they are being punished for bringing in too many England internationals. As Sutton says: “It affects your personnel policy in a completely different way.”

Unlike France, which imposes a hard limit on the number of foreign players under the Giff rule, the Premier League, due to the presence of Kolpak players, should encourage rather than deter clubs from producing as many English players as possible. As such, the maximum credit limits that clubs can claim for homegrown and EPS players should be lifted or at least significantly increased in order to have a budget to replace England players.

As alternatives could be eased on the condition that the RFU provide more direct funding to the clubs of its top players. This would be a step towards closer cooperation between the union and the league. Negotiations are already underway.

There is practically no justification for the continued existence of the lead player rule. Even if you have to give clubs three or four years to terminate certain contracts, Meiners' recommendation should take effect immediately.

None of this directly benefits the players, at least not at the highest level. Low wages are a problem and a minimum wage with a charity fund for former players, a key requirement of the Rugby Players Association, should be included in the next Professional Games Agreement.