Rugby union should be wary of following football into financial fantasy land

As English football struggles to find its way through the clouds blown up by the Sam Allardyce affair,  it is perhaps as well for rugby union that there is barely a transfer market to speak of and no scope for third party ownership.

Football is awash with money, but it is not the root of all evil. The salaries of some Premier League managers exceed the salary cap in the Aviva Premiership, and while there was a whiff of scandal last year with allegations of cap irregularities investigated and buried, there is far from a financial surfeit at the top level.

Leicester Tigers chief executive Simon Cohen is already warning that the premiership salary cap is at a dangerously high level. For there is now a clear dividing line in the Premiership between those clubs, such as Leicester, Gloucester, Northampton and Harlequins and Sale who spend what they earn and others such as Saracens and Bath, who have loaded backers, and Wasps, who raised £35m through a bond scheme.

Cohen’s point, which contained the implicit message that clubs trying to live within their means were being forced to keep up with those prepared to carry debt, was that wage inflation had reached a level where all players, whether top internationals or rank and file, were earning considerably more than a few years ago and that squad sizes were, as a consequence, shrinking.

“Smaller squads are detrimental to player welfare,” he said. “Players will play more matches in a sport that is becoming quicker and faster with bigger hits coming in all the time. I think the salary cap is at a point where it will be dangerous for the game if it goes higher. Spending on players is going up from £60m to £80m this season and a huge amount of revenue that could have gone into stands, community projects and developing the game, has gone straight into the pockets of players at a time when it is becoming much, much harder to fund the salary cap.”

At least the Premiership has a fixed cap which every club has to adhere to. It is different in the Pro12 where most of the sides are funded directly by their unions. The Welsh regions have a salary limit of £4.5m which is less than their rivals in other countries, but they have some relief in the form of national player contracts which means the Welsh Rugby Union pays the bulk of the wages of the (relatively few) players concerned.

In France, the cap is £10m, although there are ways to extend it, as Racing 92 are doing with Dan Carter and Toulon did with Jonny Wilkinson, and bonuses are allowed on top of the cap as long as they do not exceed 10% of it. It is rigorously, and transparently, policed as Toulon found out last season when fined for breaching the bonus limit, an affront the club’s owner Mourad Boudjellal, who is still sore enough to question whether he wants to remain in the game.

Clubs in England and France have in the past couple of seasons enjoyed a substantial increase in revenue due to television and sponsorship deals. Cohen’s contention is that, like football where the Premier League has had an explosion in income since Sky was joined in the rights’ pursuit by BT, the extra money goes on wages with little filtering its way into improved facilities, investment or subsidising costs borne by supporters. It is to football’s( the round ball variety) shame that despite all 20 Premier League clubs being on European football’s rich list, they make players and managers multi-millionaires while expecting supporters to, at best, cough up as much as before.

The more they have, the more they spend to the point where they are no better off. If the bubble bursts, supporters will not switch allegiances like players and will be the ones counting the cost.

Rugby union remains a sport where interaction with paying supporters remains important. It was not that long ago that Leicester were among the clubs lobbying for a rise in the salary cap to help English clubs compete with the French and Irish in Europe: the best supported club in the country had the means to fund the increase, but others now have greater spending power through debts that are guaranteed.

Premiership Rugby did not enjoy its finest hour last year when revealing the outcome of the salary cap investigation into whether certain, unnamed clubs had exploited a loophole or two. It seemed to be a case of “we know who it is, and if they do it again, there may be trouble.” It says it has tightened up procedures, but supporters are entitled to transparency on a French level.

Clubs in France are often mocked for their spending, but anyone who either exceeds the cap or fails to provide the means to pay the budget it declared at the start of a season is punished severely; relegation in the case of the latter.

Financial fair play in England would be a start to ensure that clubs bankrolled by debt do not threaten the financial models of those who balance the books. The salary cap has reached its sustainable level for the near future and as recent events in football have shown, rugby needs to keep in contact with its roots, not unreality.

Mike Miles

 

www.scrumdown.org.uk

 

mike.miles@scrumdown.org.uk

 

 

 

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