• Competitiveness of the league: the Salary Cap provides equal opportunity for clubs, so creating a highly competitive and unpredictable Aviva Premiership Rugby competition where on any weekend any team can beat any other team. It ensures the competition is exciting and unpredictable which attracts fans, sponsors and broadcasters.
  
• Financial sustainability: the Salary Cap helps ensure that the clubs build their businesses in a sustainable way.

The first salary cap was introduced by Premiership Rugby in July 1999 as a result of concerns over the financial sustainability of clubs in the league. The first cap was set at £1.8m.

Salary Cap 2011-12

For the year 1st July 2011 to 30th June 2012, the Salary Cap has been set at £4m, as it had been for the previous three seasons. This season, however, will see the introduction for the first time of Academy Credits which allow clubs to benefit from including home-grown Academy talent in their senior squads. For qualifying players, clubs will get a credit in the Salary Cap of £30,000 per player for up to eight players (maximum £240,000), meaning the maximum Salary Cap spend this season will be a total of £4.24m, a 6% rise from the 2010-11 season.

The Academy Credit system aims to:

• Reward the clubs for the quality of players coming through the Academies
• Assist the clubs to retain their best young players
• Give developing players early opportunities for Aviva Premiership Rugby

As in previous Rugby World Cup (RWC) seasons, in 2011-12 only, there will also be a RWC Credit of £30,000 for each international player participating in the RWC in order to help clubs manage the reduced number of players available to them in the opening weeks of the season.

Salary Cap 2012-13 Onwards

Premiership Rugby has recently decided on the development of the Salary Cap up to the 2014-15 Season with the aim of:

• Strengthening the depth of playing squads
• Enhancing the ability of the clubs to retain the best English players
• Attracting some of the world's best players to Aviva Premiership Rugby
• Building the clubs' businesses in a sustainable way
• Protecting the competitive balance and unpredictability of the competition

Salary Cap 2012-13

In the 2012-13 Season, the base Salary Cap will increase to £4.26m, rising to a maximum of £4.5m with the continuation of the Academy Credits. In addition to this, a club may choose to nominate to Premiership Rugby one qualifying player to be excluded from the Salary Cap. This will provide the clubs with further capacity to retain our world-class England talent as well as attract a limited number of foreign players. At the same time, the clubs' success in playing a high number of EQP (English Qualified Players) can be maintained and the balance of the competition can be protected.

Salary Cap 2013-14 and 2014-15

The level of the base Salary Cap during the 2013-14 and 2014-15 Salary Cap years will be linked directly to annual central revenue distributions to the clubs from Premiership Rugby. This is designed to promote the sustainable financial position of Aviva Premiership Rugby and its clubs. Growth in salaries will be linked to growth in average revenues. This will provide a natural check on the financial capacity of the clubs to spend on playing talent, and as the collective business of Aviva Premiership Rugby develops further, there will be equal opportunity for all clubs.

MANAGEMENT OF THE SALARY CAP

Salary Cap Manager

The operation of the Salary Cap is policed by Premiership Rugby's Salary Cap Manager, with the assistance of external legal advisors and accountants. The process involves:

• Monitoring and investigating club and player activity including new signings, transfers and agreements with connected parties and/or third parties
• Overseeing the annual audit process and investigating any areas of non-compliance
• Leading an annual review of the operation of the Salary Cap and presenting any conclusions and/or recommendations going forward

Premiership Rugby Clubs are subject to on-going monitoring and a formal annual audit of their financial arrangements. Any breach of the Salary Cap carries serious financial and other penalties for clubs.

Salary Cap Sub Committee

The Salary Cap Sub Committee is the body which is accountable to the Board and the clubs for the operation and review of the Salary Cap Regulations. The Sub Committee was established in 2002 and comprises representatives from 4 clubs, appointed for a fixed term of 2 years. Where possible the mix includes a Chief Executive, a Financial Director, a Director of Rugby and one other appropriately qualified person. The Committee is chaired by the Director of Rugby with the Salary Cap Manager in attendance. The aim is to ensure that the Salary Cap strategy is a relatively simple system to adhere to but is effective and works well for the good of the 12 clubs and the sustainability and success of Aviva Premiership Rugby.