Salary Caps exist in many commercially successful sports around the world. The most obvious examples are the NFL and NHL in the USA, and the NRL and AFL in Australia. The introduction in football of UEFA’s Financial Fair Play and the Premier League clubs’ new financial regulations, together with Salary Caps in Rugby League, County Cricket, French Rugby Union’s Top 14, and the Welsh Regions in rugby union, all demonstrate how European sport has recently grasped the importance of controlling costs and long-term financial sustainability.
As a collective, Premiership Rugby and its clubs led the way in England when they introduced their Salary Cap in 1999 in order to ensure the financial viability of all clubs and the Gallagher Premiership Rugby competition, to control inflationary pressures on clubs’ costs, and to provide a level playing field for clubs to ensure a competitive Gallagher Premiership Rugby competition.
These objectives are borne out in the financial success the league and a healthy turnover of teams at the top of the league with five different Gallagher Premiership Rugby Champions in the last six years.
The level of the Salary Cap and the operation and management of it is reviewed regularly to ensure it is fit for purpose. The Premiership Rugby Board, made up of the 12 Clubs, determines the Regulations and has a Salary Cap Manager, whose role is to monitor and investigate player recruitment and remuneration across the Clubs, to ensure the system is managed in a fair and reasonable manner.
The level of the Salary Cap is proportionate and aligned to the growth of the business and is linked directly to the annual net central distributions to the clubs from Premiership Rugby.
The current level of the Salary Cap for 2017-18 is £7m, plus two Excluded Players whose salaries sit outside the cap, enabling clubs to recruit and retain world class talent. Within the £7 million Salary Cap ceiling, clubs are encouraged to develop home grown talent by accessing up to £600,000 of Home Grown Player Credits. Also, they can provide an unlimited education (academic or vocational) fund to their players, and can replace long-term injured players without impacting on their Salary Cap ceiling.
Injury Dispensations up to a maximum of £400,000 per season continue to be available to each Club, a new England Senior EPS or International Player Credit of up to £80,000 per player has been introduced to cover for player absence during international periods and there is a new overrun tax on any Salary spend of up to 5% over the Base level (5% being £350,000 in 2017-18).
Matches in the Gallagher Premiership Rugby competition get more compelling and competitive every year and the Salary Cap is fundamental to the long-term success of this competition and the clubs who play in it, from both a financial and competitive perspective. This responsible financial management helps support investments made by shareholders, players and fans in building a bright future for the Gallagher Premiership Rugby competition and its clubs.
HOW DOES IT WORK?
It is all about the transfer of value from the Club to a Player during each salary cap year (1 July – 30 June). It is the combined “salaries” of all Players at the Club. There is no restriction upon an individual’s Salary but on the whole squad spend.
When looking at a Player for Salary Cap purposes we include a broad web of connections such as family members (e.g. spouse child, parents), the Player’s Agent, any company, trust or organisation, and so on.
When looking at a Club for Salary Cap purposes we include a broad web of connections such as any Director, officer or employee (excluding Players) of that Club; any family member/spouse/partner of any Director, officer or employee (excluding Players) of that Club; a shareholder; a sponsor; any company, trust, partnership, or other body, organisation, and so on.
WHAT GOES IN?
Amounts which are paid or payable (or in the case of a benefit in kind, provided or to be provided) directly or indirectly, onshore or offshore, by or on behalf of a Club or any Connected Party or Third Party of the Club, to or in respect of a Player or any Connected Party of the Player…..
Amounts that are Included
- Salary, wage, fee, remuneration etc.
- Bonus (match, win, year-end etc.)
- National insurance
- Loan (not paid back in full before end of SCY loan was made).
- Child support / maintenance /school fees
- Accommodation or holiday cost
- Pension (incl. annuities)
- Image Rights payments
- Payment in connection with promotional, media or endorsement work
- Payment for off-field activities for or on behalf of club
- Signing on fee, transfer payment, relocation allowance or payment linked to transfer
- Accommodation, holidays, cars, match tickets (other than 4 per match), clothing (other than training kit, official club blazers and other club wear), travel, membership fees, food and drink (other than at matches and training)
- Payment in kind a player would not have received were not for his involvement with a Club
- Redundancy/Compromise etc.
- Agent Fees plus VAT & NI
- Any 3rd Party & Connected Party (e.g. sponsor) payment unless demonstrated separate
Amounts that are Excluded
- International match fees, bonuses, etc.
- Legitimate and reasonable expenses
- Player’s personal private medical insurance including Rugby Care scheme
- Benefit Year (testimonial)
- Education fees (e.g. university tuition fees, joinery course fees etc.) for the player
- A season long Loan Player x 3 players
- A player who is Injured for the entire season
HOW IS IT MANAGED?
On-going monitoring and investigations
Throughout the year every Premiership Rugby Club is required to submit to the Salary Cap Manager within 28 days of signing full copies of all Contracts and arrangements for playing (employment) and non-playing (e.g. image rights) services. All documents relating to Loans and copies of any Contracts/written documents evidencing payments to Player Agents are provided. These submissions are reviewed on an on-going basis and the Salary Cap Manager has the ability to investigate any arrangement between a Player and a Club. Player interviews are carried out on a regular basis to support the management of the Salary Cap. There is also a formal whistle blowing policy.
In July each pre-season every Premiership Rugby Club will provide the Salary Cap Manager for the new Season. This information is presented to the Board of Premiership Rugby. In September each season every Premiership Rugby Club provides the Salary Cap Manager with Certification setting out their spend during the previous Salary Cap Year. Both of these documents are approved by a Club’s Board and signed off by the Chairman, Chief Executive and Finance Director. The independent auditors (PWC) (during October and November) audit each Club in accordance with the Salary Cap Regulations. The audit results are presented to the Board of Premiership Rugby and shared with each Club.