Three changes the Premiership needs to make for clubs to compete and why

In the wake of Wasps’ 18-16 loss to Bath, a result which sees them sitting winless at the bottom of Pool 1 with a visit from Leinster still to come, the club’s Director of Rugby Dai Young was outspoken on the salary cap.

Young made the point that whilst Leinster are able to replace internationals with internationals when players are injured, Gallagher Premiership clubs struggle to do likewise, due to having to stay under the £7m salary cap the competition enforces.

He went on to make the point that Leinster can field a second team in the Guinness PRO14 and still record wins, whilst English clubs cannot afford to do likewise, due to the threat of relegation.

It’s certainly a fair comment this season, where the relegation battle has been unusually wide open, with as many as eight or nine teams at one point or another having been considered to be in it. That said, it is not an excuse that can be paraded out in too many previous seasons, where relegation has often been a two or three-horse race, with those two or three sides usually in the Challenge Cup rather than the Heineken Champions Cup anyway.

Perhaps the most significant reason that Leinster are able to replace internationals with internationals is because they keep developing internationals. They signed Scott Fardy and he has been an impressive performer for them, but the bulk of their Irish internationals have been nurtured and developed by the province themselves. One of the most basic concepts of recruitment and player retention in rugby is that it is generally cheaper to extend a contract of a player you have developed yourself than it is to lure a player of similar quality away from another side. That ability to retain players at a ‘hometown discount’ is lessened the lower down the table you go, but certainly rings true for clubs doing reasonably well and with a clear plan for progression in place.

The story of Wasps’ recent seasons has been one of consistent, heavy recruitment each campaign, large turnovers in playing personnel and a noticeable lack of players emerging from the club’s once-productive academy. This method obviously puts a premium on the salary expectations of the players at the club and there have been talented players produced at Wasps in recent seasons, but with an apparent disconnect between the senior side and the junior pathway, very few have made the step up.

Given that Wasps’ debt grew to £55.8m for the fiscal year ending June 2018, with pre-tax losses of £9.7m, which is, worryingly, over double the loss the club posted the year before. Income actually dropped for the club, too, with their revenues falling by £200,000.

With the CVC investment set to soon arrive in the Premiership, which will deliver sizeable injections of cash for each of the 13 member clubs, this is a dangerous time to talk about increasing the salary cap.

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If an increased salary cap is Pandora’s Box, then the CVC investment is the key, and once that box is unlocked, there is no closing it again.

Salary expectations have risen sharply over the last five or so years, driven predominately by the market for players in France, England and Japan, and whilst those expectations will be kept largely in check by a steady salary cap, despite the investment, an increase to that cap is going to take an already borderline unsustainable sport into some very dangerous territory.

Whilst Wasps do not necessarily endear themselves to sympathy given the way they have constructed a squad over the last number of years, there is a constant battle being fought with French clubs, who enjoy a less restrictive salary cap – although no marquee players – and other nations who benefit from central contracting, and you can understand the frustration of some Premiership directors of rugby.

There are perhaps then a number of ways of creatively providing clubs with more flexibility within the salary cap, without directly raising it and inviting the squad-wide monetary demands that will inevitably come.

A soft and a hard cap

As stands, there is just one salary cap in the Premiership and that is the hard £7m cap that clubs cannot break, save for a small taxed overrun, lest they face repercussions from the competition. Another way of going about it would be to turn that hard cap into a soft cap, with a new hard cap set at £7.5m.

Teams would then be allowed to go beyond the soft cap of £7m, but only in order to re-sign players who have been at the club since they were 18 and came through the club’s junior academy. It would allow a club to maintain a larger squad whilst also putting a priority on player development of the club’s own talent, as that additional £500k – or whatever the figure would be set at – would only be available to homegrown products.

If the club is above the soft cap of £7m, they cannot recruit externally until they drop back down below it. Using that additional cap space beyond the soft cap would be a risk and it would require good squad management, a productive academy to provide fresh waves of affordable talent and a pathway that allows those players to be produced and developed. For clubs who think they are ready to make an assault on European rugby’s grandest prize, this would help ensure they have the requisite squad depth to do so.

Removal of agent fees, image rights and similar from the cap

Currently, all agent fees and image rights are included in the salary cap. They are not astronomic fees but even working on a conservative basis – a 5% agent fee on a full cap of £7m – that amounts to £350,000, which would be enough to add three or four good quality players to a team that has a genuine chance of competing in Europe or for the Premiership title. Another way of looking at it is that it would pay the salaries of just over 11 senior academy players at a Premiership club, and that is based purely on a smaller agent fee for a player re-signing with a club, rather than the steeper percentage for new signings, which could well bring the figure up to around the £500,000 mark.

Coupled with image rights, these fees can begin to add up and take up a significant amount of space within the cap. If they were to be removed and made separate to the cap, it would not be a step towards making the sport more financially sustainable, but it would allow directors of rugby a little more breathing room in assembling, recruiting and retaining their squads. Crucially, it should not have a major effect on increasing salary expectations across the board in the same way a blanket increase to the cap would.

Embrace central contracting

An unpopular one in England, certainly, but if you want to emulate the Irish provinces and their success at European level, then perhaps a level of control needs to be conceded to the RFU. The provinces aren’t just financially supported by the IRFU, their players are well-managed to ensure they are at their peak for international and major domestic and European matches. If the top 40 players in England were contracted by the RFU, you lose control of when you can play them, but there is no doubt they will face less minutes across the season and be in better condition for critical matches.

It’s not a move that is likely to happen anytime soon, but if, as Young suggests, clubs need to stack their squads with internationals to compete, this is the only way that is financially sustainable as stands. If you’re going to have to go out and recruit those internationals, as would be the case with Wasps in this example, where only two of their 16 current internationals came through their own junior academy, then the costs are going to be even higher than those at Leinster, where the vast majority came through the club’s own pathway.

Ultimately, Saracens have shown what can be achieved by a productive academy, well-established player pathway and a progressive attitude towards player welfare and squad rotation, winning multiple domestic and European titles in recent years. Exeter Chiefs have replicated that domestically, albeit without the success in Europe to date.

There is no quick fix. Wasps or any other Premiership club can’t go out and sign a few more internationals and expect to compete. The journeys that Saracens and Exeter have been on have taken a long time, but ultimately have borne fruit.

English rugby doesn’t have a salary cap problem, but if there is a clamour for change, at least let it be measured and thoughtful, rather than bullish in nature, with long-term effects more damaging than the short-term highs.

Watch: The Rugby Pod discuss players wanting to be paid more.