The Salary Cap

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I think a salary cap, set at the right level is not a problem. I would argue that the premiership cap is now set too low. A free for all would be very dangerous. Allowing more that the very occasional insovency would poison the commercial environment for all rugby clubs in England.

The 'dreadful' small number of rich clubs dominating the soccer plumpyship are largely built on sand in that they have debts higher than Northumberland Police's overtime bill which are mostly serviced by obscenely rich, sugar-daddies, each of whom could earn the epithet Joshua should they pull the plug for any whim or reason.

That may not be important to any but their creditors if that potential is realised if they are nought but businesses, but just as to us Tigers is far more, so it is with their all-weather supporters.

Were the salary cap to be abolished it is probable the sugar-daddy sponsored rugby clubs would surge to the forefront of trophy lifters as new, perhaps limitless investment chased success, distorting the plumpyship as soccer's is and removing their clubs further distant from their fans, to teeter high upon some impossible pinnacle. Tigers may be clambering that way gradually but we still have hope, futile though it may be, that we'll build on sterner stuff and still figure in their plans.

There are two sides to this argument, but someone on here once compared the salary cap to a safety fence along a cliff-top - they were not far wrong.

It is no measure of health to be well-adjusted to a profoundly sick society [not original]. We cannot solve problems by using the same kind of thinking we used when we created them [AE]

Whilst Tigers may be wholly predictably cash-strapped currently the salary cap should nonetheless be increased sufficiently to allow those clubs who can afford it to compete in Europe.

It should remain, however, tight enough to allow no more than that. Is there a formula which might allow clubs which have high, realistic expectations of Europe to maintain players principally to that end but within a plumpyship salary cap ... but not regions/franchises?

'Lions led by donkeys' .. Lest we forget

The salary cap doesn't save any one from insolvency, sensible business practise does that.

No club (even us) is too big to fail in rugby, so if people want to push the boundaries we should let them, provided people are willing to take their medicine if it all goes wrong.

SK88. I don't agree. The salary cap saves some, who might otherwise prove incompetent or over-excitable, to escape.

It does also encourage the developement of home grown players (on the cheap) so to speak rather than buying everything in as some clubs have done and continue to do. That part is one of the valuable reasons to have a lower number on the cap, I think the cap is two pronged really, to stop one or two clubs totally dominating as per the roundball game and to encourage yoof development, I am not sure having a salary cap will ever really work in keeping teams from going bust, only if as mentioned above you set the cap level for the lowest attendance/revenue clubs so they don't exceed themselves but that then also hurts the prem and player developement. If the cap is too low, players earning power is limited here, clubs are forced to let good players go to balance the books, you may lose some more home grown experienced players from the prem offshore etc (how many went to France last year?). How many clubs are in the black currently anyway?

The salary cap prevents launderette owners and loadsa money jolly boys throwing obscene millions at struggling clubs with the lure of 'instant' success and no small 'pay-day' in exchange for a different name on the lease for the ground and the license for the club house fruit machine

When they're bored and take their rug home as the club ceases to exist, it's the fans who lose everything

'Lions led by donkeys' .. Lest we forget

Only 2 clubs have been mentioned as being the major ones to suffer, yet no mention is made of West Hartlepool who at one time were in the Premiership, there there is Orrell who fell even further, or what about the number of clubs in the Championship Bristol, Rotherham, Nottingham, Moseley, Coventry, Bees and there is no mention of Wakefield who are no more?

The talk of English clubs performing poor in Europe is one of the reasons to increase the cap but looking back at past winners of the HEC over the last 10 years to 2000, we see 5 English winners, 3 French Winners and 3 Irish Winners and for all the money that is in French Rugby they have only managed to win twice in 6 years, the Welsh for all their free spending have won nothing and have not had a finalist since Cardiff in the inaugural season for all the money that has been spent at Cardiff on players such as Jonah Lomu, Iestyn Harris etc they only thing they have to show is the Amlin Cup is that money well spent?.

Ireland have been successful recently as they have most of the Irish National team spread over 2 provinces and a number of their players are centrally contracted. The only fair and equitable way would be if the RFU were to pay 50% of players salary that is in the EPS squad so for e.g. if a player was paid £100k p.a and England picked up 50% of the players salary it would allow the club to use the remaining 50% to use to sign a back up replacement player.

That's an argument often made LH but one that would require PRL to end the 'smoothing' of EPS payments. Now which clubs are going to give up their 'share'?

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Thanks Ian. I am in favour of a cap but reckon there should be some recognition of English Internationals and HEC qualification while the league is played through the international windows.

That way the clubs providing England players aren't penalised and enduring the rigours of the HEC are rewarded.

Northampton, Bath, Leicester and Wasps have all won the HC, I can't think of a fifth. Since 2000 it is only Northampton (2000), Leicester (2001&2002) and Wasps (2004&2007).

Which as you will notice is in fact two in the last eight years. Compared to 5 in 7 years (including a year we weren't in the compotition) from 98 to 2004.

This is the longest time England has ever gone without a Heinekin Cup win, and I think the salary cap has to bear the brunt of the blame.

Agreed SK88. The real question is though - is that a reasonable price to pay for a regulatory regime intended to save clubs from folly and incompetence of their own making?

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Quote:

SK 88
Northampton, Bath, Leicester and Wasps have all won the HC, I can't think of a fifth. Since 2000 it is only Northampton (2000), Leicester (2001&2002) and Wasps (2004&2007).
Which as you will notice is in fact two in the last eight years. Compared to 5 in 7 years (including a year we weren't in the compotition) from 98 to 2004.

This is the longest time England has ever gone without a Heinekin Cup win, and I think the salary cap has to bear the brunt of the blame.

So how do you account for the French with no Salary cap who have won it only 4 times in 13 years and only 5 times in total yet England with a cap has won it 5 times

In the last 10 years there have been 3 French Winnes Tolouse 2003/2005 & 2010 and 5 English winners Saints in 2000 your good selves in 01/02 and Wasps in 04 & 07 in a 5 year period 05-10 there was only 2 French Winners yet with all that money surely they should have won it more? All though have won 3times recently 06 08 & 09 it took them 9 years to get a team in the final.


The salary cap has little to do with English success in Europe its usually down to a favourable draw in the pool stages and home advantage in the knock out games.

Its the same the Champions League for all the millions Chelsea and Real Madrid have its been a while since the later one and none for the former

Quote:

Rich W
Agreed SK88. The real question is though - is that a reasonable price to pay for a regulatory regime intended to save clubs from folly and incompetence of their own making?

No it is not a reasonable price to pay.

Despite all the efforts to help the smaller, shall we say poorer clubs very little if any progress has been made.

We are being held back by clubs who not developed and built then selves up over the last 10 years. there are a number who cannot attract 10,000 supporters on a regular basis.

The salary cap if we should have one should have been extended each year by a reasonable amount, the current cap should be 6 - 7 million IHMO.

The incentive is for clubs to develop their business.

Couldn't have put it better myself John.

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I don't see the point of even having a salary cap if it would be £6or7 million as there isn't a club in England that could afford to pay up to that level at the moment.

Having a cap of £6 million would be the same as having no cap.

So the French clubs only started winning after our salary cap started being significantly lower than their salaries?

I would say that points towards the salary noose slaughtering english ambition before it can even get off the ground.

Though it cannot be other than conjecture, had the salary cap increased exponentially there is a real possibility we would now spend near to it having invested in expensive players to achieve success, and Tigers would be even more of a 'business', even less 'our club' because of the influence of 'new' investors.
There would be a greater divide in the league between haves and have nots and many results would be very predictable, especially where the weakened teams were sent to targeted away games at the richer clubs - league games could be like a conveyor belt, crowds smaller and less passionate.
It is unlikely we would have such good facilities at either Welford Road or Oadby and the Cat stand would not have been built without yet more significant,'non-rugby' investment.
We might have few clubs of a similar player standard to play against, leaving only the pay-off and European semis and finals of any real interest, and there would still be no guarantee that we would be more successful as the ethos which sets us apart would likely be lost wheras any club can attract investment.
... On the other hand, it could be bliss

'Lions led by donkeys' .. Lest we forget

Quote:

So the French clubs only started winning after our salary cap started being significantly lower than their salaries?

The French have won twice in 5 years, its only in the last few years that the English cap has been at its present level, English clubs were winning the HEC when the cap was only £2million+ how do you account for this, for all the money the French clubs have I do not see a French Winner every year surely with no cap they should win the HEC every year year on year why do they not for all their money they have

Regards the football analogy (and the obscene debts saddling some big clubs), the only free-market situation occurs in the Prem, which is just 20 clubs.

The rest are supposed to adhere to a wage bill in line with their income. Also, the punishments for financial failings are huge, and have lead to the serious demise of clubs like Southampton, Luton and (now) Portsmouth.

The reason that clubs go bust is because they are run by idiots and I'm not sure how much legislation we need to deal with that.

It's convenient (lazy) to make this about us vs the French. But the fact is we can't compete financially withe the Munster-Leinster axis or with the WRU chequebook backed Hairsprays.

And since an English team last won the HEC the wiiners have been French and Irish - money talks. Sad maybe, but true.

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I don't see how "investing in expensive players" would have led to us having more money to be able to continue affording such a policy.

The way that GP funds are distributed by PRL (and the way they will continue to be distributed) does not reward success. It rewards existence.

Unlike in the football Premiership, there is very little direct financial reward for winning trophies. Most of the money is distributed pretty evenly across all clubs. The winners of the GP receive little more than the relegated club for example.

Therefore I fail to see how "investing in expensive players" would generate the significant revenue increase required to make it work.

We are at or near stadium capacity and, while more hostility income could obviously provide a revenue increase, I don't think it would be able to offer significant profit increase to fund an additional £2m pa to spend on player salaries.

I guess more marquee players combined with more success might generate more sponsorship income. Whether it would be sufficuent is debateable.

But the point is that the lowest common denominator, dumbing down impact of the cap is a disincentive to grow and to succeed.

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I'd say that the relatively flat distribution of PRL's funds to all GP clubs & the failure to fairly reward success on the field is far more of a disincentive to grow & to succeed.



In my opinion, the salary cap curbs excessive spending but the PRL revenue distribution methods are what disincentivise clubs from aiming for success.



Until you fairly reward success on the field, many clubs won't focus on that as their key driver. This is not the fault of the salary cap.

It is if there is nothing to gain from seeking to grow revenues because you can't spend them. They are two components of the same problem.

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Quote:

tjs10
The way that GP funds are distributed by PRL (and the way they will continue to be distributed) does not reward success. It rewards existence.
Unlike in the football Premiership, there is very little direct financial reward for winning trophies. Most of the money is distributed pretty evenly across all clubs. The winners of the GP receive little more than the relegated club for example.

We are at or near stadium capacity and, while more hostility income could obviously provide a revenue increase, I don't think it would be able to offer significant profit increase to fund an additiional £2m pa to spend on player salaries.

"does not reward success. It rewards existence." this I believe is a significant problem, success must be rewarded and will be the driver for other clubs to develop.

As for being near stadium capacity I think the club did well to increase the attendance from 17,500 as they did but this as expected was at a price and no doubt further offers will be made this year to help boost attendance.

The Cat stand offers the opportunity to substantially increase our conference and banqueting income, now we have had this facility for a year to showcase to potential users it is reasonable to expect this income to increase.

Professional Rugby in England will only prosper if Su7ccess on the field is rewarded, plus clubs must have plans to develop their business.

The weak will fail and no doubt be replaced.

I guess the ideal is that people who run professional sports clubs should regard themselves as custodians looking after a treasured piece of local history and culture.

They should not be allowed to run a local club as a "toy" that they can play with, put at risk, and discard when they're bored.

This should be policed by making sure they produce audited accounts that show due dilligence, and not by the clumsy mechanism of a salary cap.

Of course, this would require some old furt at the GP to put down their G&T for long enough to have a butchers at 12 sets of annual accounts.

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Rich W
It's convenient (lazy) to make this about us vs the French. But the fact is we can't compete financially withe the Munster-Leinster axis or with the WRU chequebook backed Hairsprays.
And since an English team last won the HEC the wiiners have been French and Irish - money talks. Sad maybe, but true.

I forget how many HEC wins the Ospreys have, for all the money they are throwing around.

As for Munster Leinster they are succesful again not for money but because 90% of the Irish team in spread over these 2 Proviencies and the IRFU centrally contracts these players and pays some of their salary. Which leaves the French and their money which has won a grand total of 4 HEC in 10 years 1 less than English Clubs.


With all that money why are the French clubs not winning it every year, why is before this years win they had 1 win 4 years, its not as if between 2005 & 2009 they had a club in the final, its not as if they had 2 clubs in the semi final, its not as if all French teams were winning the pool stages.


It seems one or two equate £££££ and no cap with clubs winning yet when looked at in more detail the recent succesful nation has been Ireland who have their team under lock and key with the IRFU and central contracts with the millions the Ospreys are spending they not even making it to the dance Toulouse and their 20million euros have 2 wins in 5 years they have spent 100 million Euros to achive this or if you like on average 50million Euros per HEC win has it been worth it.

LH - you're as prone to cherry picking bits of people's arguments as Tim.

The point, I repeat, is that because of the central contracting of Irish players along with IRFU subsidy of some overseas imports the effective wage bill of those two provinces massively exceeds ours. The O's were included because of their spending power and its obvious impact on the market. But if you feel that misinterpretting other people's posts strengthens your argument - fine. In fact I'll make it easy for you - you're worried that Leeds will get left behind so you think it best to hold everyone else back - fine - not an unreasonable position. But at least be honest.

I'm bored with arguing with closed minds to be frank.

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Quote:

Rich W
LH - you're as prone to cherry picking bits of people's arguments as Tim.
The point, I repeat, is that because of the central contracting of Irish players along with IRFU subsidy of some overseas imports the effective wage bill of those two provinces massively exceeds ours. The O's were included because of their spending power and its obvious impact on the market. But if you feel that misinterpretting other people's posts strengthens your argument - fine. In fact I'll make it easy for you - you're worried that Leeds will get left behind so you think it best to hold everyone else back - fine - not an unreasonable position. But at least be honest.

I'm bored with arguing with closed minds to be frank.

Who has a closed mind Your whole mantra is English clubs are suffering due to not having the same salary cap as other Euro nations English clubs are failing in Europe when the facts in black and white do not state this Toulouse 2 HEC wins in 5 years for a return of 20million Euros per season, the Irish Provinces are centrally contracted if you wish English teams to be on the same level I am sure the RFU would be happy to accommodate this.

Show me where English Clubs are being left behind?? I can show you 0 Wins for Welsh Clubs in the HEC for all the money the Ospreys have spent they have got exactly what? an EDF Trophy, for all the money Cardiff has won the Amlin Cup, the French for the millions they have have what 3 HEC Wins in 10 years is that really a great return. Ireland are successful because 90% of the Irish National team plays for 2 Irish Provinces, if 90% of the English team played for 2 Premiership clubs I am sure there would be numerous English wins in the HEC.

you are upset because not everybody will agree with you, you have not been able to provide proof that because of an imposed strict salary cap English clubs have struggled to win the HEC.

I am not worried that Leeds will get left behind I think we will be fine, we have the tie up with Leeds Rhinos which would probably allow us to draw on their income. What I worry about is that if the salary cap is removed then it will create a league where only the same 2-3 teams will win every year and it would turn into a league much like Scottish Premier league where only 2 teams seem to win the league. Also just because Leicester are best supported club in the Premiership does not mean that going forward with no cap you will be the one still to win it all, I would say Bath and Saracens where there is serious money behind them will move into pole position as they will have the backing to offer more money even pay transfer fees for players under contract, there may even come another club from the lower leagues that have wealthy backer that buy their way to success. Much like Liverpool who won all before them in the old football league when the Premiership came along they became a team that won the league every year to a team that became an also ran and has not won a Championship in 19 years.

Be careful what you wish for as it might not turn out to be the way you want and once you have abolished the cap, it may never return.

If you are worried by the league being dominated by 2-3 teams you are too late.
[en.wikipedia.org]

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It just shows really, that even we can't agree about the cap, so what negotiations are like between the clubs we can only guess, but torterous might be a good starting point.I stand by my longstanding point that if we had never had the cap,over half the clubs would have gone bust.

So what?

They would have been replaced by others who would have kept their house in order.

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SK 88
So what?
They would have been replaced by others who would have kept their house in order.

Which others would they be, perhaps you could list clubs who may make a go of it, points lost for clus that have some financial issues.

If there was no salary cap then it would be quite possible for a stupid chairman to overrule a weak FD, under the noses of a neglectful board, and ruin a club by spending money it didn't have.

But why should this happen? I don't get it.

If I hired a hugely expensive bunch of individuals on the off chance that it "might be all right in the long run", then I could bankrupt my company to the immense annoyance of the major shareholder, leave a trail of debts with companies that were relying on my cash, and would be barred from running another business for gawd knows how long.

So I wouldn't dream of doing it.

Why is that people who run rugby and football clubs can't be allowed to operate within the same boundaries of common sense?

I think the salary cap is an admission by the custodians of our clubs that they can't be trusted to run their businesses with due dilligence.

Spot on Honest Tone.

You let them go bust, rthee are others who would like to join the club.

May be 12 clubs are to much for professional rugby to support at this stage.

The Soccer clubs never seem to let a club go bust these days, but as in any business the failure of one is an opportunity for a new business to start up with new ideas, this is how the world goes round, interfere at your peril.

Depends what you mean by "bust" football doesn't have a tradition of relegating clubs for financial reasons and before w.nker warnock couldn't face up to the fact Leicester were better than Sheffield United there was no tradition of points deduction either. So when a club overstretched they either went completly (which happend about twice in 90 years) or just took their medicine and lost players and got relegated untill they stabilised.

In rugby there is a massive punishment for overstretching (deductions and relegations) but little prospect of the huge reward you get if it works.

Loosehead wants a list of clubs, if Sale, Worcester and Leeds are the benchmark (no history of being a successful club or support before they made it) I see no reason why Coventry, Nottingham, Bristol, Moseley, Bedford, Cambridge, Cornish Pirates, London Welsh and London Scottish wouldn't be viable had they had the chance of a millionaire backer.

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johns
Spot on Honest Tone.
You let them go bust, rthee are others who would like to join the club.

May be 12 clubs are to much for professional rugby to support at this stage.

The Soccer clubs never seem to let a club go bust these days, but as in any business the failure of one is an opportunity for a new business to start up with new ideas, this is how the world goes round, interfere at your peril.

Encouraging clubs to go bust is hardly in the best interests of the sport though is it johns?

It is also not in the best interests of the players, the coaches or even the office staff involved in each club either!

Didn't the Prem salary cap reduce a couple of seasons ago and then stand still? Whilst players' values (salaries) have been on the increase, the buying power of the Prem clubs has effectively been reducing. Hence the reduction in squad sizes for most Prem clubs over the last 2 or 3 seasons.

Whilst I'm not 100% convinced that the celery cap is to blame for last season's poor showing by English clubs in the HC (although another poor showing in the coming season's competition will do so), I do firmly believe that it is stiffling the development of the English game and the development of young English players.

I thought it did the opposite Yorkie.

It increased from around £2.2m + side pots to a simple $4m cap a few years ago.

There were calls from some clubs for the £4m figure to be reduced, shortly after it was introduced but it never happened as the majority of PRL clubs voted for it to remain as the same level. Most recently, proposals for an increase were voted down in the same manner.




Thhe contrary argument could potentially be put forward though Yorkie. That a (real terms) reduced salary cap has in fact encouraged the development of Englis talent as clubs are forced to look inwards for the next generation rather then being able to bring in expensive foreign imports. Yes, the imports do help to develop the rising talent but they also take away a place that could otherwise be filled by one of the up & coming stars of the English development programme.


Swings & roundabouts.

There is always a contrary argument (opinion) but I stick by mine. I believe that there is less cash around for the young and upcoming/about to make it players and so they are let go. Haven't got the time or inclination to do the detailed research, but I believe less players out of the academies are kept for the first team squads and those that are, seem to be shipped on after just one year in which they either don't appear or play an odd game.

36 was shipped out by Tigers remember cos there was no room in the celery cap whereas, once upon a time, I believe he'd have been kept at Tigers so there was no risk of a home grown talent who's a slow developer ending up elsewhere.

36 is a good example actually. He was shipped out to a club where he was able to get regular game time & develop faster than he would have done being stuck in the depths at Tigers.


He developed so well that Tigers brought him back on board and in my opinion he is far closer to the first team now than he would have been had he stayed at WR the whole time.

Surely that is HELPING to develop the young English players of the future?

Tigers are just more enlightened than other clubs!!

Other players, Dan Cole for example, have been kept at the club and shipped out to places like Bedford and Nottingham to develop whilst remaining a Tigers player. What's to say this wouldn't have happened with 36 too?

But these are just 2 players. What about all the others who are shipped on, at Tigers and elsewhere. Comparing clubs' squads for next season with last season has been very revealing in supporting my last post re young players not lasting long in their first team squad.

Here's a thought. If he "developed" today, do you think that great Tigers' servant/clubman Brett Deacon would have been retained? I don't! Others like Will Johnson and even Sam Vesty spring to mind too.

Quote:

johns
Spot on Honest Tone.
You let them go bust, rthee are others who would like to join the club.

May be 12 clubs are to much for professional rugby to support at this stage.

The Soccer clubs never seem to let a club go bust these days, but as in any business the failure of one is an opportunity for a new business to start up with new ideas, this is how the world goes round, interfere at your peril.

so tell me how Chester FC are doing these days, IIRC Bradford Park Avenue, Aldershot and others were penalised

Not having watched Brett as an academy prospect I couldn't say for certtain how much promise he showed at that age Yorkie but yes, I do expect that he would have been retained if the club felt he was worth retaining.


When Brett joined the academy (1998) the game had already gone professional and clubs (including Tigers) were already midful of their spending. I can't remember what the salary cap was in 2000 (when Brett was reaching the end of his time in the academy) but my guess is that it was far lower, even in real terms, than it is today & therefore the thought processes that went into deciding whether or not to retain players like him were similar to the thought processes today.


Therefore yes, I expect he would have been retained today had he been developing now rather than 10 years ago.

I believe the first cap was £1.8 million but that is just plucked from memory so might be very wrong indeed.

Brett was very highly rated as a academy prospect, partly due to Louis being the first properly local player to come through for a long time, and he played for England U-21s and captained Leicestershire youth teams.

That whole youth team was both very good and very highly rated Hamilton, Vesty, Ellis, Holford, Smith, Hipkiss, Golding were all in the same youth team and Lamont (the one that's 28 obviously) was the same age and from Melton but never got picked up by Tigers.

One other effect of the salary cap is that there is no transfer market as such.

Occasionally a club will pay a release fee to a player's old side if that player is in mid-contract, but the cap ensures that Rugby Union in England will never see the sort of silly money that is brandished for transfers in football.

I think in the early days of the cap players that had come through the academy up to the age of 22 I think were not included in the cap. Seem to remember we had one or two players who had become internationals but not included in the cap because of their age.



Edited 1 time(s). Last edit at 2010:07:23:07:18:07 by johns.