Premiership Rugby clubs have reportedly reacted to the financial crisis caused by the coronavirus pandemic stoppage of rugby in England by unanimously agreeing to cut their tournament’s salary cap by £1.4million for the 2021/22 season. There will also be a reduction in the number of marquee players sitting outside the cap in 2022/23.
The current salary cap for the top-flight league in England is £7m per club (£6.4m plus £600,000 academy credits), with the salaries of two marquee players sitting outside that cap.
However, it is now being reported that a meeting of clubs has resulted in action being taken to help everyone better live within their means during the financial crisis. The reduction in the cap won’t be permanent, with flexibility allowed for it to be restored to current levels once the game economically rejuvenates itself in the years ahead.
The decision to only bring in the reduction (a £5m ceiling plus £600,000 academy credits) for the 2021/22 season and not next season was due to most contracts already being signed for the 2020/21 campaign after clubs made preparations with a £7m ceiling.
It is also reported that alterations have been made to the marquee player dispensation. Rather than allow for two star players to sit outside the cap, this will be cut to one from season 2022/23 onwards. These reductions will spark fears of an exodus from the English top-flight, with high earners potentially tempted to follow the likes of George Kruis and Freddie Burns and take up deals in places like Japan.
The pinch is being felt at Welford Road https://t.co/g5cfrcpMUJ
— RugbyPass (@RugbyPass) June 4, 2020
Gallagher Premiership clubs convinced their squads to take a 25 per cent pay cut when the pandemic first struck in March and there are now predictions that this reduction will also be made permanent. Speaking on BT Sport last month, Lawrence Dallaglio said: “The reality of the Covid crisis is that the salary cap is going to come down, there is no doubt about that. The game, the sport of rugby, particularly at the highest level, has been living way beyond its means.
“What we have seen since the introduction of the Covid crisis is a 25 per cent reduction in salaries which all the clubs have agreed. Some clubs, I won’t name them, were pushing for a 50 per cent reduction in these salaries. The new normal for players will be that their salaries won’t be going back up again. Those reductions are here to stay for the foreseeable future. The reality is the game is starting to recognise that it has to live within its means.”
“None of those clubs have made a profit in the last few years (except Exeter). Just to give you some idea, five years ago about five players in the Premiership were earning a salary of £300,000 or more. In the five years since then, it’s somewhere around about 100 players are earning that sort of level.”
Lord Myners’ recent salary cap report, which included 52 recommendations that have been adopted by the Premiership clubs, highlighted how the business of rugby just doesn’t make ends meet. The report outlined that Companies House recorded a staggering £88.7million collective loss among the 13 stakeholder clubs in the years ending 2017 and 2018. Only Exeter turned a profit, whereas others such as Wasps lost in excess of £14m.
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