Three, possibly four, Premiership clubs are in genuine danger of going under
Trapped in our homes with no other outlet, rugby social media is in overdrive. Every which way you look on your smartphone, web pages are sopping wet with nostalgia, what-ifs and fantasy XVs. If you want to know how much a fan base loves its sport, take it away from them.
And yet, despite the strength of the outpouring, the frailty of the sport cannot be disguised. Rugby is ailing; it has been for quite some time. And without the rosy-cheeked complexion of fixtures, the sport’s pallid and listless condition has become increasingly evident.
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In England, the situation is critical and complex. We knew, regretfully, that this pandemic would claim lives. But could it also be about to kill off a whole sport? The balance is precarious. Clubs in the Gallagher Premiership have all cut staff and player salaries. The money from TV is not currently forthcoming and the clubs had to act promptly.
The CVC money was quickly eaten up by clubs spending in the region of a million pounds a month. The process has been understood by the players. The RPA, the union in place to support the players, has rightfully suggested they seek legal advice, but most players recognise this is about their wider existence rather than them missing out. The players know why cuts need to be made.
What makes things trickier for the clubs is that BT Sport’s new TV deal was being negotiated. When Covid struck, Premiership Rugby and BT were thrashing out an agreement for 202 which sensibly has now been shelved pending developments with the pandemic.
Unfortunately, it means there is nothing concrete about the season after next. BT Sport have been incredibly supportive of Premiership Rugby during this period but they are understandably holding back on the future. That makes planning long term a lot more tricky.
Let’s assume a broadcast deal is secured on similar terms to their most recent contract – does that solve things for the Premiership Rugby clubs? In short, no. However, a potential answer has ironically been presented to English rugby’s top tier by this global pandemic. Cutting salaries will allow clubs to operate in the short term, but the whole sport would be a great deal better off if the clubs could drop salaries forever.
I asked Ed Slater a question on the Gloucester Rugby Podcast this week. Slater, the ex-Leicester lock now in situ down at Kingsholm, has recently completed an MSc in sports directorship during which he wrote a dissertation on the financial issues facing rugby.
His findings are a closely guarded secret and it’s not difficult to work out why: his livelihood and that of his fellow professionals would be under the microscope. The question I asked Slater on The Podding Shed was relatively simple: has the Covid situation fast forwarded the collision course rugby’s finances was on?
"It’s a lot more difficult for those lower paid players to stick their heads above the parapet because they might be judged for doing so."https://t.co/w5m6CkKwYw
— RugbyPass (@RugbyPass) March 27, 2020
His answer was understandably fudged for the medium he was speaking on, yet an affirmative came in USA Rugby’s own most recent press release as they announced they were filing for Chapter 11 bankruptcy. “Existing financial challenges have been accelerated by the impact of the Covid-19 pandemic,” they declared. Chapter 11 gives them a chance to reorganise themselves and their debt. I wonder how many Premiership Clubs would like to do that, given the chance?
Over the last ten years, players’ salaries have steadily increased. Naturally, as the years have gone by and details of deals have been released, the next player has desired more. Good agents are a knowledgeable lot and they are aware of the going rate for every type of player, just wanting to get a smidgen more for their man. Hence things have constantly crept upwards, every club trying to keep up with the other, each trying to make their own players feel a little more special.
Of course, with hindsight, they should have resisted. Some did try and put things in place. Harlequins did a very good job of retaining the top tier of their players by making sure that no one in that bracket was paid more than another. The top tier players were allegedly paid the same salary, knew they were equal and that no one was earning more than them.
Quins were able to hold onto a huge amount of talent in that way, but even this seemingly solid nut was eventually cracked. The London club have lost perhaps their greatest asset as Kyle Sinckler, the England and British and Irish Lion prop, will join Bristol in summer. It doesn’t take much to guess that he must have been offered more than that top tier.
The fact that this approach is not unilateral is its undoing. But how can you create that unity amongst clubs competing against each other? If one club has a wealthy backer happy to meet that overspend, then there is little stopping the outbidding. But does this do our sport any good? It seems strange to talk about altruism amongst those hunting personal triumph, but the thrill of the chase is killing the horse. As we have already discussed, we love the horse more than anything else.
“I hope we all get some external help because I would hate… it would be disastrous for the game if we lost clubs" @CoventryRugby boss @njperformanceuk fears the worst – writes @heagneyl ???https://t.co/W0CU4euLRu
— RugbyPass (@RugbyPass) March 29, 2020
The other issue muddying the water is marquee signings. This was brought in to ease the pressure on the salary cap, allowing each club two players whose (normally large) salaries would sit outside the cap. But the unrecognised effect of these inflated salaries is how they skew the range on which all other players sit.
Let’s stay with Bristol to explain the difficulty. It is pretty well known that one of their marquee players, Charles Piutau, signed a £1million-a-year deal. This number then becomes something of a gauge for all other personnel in that squad.
Let’s look at some of their younger, very promising players: Callum Sheedy, Harry Randall, Piers O’Conor, all playing a large part in the Bears’ campaign. Are they each worth only 20 per cen of Piutau?
It doesn’t sound much but even if they agreed that their contribution to the squad is worth only 1/5th of their beloved full-back, then they should be asking for at least £200,000-a-year next time they come to negotiate their contract (£80,000 more than the average Premiership wage). Another question for clubs: is one Piutau worth five O’Conors? Marquee signings cause more problems than they solve.
The other unusual thing that has been happening in rugby is scheduled pay increases. Even for non-playing staff, multi-year contracts are written as such (as an example): £40,000 for the first year, £45,000 for the second, £50,000 for the third. There is no reason for that increase. It is not based on hitting targets or success in the role. But this is how it has always been in rugby.
Commercially, this is crazy. No other business entity would work like that. Many players’ contracts are the same: £140,000 becomes £150,000 which then becomes £160,000. £20,000 spent for no reason. The commercial world is not adverse to bonus payments but that must be connected to financial or company success, and there is next to none financial success in rugby.
Some rugby club bosses want a lowering of the salary cap. This would be a potential solution but it comes with serious complications. What about those already on deals and those hoping for their final step up? Many players will have their lives set up on the promise of certain amounts coming in.
The dichotomy is between an individual demanding what they think they are due versus the club staying afloat. The way society has acted recently doesn’t make me hopeful that selfishness will be avoided. And in a way, why should current players foot the bill? The more questions you attempt to answer, the more queries are put forward.
How serious is this? My understanding from conversations with people within the game is that there are three, possibly four, Premiership Rugby clubs in genuine danger of going out of business in the next few months. Maybe that is what needs to happen. Maybe the best developments will only be made if everyone folds and has to start again. All I know is, nothing is off the table in these unprecedented and deadly times.
WATCH: Billy Vunipola chats to Jim Hamilton in the latest episode of The Lockdown, the new RugbyPass series
Comments on RugbyPass
You know he can land a winning conversion after the full time siren is up. (Even if it takes two attempts.)
5 Go to commentsA very insightful article from Jake. I would love to know how South African’s feel about their move to Europe. Do you prefer playing in Europe or want to go back to Super Rugby?
2 Go to commentspure fire
1 Go to commentsA very well thought out summary of all the relevant complications…agree with your ”refer the Cricket Test versus 20/20 comparison”. More also definitely doesn't necessarily mean better!
2 Go to commentsMust be something when you are only 19 y.o and both NZ and France want you. Btw he wasn’t the only new caledonian in french U20 as Robin Couly also lived in Noumea until 17. Hope he’s successful wherever he chooses to play.
7 Go to comments“Several key players in the Stade Rochelais squad are in their thirties” South Africans are going to hate the implications of that comment!
5 Go to commentsI know Leinster did a job on La Roche but shortly after HT Leinster were 30-13 ahead of them and at a similar time Toulouse were trailing Exeter. At 60 mins Leinster were 27 ahead but after 67 mins Toulouse were only 19 ahead before Exeter collapsed. That’s heavier scoring by Leinster against the Champions. I think people are looking at Toulouses total a little too much. I also think Northhampton are in with a real chance, albeit I’d put Leinster as favourites. If Leinster make the final I expect them to win by more than ten and with control.
5 Go to commentsHey Nick, your match analysis is decent but the top and tail not so much, a bit more random. For a start there’s a seismic difference in regenerating any club side over a test team. EJ pretty much had to urinate with the appendage he’d been given at test level whereas club success is impacted hugely by the budget. Look no further than Boudjellal’s Toulon project for a perfect example. The set ups at La Rochelle and Leinster are like chalk and cheese and you are correct that Leinster are ahead. Leinster are not just slightly ahead though, they are light years ahead on their plans, with the next gen champions cup team already blooded, seasoned and developing at speed from their time manning the fort in the URC while the cream play CC and tests. They have engineered a strong talent conveyor belt into their system, supported by private money funnelled into a couple of Leinster private schools. The really smart move from Leinster and the IRFU however is maximising the Irish Revenue tax breaks (tax relief on the best 10 years earnings refunded at retirement) to help keep all of their stars in Ireland and happy, while simultaneously funding marquee players consistently. And of course Barrett is the latest example. But in no way is he a “replacement for Henshaw”, he’s only there for one season!!! As for Rob Baxter, the best advice you can give him is to start lobbying Parliament and HMRC for a similar state subsidy, but don’t hold your breath… One thing Cullen has been very smart with is his coaching team. Very quickly he realised his need to supplement his skills, there was talk of him exiting after his first couple of years but he was extremely shrewd bringing in Lancaster and now Nienaber. That has worked superbly and added a layer that really has made a tangible difference. Apart from that you were bang on the money… 😉😂
5 Go to commentsNot sure exactly what went wrong for him at Glasgow but it’s pretty clear he ain’t Franco’s cup of tea. Suspect he would have been better served heading out of Scotland around the same time as Finn, Hoggy and Jonny!
1 Go to commentsBulls disrespected the Northampton supporters and the competition. Decide quickly, fully in or out.
25 Go to commentsI wonder if Parling was ever on England’s radar as a coach? Obviously Borthwick is a great lineout coach, but I do worry he might be taking on too much as both head coach and forwards coach.
1 Go to commentsJason Jenkins has one cap. When Etzebeth was his age he had over 80 caps. Experience matters. He will never amount to what Etzebeth has because he hasn’t been developed as an international player.
2 Go to commentsSays much about the player picking this gig over the easier and bigger rewards offered to him in Japan. Also says a lot about the state sanctioned tax benefits the Irish Revenue offers pro rugby players, with their ten highest earning years subject to an additional 40% tax relief and paid as a lump sum, in cash, at retirement. Certainly helps Leinster line up the financial ducks in a row to fund marquee signings like this!!! No other union anywhere in world rugby benefits from this kind of lucrative financial sponsorship from their government…
5 Go to commentsTrue Jordie could earn a lot more in Japan. But by choosing Leinster he’ll be playing with 1 of the best clubs in the world and can win a champions cup and URC…..
6 Go to commentsThanks for that Marshy, noticed you didn't say who is gonna win it. We know who ain't gonna win it - your Crusaders outfit. They've gone from having arguably the best Super Rugby first five ever, to having a clutch of rookies. Hurricanes all the way!
1 Go to commentsGeez you really have to question the NRLs ability to produce players of quality. Its pathetic. Dont the 25mil in Aus produce enough quality womens players. Sad.
1 Go to commentsBulls fan here, and agree 100% with the conclusion (and little else) of this article. SA sides should absolutely f-off from the champs cup until we get fair scheduling, equal support for travel arrangements and home semis. You know, like all the european teams get.
25 Go to commentsI’m yet to see why Grace would be an ABs contender. He’s pedestrian and lacks the dominance required of a top flight 8.
11 Go to commentsGee my Highlanders were terrible. They have gone backwards since the start of the season. The trouble began when we left Millar behind to prep as the 10 against the Brumbies and he was disconnected from the team that came back from Aussie. We rested Patchell for that game and we blew an avalanche of ball in good attacking positions in the 1st half. Against the Rebels we seem to of gone into a pod system with forwards hanging off from the breakdown leaving Fakatava to secure our ball!
80 Go to commentsPot Kettle, the English and French teams have done it for years.
25 Go to comments