Agents stand-off could trigger an exodus of players
Could the Premiership be facing an exodus of high-profile international players to rival leagues in France and Japan, or the United Rugby Championship? Such a doomsday scenario could soon become a reality, according to leading agents in England.
One agent said an indication of the immediate of impact was Duane Vermeulen’s move to Ulster, at a time when at least five Premiership clubs were looking for a top-quality ball-carrying No 8 like the Springbok World Cup winner.
The problem? A deadlock over the payment of fees to agents for new contracts and renewals of existing deals that has led to the representatives of players in the Premiership refusing to recommend that their clients agree to any new business. The agents claim that what started out as a rather dry tax ruling by HMRC on payment of agents’ fees in football is now threatening to spill over into the retention and movement of players, as well as the signing of top overseas performers to the Premiership.
The ruling by HMRC has put under the spotlight the practice of clubs paying 50 per cent of the agents’ fees in any transactions. Previously, that portion of the payment would not be included in the “compensation” package and would be exempt from tax.
The agents claim that Premiership clubs have used that interpretation to exclude any payments to agents, in a move to sideline their influence from future deals in an attempt to reduce the estimated £400,000 annual cost of fees paid that are included in the salary cap.
The clubs’ motivation in the longer term, according to the agents, is to exclude them from future negotiations at a time when there are strong rumours that the salary cap reductions brought in as a response to the financial impact of the pandemic are to be extended for at least another two years.
With the agents effectively downing tools in response, the warnings are that some leading players will be moved to leagues where fees are paid for agents’ services, most notably Japan.
“We have said we are not happy to recommend players sign new deals or renewals until we know the final position and how it will affect them financially,” one leading agent said.
“The result is that the Premiership will see some of its best players leave to go to other leagues, and clubs are going to miss out on top-flight overseas signings.
“Rugby is so obsessed with cost-saving, it is actually getting to the point where it’s at the detriment of the league. It used to be all about investment and bringing the best players to the league in order to get a bigger TV deal, but with all these cost savings, it is now about making cuts and hoping the values will stay the same.
“The agents provide a service to the club as well as the player, and the concern is that the clubs will convince young players that it is in their best interests not to use an agent, which could result in them not receiving the true value of their new contract.”
Another agent said that the move would likely lead to more “underhand dealings” rather than removing any suggested conflict of interest. “Currently everything is above board, over time it will become under board,” he said. “Agents will look to move players to leagues where they do get fees.”
The Rugby Players Association,
which represents more than 700 professionals, has also indicated its concerns about the proposal. In private correspondence, seen by The Daily Telegraph, it claims the proposal “does not have the best interest of RPA members, due to the adverse effects it will have”. The RPA highlights the claim that the Premiership’s proposal instantly reverses “an accepted practice” that has been in place for more than 20 years.
“Our members wish for it to be made clear that the proposal will have a significant and negative impact upon them, adding considerable financial pressures on them on top of the recent pay cuts for most Premiership clubs and the lowering of the salary cap.”
Phil Winstanley, rugby director of the Premiership, has been tasked with leading negotiations for the clubs and insists the motivation behind the proposal is
not to cut costs but to remove any conflict of interest in future deals and put the player at the centre of the transaction.
“There’s no attempt for us to undermine either the agent or to impact on the player,” Winstanley said. “The reality is that the player has to be responsible for the payment and therefore has to be at the centre of the arrangement.
“We’ve come from an environment where there’s been a general acceptance that an agent can act on behalf of a club for a player. The reality is, that’s never
been the case, so we’ve got a real conflict of interest.
“What we’re trying to achieve here is to put the player at the centre of the arrangement, and there’s no doubt the tax legislation and guidance is that the player is going to be responsible for all the taxes paid on any agents’ fees.
“It’s entirely appropriate that the player is put at the centre, and is responsible for negotiating the level of the fee. What that allows us to do is avoid any risks in future of any tax investigations or tax issues that impact on the club. To label this as one issue, which will determine that certain players do or don’t come into this market, would be a little tenuous.”
The issue is to go to mediation next week and, at a time when the Premiership has enjoyed a highoctane start to the season, it is an issue that requires a swift resolution to prevent it escalating.
‘Rugby is so obsessed with cost-saving, it is at the point of being to the detriment of the league’