Premiership clubs agree to cut salary cap to £5m from 2021
Premiership rugby clubs have unanimously agreed to reduce the salary cap to £5m for the 2021-22 season, the Guardian understands. All 13 clubs agreed the move at a board meeting on Monday but with a view to returning the cap to its current level should revenues increase to appropriate levels in future seasons.
At present the cap is £7m which includes add-on credits of around £600,000. It will be reduced to £5m plus additional credits in a move that will spark fears a number of high-profile players – including England stars – will seek to follow George Kruis in securing lucrative deals abroad, which would rule them out of international contention.
The clubs were also expected to discuss doing away with the marquee system which allows for two players’ salaries to sit outside the cap after it was heavily criticised in the recent damning report written by Lord Myners, who deemed it, “inflationary, over-complex and unnecessary”. It is understood, however, that the clubs have failed to reach a consensus on removing either one or both of them for 2021-22. While the exact terminology of the reduction was still being finalised on Monday night, the clubs were united in agreeing to bring the cap down, but the move will not be implemented for next season with most contracts already agreed. It is believed the decision to make the reduction temporary, as well as a failure to agree upon removing the marquee scheme, was enough to convince clubs such as Bristol, who had been vocal in their opposition.
The Harlequins chief executive, Laurie Dalrymple, said: “If we lower it, we have to be cognisant of the fact that when we do get our sport operating commercially, we have to then raise it appropriately and fairly as well. So it’s not about just hitting it and reducing it. When the value of the broadcast rights hopefully increases, then it is only fair that is then metered back out into the system so that everyone gets their rewards.”
Despite the fact the reduction is likely to be temporary however, it is still expected to encourage clubs to press ahead with plans to make the blanket 25% wage cuts permanent, or at least until the cap reverts to its current level. The Guardian has learned that at least one club plans to do so despite opposition from the Rugby Players’ Association. That in turn is likely to lead to players seeking legal action by lodging claims of unlawful deduction of wages.
Even before the coronavirus pandemic there were moves to bring the salary cap down with clubs collectively losing £89m over the past two seasons and, with the Premiership on hold since March, some have been pushed to the brink of bankruptcy. Clubs have been able to put their players on the government’s furlough scheme during lockdown but HMRC said last week that by the time players return to contact training they are no longer eligible in a move that would cost the clubs around £200,000 each. Leicester are already forecasting losses in excess of £5m for this financial year.
With the Premiership still planning to introduce a Covid-19 testing programme when contact training begins, at a cost of around £20,000 a week per club, the financial outlook is particularly bleak. It also partly explains why clubs such as Harlequins, who returned to training on Monday, intend to stay at stage one – which allows only for individual conditioning – for four weeks before moving to stage two in preparation for the 15 August restart.
“I’m not saying we’ll hold the training process back to the detriment of the group,” added Dalrymple. “But when we turn the dial up and go into more core impact training and coach-led sessions where we have tackling and contact, it will have a bearing for us. Our financial situation is not one with a huge amount of wriggle room.”