Friday, 12 April 2013

The Salary Cap and the Future of Super League

British Rugby League at the elite level is facing a number of challenges at the moment. Several clubs seem to be struggling financially, aggregate crowds are beginning to dwindle and there seems to be some consensus that the standard of entertainment delivered by the Super League competition isn’t quite at the level it was four or five years ago. Add to this the continuing growth of English Rugby Union and the injection of astronomical funds into the Australian NRL competition, and it seems clear that Super League has some serious thinking to do.

I am not convinced, however, that the severity of the situation has been recognised by enough people in the game. To get a sense of perspective, let’s look at the salary caps of the Super League and NRL competitions. The Super League currently operates a £1.65m cap on salary payments to any club’s top tier of 25 players. This figure has remained the same for approaching a decade, and as such has reduced fairly significantly in real terms after inflation is taken into account. The NRL, by contrast, has seen its salary cap steadily rise since 2006. Last season their cap was at $4.4m (just over £3m). Thanks to an enormous broadcasting deal worth around $1bn, that figure has been hiked again; the ‘Collective Bargaining Agreement’ between the players’ association and the governing body has resulted in an immediate jump in the salary cap to $5.85m (just over £4m – well over double the Super League figure), and a timetable of annual increases culminating in a figure of $7m (£4.8m) in 2017. By that time a minimum salary for NRL squad members of $60,000 (£41,000) is expected to be in force.

The most noticeable effect of the NRL’s newfound riches to date has been the decline in quality of overseas imports attracted by our big clubs. The days when the pound was strong and players like Jason Smith, Trent Barrett and Shaun Berrigan would finish off their careers with a lucrative stint in the Super League are gone. More importantly, though, the flow of talent has changed direction. We have recently lost the Burgess brothers and James Graham to the NRL, and will by all accounts soon lose Tom Briscoe, Gareth Hock and Lee Mossop. It also seems inevitable that Sam Tomkins will go either to the NRL or Rugby Union within a year or two. This in itself isn’t ideal, but the reality is that it is the tip of the iceberg; if the Super League salary cap remains where it is, then by 2017 NRL clubs will be able to outbid their British counterparts for their very best players by rummaging down the side of their sofa cushions. When players like Jonny Lomax, Josh Charnley, Liam Farrell, Ryan Hall, Kallum Watkins, Stevie Ward, Ben Currie, Stephan Ratchford and Richie Myler next come up for contract renewal the likelihood is that they will be subject to offers from the NRL which our clubs cannot hope to compete with. And that is not to mention the generation of young players yet to make their name in the British game.

British Rugby League is all too familiar with having a rich competitor. English Rugby Union has had vastly superior spending power for quite some time now. But, while the odd young talent has been lost to the other code – Kyle Eastmond, Chris Ashton and Joel Tomkins spring to mind – the damage has always been limited by the fact that Rugby League is played predominantly by people who love Rugby League. An offer from a Rugby Union club may be financially attractive and may offer the potential of playing on a world stage, but it still means going to play a game which many League players feel indifferent towards. There is no such security against the threat posed by the NRL. Super League’s top players will sooner or later be offered the chance to play the game they love in a sunny climate and get rich and famous in the process. Surely only a few will turn that chance down.

The Super League talent pool is already diluted too thinly. A steady siphoning off of our top players and our most promising youngsters will leave us with a genuinely sub-standard competition. If the game is to avoid this happening, or at least minimise the damage, it needs to act immediately.

Equality or Excellence?
If the Super League is to improve or maintain its current standard it needs to adapt its philosophy to the current climate. For a long time, and probably as a result of the 1989-1995 period of one-club domination (wonderful for Wigan, dreary for everybody else), the RFL has focused on manufacturing a ‘level playing field’ in the sport. This has generally involved restricting the game collectively to a pace with which the weakest clubs can just about keep up. The flat-rate salary cap is the most obvious example of this mindset.

The equalising aim that the salary cap represents is a noble one, but how effective it has been is debatable. While no single club has run away with things, only four clubs have won the title since 1996 (1989 if you include pre-Super League years), and nobody in their right mind would suggest that Castleford, Widnes, Hull KR, Wakefield, London, Salford or Bradford have even the remotest chance of winning the title, even with a preposterous eight-team playoff system. A serious problem with the cap is that, in attempting to find a figure that works for everyone, the RFL seem to have arrived at one that works for nobody. The bigger clubs are held back by it but the smaller clubs continue to cripple themselves in trying to reach it. £1.65m is a modest amount to Leeds, who recently announced a turnover of over £10m, but it is too much for the backers of Hull KR, who have announced that they are to pull out of the club at the end of the season, and was certainly too much for Salford and Bradford until recently.

So how can the game respond to the external threat posed by Rugby Union and the NRL given this set of circumstances? In my view, it needs to give up on, or at least relax, the drive towards maintaining equality between clubs. That ambition was sustainable when the game wasn’t so dangerously exposed, but the current circumstances demand a different approach. It seems to me that a radical overhaul of the salary cap is urgently required. We need to give some of the wealthy individuals that have recently been introduced to the game the power to invest more of their money in the on-field product. Clubs that can afford to spend more should be given more freedom to do so. It also needs to be ensured that clubs only spend what they can afford to (something which the current cap does not do). With this in mind, I propose the following amendments to the salary cap.

A New Salary Cap
My proposed salary cap would:

  • Have a flat limit of £2m.

  • Reintroduce the link between a club’s turnover and the amount it can spend on salary. A club can only spend the overall maximum of £2m if this figure amounts to less than half of the turnover stated in the club’s most recently published accounts. If a club’s most recently published turnover is less than £4m, then the maximum that club can spend is 50% of that turnover figure.

  •  Allow benefactors to directly fund player salaries that cannot fit under a club’s salary cap limit. For example, if Salford have a turnover of £2m, they can only spend up to £1m. However, if Marwan Koukash wants to invest up to the flat limit of £2m he is allowed to do so, on the proviso that the legal responsibility for that investment is with him and not the club (in other words, in these situations the benefactor directly pays the player to play for the club).

  •  Introduce an additional ‘Star Player Allowance’ of £500,000. This allowance can be spent on a maximum of two players, but would be subject to the same restrictions as the standard £2m cap (i.e. it can only be spent if spending it does not take the total salary spend beyond 50% of club turnover, or if the spending is underwritten by a benefactor or group of benefactors).

A salary cap run along these lines would incentivise good off-field practice. It would stop clubs from spending money that they can’t afford to spend and it would allow clubs with spending power to make competitive offers to the best players in the game. The introduction of a clause allowing a benefactor to underwrite player salaries would mean that club owners who wish to invest large sums of money in players’ salaries could do so, but at their own risk rather than at that of the club. The ‘Star Player Allowance’ would help to ensure that the increased spending power of clubs wouldn’t simply lead to inflated wages being paid to the same set of players.

These measures wouldn’t mean an end to top players leaving the game, but they would allow Super League clubs to be competitive in the market for players. Ideally it would be combined with a reduced number of teams in the top division and the reintroduction of promotion and relegation; ultimately this may lead to some clubs dropping behind, but that is not to say that other ambitious clubs cannot take their place. If the game wants to continue to be competitive, it needs to let the strongest clubs take the lead.

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