Is Premiership Rugby's salary cap preventing it's own Growth?

In the lead up to the 6 nations, World rugby was rocked by the news that current European champions Saracens would be relegated to the second division of English Rugby.

Such extraordinary measures of punishment were the result of breaches to the Gallagher Premiership’s salary cap.

After Saracens were unable to prove that they could adhere to the salary cap during this current season they accepted their fate.

A rule has been broken, a punishment has been decided and then accepted. All would suggest that the Salary cap is fit for purpose.

But what is that purpose? And what impact does the salary cap in this country have on the game of Rugby?

Why is the cap in place?

Premiership Rugby outline 5 objectives of the regulations, they are as follows:

Ensuring the financial viability of all Clubs and of the Gallagher Premiership competition (Making sure a club & the league make enough money to sustain themselves)

Controlling inflationary pressures on Clubs' costs (Manage the rise of Player salaries and agent fees)

Providing a level playing field for Clubs

Ensuring a competitive Gallagher Premiership competition

Enabling Clubs to compete in European Competitions

Do Salary capped leagues work?

More often than not salary caps are a resounding success. It of course depends on the league in which it’s being implemented.

There are certain conditions which need to be met, for a salary cap to have a positive impact.

Transparency is one key aspect to maintaining a salary cap. In the NFL there is almost complete transparency over what each player earns against their team’s cap.

Websites such as https://overthecap.com/, publish player contracts and remaining cap space for each team in the NFL. Supporters can then see how much cap space their team has available to sign free agents.

This transparency surrounding player salaries makes it much harder for any foul play to occur as it is closely followed by the media and fans alike.

The lack of transparency over player earnings has to be partly to blame for why Saracens thought they would be able to get around the cap regulations put in place in the Gallagher premiership.

Regulating talent coming into the league. This is one of the major issues with these regulations being in place in Premiership rugby.

Most capped leagues operate a draft system to filter in talent entering the league. Whether this talent is coming from overseas (the IPL) or through the education system (NFL, NBA, MLS, MLB, NHL).

Draft systems offer a fair way of distributing the talent throughout the league. The current academy system in Rugby does not offer this same level playing field, in terms of access to new talent.

One club's catchment area might produce more elite talent than others. In many areas Rugby is a much more popular sport than others.

In the North-East & North-West it might be argued that Rugby Union plays second fiddle to Rugby league.

Putting clubs like Newcastle & Sale at a disadvantage as less "Rugby talent" will reach their academies.

As well as this disparity, a club might produce an excess of first team quality players in one season and in turn might be penalised for this, as a result of the salary cap.

The club would be forced to cough up and offer all these players contracts, counting heavily against their current salary cap and the cap in the future when the time for contract renewals comes around (even with the allowances in place for home-grown players).

Or the other option is to allow the players to go to a rival club for a small compensatory fee.

Rival leagues play a big part in the success of salary caps. In the NFL, NBA & NHL there isn't another league in the world of the same stature within the sport. This means that these leagues get access to the world's top players.

But just looking at the MLS, admittedly a league in its infancy in comparison to football leagues around the world. The league is seen as a shop window for young players from North & South America to get a move over to Europe. For example, Newcastle’s Miguel Almiron who arrived from MLS franchise Atlanta United last summer.

But there is competition for talent in Rugby. We saw Jonny Wilkinson move from Newcastle Falcons to Toulon in 2009, most likely because of an absence of a salary cap in that league. Allowing him to drastically increase his earnings.

We saw similar moves by top players from the Southern Hemisphere (Dan Carter) and other European countries (Jonny Sexton)

Does the Salary cap limit the growth of the game?

Rugby has seen success in expanding the game as a global product. The world sevens circuit is a prime example. Selling out stadiums across the world with new countries joining the circuit each year.

Combining this with the success of the Rugby World Cup in Japan and the slow emergence of competitive rugby nations such as Japan, Argentina, Italy, Georgia and the USA to name a few. The game is rapidly growing globally.

However, this seems to be almost exclusively the international side of the game. A domestic league is yet to grab this global interest by the scruff of the neck.

Much like how premier league football has captured global interest and is now reaping the rewards financially.

This opportunity exists in world of Rugby to this day. Relaxing wage restrictions and making the Premiership seem a more attractive destination for global superstars might lead to the league following in the footsteps of it’s footballing compatriot.

It seems that the salary cap is in place in order to safeguard the future for Rugby club owners.

However, in order for the league to grow and establish dominance globally among domestic leagues. It is essential that the emphasis is put on Rugby as a product. As opposed to giving club owners an easy ride.

Where do you stand on Salary capped leagues? Can the Gallagher Premiership elevate itself to the level of the premier league in it's current form?