The Premiership Salary Cap – How Does it Work and Does it Work?

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Jonathon Sexton
Dublin , Ireland - 15 December 2018; Jonathan Sexton of Leinster during the Heineken Champions Cup Pool 1 Round 4 match between Leinster and Bath at the Aviva Stadium in Dublin. (Photo By Seb Daly/Sportsfile via Getty Images)

After only one English side managed to qualify for the last 8 of the Champions Cup calls for changes to the salary cap were inevitable. Claims that the salary cap has put the English clubs at a disadvantage are already rife. Here at Last Word on Rugby we explain exactly how the cap works to dispel any myths. We will also assess whether it fulfills its purpose and whether it should be changed.

The Basics – The Salary Cap and Penalties

The Premiership salary cap currently sits at £6,400,000. On top of this the ceiling for academy players is at £100,000. Each club is also entitled to two marque players who sit outside the salary cap so their wages do not contribute to the cap. Clubs are also entitled to £400,000 to be used as cover for injured players.

Should any club breach the salary cap they are subject to penalties. For every £1 a club overspends they must pay £3 back as a fine. On top of this if they breach the cap by £350,000 or more, they are subject to a points deduction depending on how severe the breach is.

Home-Grown Players and Internationals

All the above sounds quite simple. However, it does get somewhat more complex. Firstly, each club receives £50,000 up to a limit of £600,000 for each Home-Grown player at their club. With a Home-Grown player being defined as someone that has been at the club since before they were 18 and for more than 2 years. This shows the benefit of having a successful academy system, as well as hanging onto your academy products.

Furthermore, international players also receive remuneration. Each Elite Player Squad (EPS) member pockets the club a fixed credit of £40,000. On top of this the clubs receive £5,000 for every Premiership and European match they miss as a result of international duty. International players and those not a member of the EPS receive £10,000 per game they miss for their clubs.

This shows that having internationals in your side does not put such a strain on the wage book given how long they are away from the club. Given that an EPS member can recoup close to £100,000 for their club they can be a solid investment.

Here you can begin to see how clubs can have significantly different wage budgets. Saracens for example will receive close to the maximum £600,000 for Home-Grown players as well as a hefty chunk for international players. Conversely Bristol have very few Home-Grown players and also minimal internationals. Therefore they will a long way below their rivals in terms of their ceiling for the salary cap.

Does it Work?

Most would not question the principle behind the salary cap. No one wants to see the game go the same way as football and other sports. The cap also incentivises investment and focus on the academy, which can only be a good thing. However, can English clubs compete with central contracts in Ireland as well as big spending in France?

Currently the TOP 14 has a salary cap which sits at €11.3million. This makes the cap 43% higher than England’s. This is a big jump up but thus far this season England have competed well against French opponents. Also the excess spending in France has had a negative effect on the national team.

Wages in Ireland do not appear to be much different to those in England, especially at the top end. Maro Itoje is reportedly receiving around the £800,000-£1million mark. Conor Murray also reportedly receives a similar amount, as does half-back partner Johnny Sexton.

The advantages of central contracting clearly lie in other areas. Namely increased control of when and where a player plays. Pro 14 clubs do tend to run larger squads so overall their wage bill is likely to be higher. However, at the top end, the salary cap does not prevent Premiership clubs competing with their Pro 14 counterparts. This leads us to believe that giving the Premiership clubs more money is not the answer for better results on the field.

Concluding Thoughts

This has been a very brief overview of how the salary cap works and an assessment of its effectiveness. Individual salaries are obviously confidential, so it is hard to gain an accurate picture of wage structures. However, on balance it seems Premiership clubs are not at a significant disadvantage due to the salary cap. Perhaps what is more detrimental is that players are spread across 12 clubs. In comparison to Ireland which only has four provinces and Scotland that only has two.

Overall the salary cap has the right intentions at its core and a massive increase or abandonment of it would be a mistake. Calls to prevent the average wage rising above a certain level have some value. This could allows clubs to run larger squads without splashing out on extortionate contracts. However, the salary cap is certainly not the disaster they some have made it out to be. It may not be perfect, but this is not the time to totally rip it up.

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