Salary Cap breach a Game Changer for 2019/2020 Premiership

Salary Cap breach a Game Changer for 2019/2020 Premiership
LONDON, ENGLAND - JUNE 01: Nigel Wray, Chairman of Saracens, celebrates with the trophy following the Gallagher Premiership Rugby Final between Exeter Chiefs and Saracens at Twickenham Stadium on June 01, 2019 in London, United Kingdom. (Photo by Dan Mullan/Getty Images)

A 35 point competition deduction and £5.3m fine is a ‘game-changer’ for the 2019/20 Premiership season. Primarily for the salary cap offenders Saracens, but as much for that one side’s competitors and for fans of the sport.

Premier Rugby Ltd (PRL) brought the full force of possible sanctions down on current Gallagher Premiership and European Professional Rugby Club champions Saracens, for breaching salary cap regulations over a three year period.

Saracens; Guilty as charged

The breach first came to light some nine months ago. A SportsMail investigation for the Daily Mail uncovered business ventures between Saracens owner, Nigel Wray, and England players Owen Farrell, Billy Vunipola, Mako Vunipola, Richard Wigglesworth and Maro Iotje.

PRL initially charged Saracens in June 2019. ANd now, an independent disciplinary panel has upheld those charges. Saracens failed to disclose payments to players and exceeded the ceiling for senior players in each of the seasons 2016/17, 2017/18 and 2018/19.

The level of sanctions imposed reflect the severity of the charges. PRL is clearly seeking to make a statement of deterrent for the future. The 35 point deduction, which is the maximum possible under the regulations, together with the financial fine of £5.3m (30% of Saracens turnover) represents a watershed moment for English rugby.

A PRL spokesperson said: “the salary cap is an important mechanism to ensure a level playing field for Premiership Clubs and maintain a competitive, growing and financially sustainable league”.

Saracens offer robust rebuttal

Saracens and its owner Nigel Wray issued a strongly-worded statement, condemning the Panel’s findings and confirming an intention to appeal. Saracens were “shocked and disappointed by these heavy-handed sanctions” and “steadfastly maintain that player co-investments does not constitute salary under the regulations”.

The championship-winning club believes “the Panel’s narrow interpretation of the regulations is detrimental to player welfare…. and is damaging development of elite rugby in the UK”.

Wray said “together we have created something incredibly special with the Saracens family….. it feels like the rug is being completely pulled out from under our feet”.

Salary cap breach fallout

Fellow Premiership clubs were quick to condemn Saracens for the transgression. Some, including Exeter Chiefs, feeling the sanctions didn’t go far enough and they should be relegated from the league.

Private equity group CVC Capital Partners, who are a 27 per cent stakeholder in PRL and the force behind commercial operations, will feel the fallout from the explosive development. Their plans were to secure new sponsorship and broadcast deals off the back of the England team’s World Cup success.

This situation provides a massive blow to those plans.

It is likely the decision will impact Saracens’ contracts with existing commercial partners. The most notable of these is with Allianz whose current contract runs to 2021. Contracts of this type often have so-called ‘embarrassment clauses’, where early termination in certain situations can arise.

In addition, it also emerged that rival teams were considering foregoing fixtures if Saracens pursed their appeal of the findings. That could be a game-changer, with the sentiment from competitors, as well as rival fans and media to contend with.

What action will follow the Panels decision?

Saracens have confirmed they will appeal the Panel findings and so sanctions will be suspended while that appeal is heard.

Bath vs Saracens
Mark McCall, Saracens’ Director of Rugby chats to Brendan Venter (l) prior to the match between Bath Rugby and Saracens at Recreation Ground on March 08, 2019 in Bath, United Kingdom. (Photo by Dan Mullan/Getty Images)

Further legal action is probable, whatever the outcome of the appeal process, given what is at stake. This could either be through the English court system or, more likely, at the Court of Arbitration for Sport.

Saracens’ vehement dismissal of the charges means the written reasons behind the Panel’s findings are eagerly awaited. Salary cap or even deception of accounts might well be described, which will make the case even more emotive.

One point to make, on players behalves is, that no individuals have [so far] been identified. So the reputation of the club has taken a hammering, but by no means, should players of the caliber of Owen Farrell, Maro Itoje, or former players be implicated. Meanwhile, the media and commentators are having a field day; at the champion team’s expense.

Transparency and effectiveness of regulations

A breach of the salary cap regulations is not an issue that has only ‘suddenly emerged’ to engulf the sport. Several breaches, notices of action taken, and more warnings have been issued before this major infringement and charges.

  • 2014 first saw potential breaches identified. But, lack of transparency in identifying clubs involved and nature of alleged breaches, saw PRL accused of a cover-up.

  • 2018 and 2019, saw both Wasps and Harlequins fined for ‘overruns’ of the cap level. PRL saw these as administrative issues rather than a breach of the regulations.

Given the previous accusations and with member clubs seeing a continued flouting of the regulations, PRL had to act. This led to enforcement of the harshest permissible terms because of the repeated transgressions.

2018 Laws of Rugby Update--LWOR Resident Referee Evaluation
A common example of an old book in a law library (Image credit Getty Images)

The integrity of competition, giving all stakeholders confidence in the product on the field, through to financial sustainability, are paramount to the future of the English competition. Regulations must be abided by – champions, or not.

The Last Word on Saracens salary cap breach

It is very encouraging to see a governing body prepared to use its regulations effectively and have proper and meaningful sanctions applied for the transgression of those regulations.

It provides all stakeholders involved a degree of comfort that the integrity of the competition is a paramount concern, that goes to the heart of the sport.

Financial pressures will continue to be at the forefront of the sport’s development, but by ensuring the sustainability of all involved should allow it to achieve the success demanded.

In closing, one has to think how this will affect those team’s set to face Saracens in competition. And certainly, how fans attitude to the side changes.

 

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