HOW DOES A DECREASE IN PREMIERSHIP SALARY CAPs AFFECT TEAM PERFORMANCE?

HOW DOES A DECREASE IN PREMIERSHIP RUGBY TEAMS SALARY CAP AFFECT THEIR PERFORMANCE?

Salary caps are used worldwide in many different sports, most noticeably in the NFL. The Premiership led the way in English sports introducing the salary cap in 1999, 4 years after the game had turned professional. The aims of the salary cap in the rugby premiership are to: • ensure the financial viability of all Clubs and of the Gallagher Premiership Rugby competition; • controlling inflationary pressures on Clubs’ costs; • providing a level playing field for Clubs; • ensuring a competitive Gallagher Premiership competition; • enabling Clubs to compete in European competitions.

The salary cap is reviewed every year, and due to COVID-19 having huge effects on clubs incomes, with losses in income due to the fact that games were played behind closed doors so the clubs got no income from ticket sales, and as a secondary result of no fans, no money was earned by the clubs through hospitality sales, such as food and drinks, and also no one visited club stores to buy their merchandise, therefore the salary cap was reduced from £6,400,000 to £5,000,000.

This reduction in the salary cap has meant clubs have £1,400,000 less to spend on their players. This could lead to clubs not being able to afford high value players, and losing them to other leagues such as the French league where their salary cap is much higher at £11.3 million. This therefore could potentially lead to a huge loss in performance for teams, as their overseas stars are leaving them to earn more money in other leagues, meaning that the premiership teams won't fulfil their goals of being competitive in Europe. Moreover, club tensions may increase, as if players do start to look abroad, teammates may not take well to this, leading to a drop in team morale, which will affect the club's performance negatively. However, there is still an anchor keeping the top England players in the league, as if they are playing in a different nations league, they are unable to play for England, for example George Kruis, who went and played in the Japanese league on a lucrative deal, and never played for England again.

Nevertheless, clubs opportunity cost on other areas is less significant, as potentially if they are spending less money on players salaries, they have more money to spend on more staff, better health support, and better facilities, leading to greater performance on the pitch. Furthermore, clubs now get the first £50,000 of a player's salary for free if that player is homegrown. This will mean that clubs will put less of an emphasis on finding players from abroad, and will focus more on developing their English talent. This also, for the England team is a huge benefit, as the talent coming through will be much better equipped and there will be a bigger pool of players to choose from.

Therefore, in the short term, a reduction in the salary cap will cause a drop in team’s performance, due to an initial loss of high quality players, however in the long run, clubs will have had more time to develop their academy players, and increase their club facilities and support which will increase their performances on and off the pitch for the good.