Aviva Premiership Salary Cap Increase

[j'nuh]

ESPN are reporting that the Premiership is going to increase it's salary cap by £500k above inflation: read here.

Since the funding increase is being driven by increased revenue from the new TV deal, I don't think that this will put any added pressure on the weaker teams in the league. Since every team in the Premiership is having their funding increased via the deal, you'd think that even the weaker teams will be able to offer their best players improved deals, and stave off the top teams. (At least, as much as they are currently doing.)

However, since there will now be a scramble for the teams at the salary cap to fill up this extra space ahead of next year, this is going to put tremendous pressure on the Irish, Scottish, Italians and in particular, the Welsh. I make there being six teams at the salary cap in England (Tigers, Saints, Sarries, Glos, Quins, Bath), so there will be an extra £3m of spending power on top of the spending power created by squad movements in any given year.

Meanwhile, the WRU are asking the Welsh regions to back an agreement which means no real increase in funding over 5 years, and no promise of filling the currently missing Heineken Cup fixtures. The Premiership salary cap increase may well just be the killer blow to Welsh regional rugby as a competitive force in Europe.

What are everyone's thoughts?

(Note to mods: decided to put this thread in General Rugby Union because of the repercussions it might have elsewhere.)

 

[dullonien]

Meanwhile, the WRU are asking the Welsh regions to back an agreement which means no real increase in funding over 5 years, and no promise of filling the currently missing Heineken Cup fixtures. The Premiership salary cap increase may well just be the killer blow to Welsh regional rugby as a competitive force in Europe.

Well we don't yet know the details of the newest offer from the WRU. The Regions haven't dismissed it straight away so it must be better than their last one.

This does put Welsh rugby in a difficult place though. The regions couldn't compete previously, but with an increase in funds both in England and France next season they will need probably close to £1m extra each to even come close to competing, and the WRU probably can't afford that.

 

[Amiga500]

However, since there will now be a scramble for the teams at the salary cap to fill up this extra space ahead of next year, this is going to put tremendous pressure on the Irish, Scottish, Italians and in particular, the Welsh.

Meanwhile, the WRU are asking the Welsh regions to back an agreement which means no real increase in funding over 5 years, and no promise of filling the currently missing Heineken Cup fixtures. The Premiership salary cap increase may well just be the killer blow to Welsh regional rugby as a competitive force in Europe.

The regions couldn't compete previously, but with an increase in funds both in England and France next season they will need probably close to £1m extra each to even come close to competing, and the WRU probably can't afford that.

Ultimately that is it - there is a differential in purchasing power and the regions cannot match up. Even if they joined an Anglo-Welsh league*, their finances still wouldn't match up due to crowd and sponsors.

The question of whether the WRU can afford to make the difference is multi-faceted. Can they afford to at all? Can they afford to without cutting the grass-roots? Can they afford to without being dangerously reliant on continuous high incomes from the international game?




*and it was made crystal clear in the debate on BBC Wales this evening that an Anglo-Welsh league will not be happening.

 

[Feicarsinn]

ESPN are reporting that the Premiership is going to increase it's salary cap by £500k above inflation: read here.

Since the funding increase is being driven by increased revenue from the new TV deal, I don't think that this will put any added pressure on the weaker teams in the league. Since every team in the Premiership is having their funding increased via the deal, you'd think that even the weaker teams will be able to offer their best players improved deals, and stave off the top teams. (At least, as much as they are currently doing.)

However, since there will now be a scramble for the teams at the salary cap to fill up this extra space ahead of next year, this is going to put tremendous pressure on the Irish, Scottish, Italians and in particular, the Welsh. I make there being six teams at the salary cap in England (Tigers, Saints, Sarries, Glos, Quins, Bath), so there will be an extra £3m of spending power on top of the spending power created by squad movements in any given year.

Meanwhile, the WRU are asking the Welsh regions to back an agreement which means no real increase in funding over 5 years, and no promise of filling the currently missing Heineken Cup fixtures. The Premiership salary cap increase may well just be the killer blow to Welsh regional rugby as a competitive force in Europe.

What are everyone's thoughts?

(Note to mods: decided to put this thread in General Rugby Union because of the repercussions it might have elsewhere.)

Interesting that you should say it's above inflation. In terms of the general economy it is, but in terms of the rugby economy it's still well below. Remember that the French have just doubled their TV revenue for next season. Now I don't know exactly how much of their budgets is made up by Top 14 TV money, but if we assume it's substantial then the French clubs are going to be going into the player market with an increased spending power far outweighing that provided to the English clubs by the higher salary cap.

It's going to be interesting to see how the Premiership resists the player drain. You've lumped the Celtic nations on one side and the French and English on the other, but in reality the picture is a bit more complex. The Scots haven't been able to keep hold of their best players for a long time now, same goes for the Italians. The Welsh are in a bit of a mess and seem to be slipping further down the road of having all of their best players play abroad. Things are okay in Ireland at the moment, but how long this situation is going to persist is another matter. The English clubs simply do not have the financial power to compete with their French counterparts. While the allure of international rugby will keep many at home, others will no doubt depart, as we've seen in the past with the like of Steffon Armitage and now with cases like Toby Flood. Moreover, the Premiership's ability to attract big name foreign players is going to become severely curtailed.

In many ways the situation in England is closer to what's happening in the Celtic nation than to the French clubs (certainly a lot closer than they'd like to admit anyway.) None of us can compete with the financial clout of the Top 14 and I don't think this salary cap increase is going to go a long way to stopping that. What the salary cap increase will no doubt do in any case is lead to a larger gap between the strong clubs and the weak within the Premiership.

 

[Amiga500]

Yeap, I'd broadly agree with the above... there are now 3 or 4 levels of domestic club/region budget in Europe...

1. French
2. English/Irish
3. Welsh
4. Scots/Italians

With the Welsh moving nearer to the Scots/Italians than they were to the Irish/English. Given the disparity between the new Canal+ deal, and the actual figures the PRL will get from the BT deal (which, due to no RCC as it stands currently, won't approach the headline £150 million figure) - it could be argued that the gulf between 1 and 2 is now wider than that between 2 and 3!


Long term, its not a good thing for any of the home nations - but whats the solution?

 

[Peat]

Not quite sure why the Welsh situation and the WRU were brought up here.

I'm not sure too much will change. A lot of the clubs mentioned as being near the cap have young players who will require very substantial wage increases next contract. All of them have top players they'll wish to keep from going to France. Combine the two and throw in more attempts to bring in marquee names and that could easily cover the whole amount.

 

[profitius]

J'nuh, I disagree when you say the increase won't put any more pressure on the weaker teams in the league. If they are not able to reach the salary cap now then thenew salary cap will just increase the wage gap between rich and poor.