A new report, published by Sportsmail, has flagged a potential breach of the sport’s salary cap by reigning Gallagher Premiership champions, Saracens.
The report follows a four-month investigation and could place the club under scrutiny for the potential breaches.
What is the Salary Cap?
Under the Premiership Rugby rules, a salary cap is enforced in order to control inflationary pressures on clubs’ costs and to provide a level playing field for clubs to ensure a competitive competition. A similar system of capping player salaries is in force in Rugby League. The level of the salary cap is reviewed regularly to ensure it is fit for purpose and is proportionate to the growth of the sport. The current “senior ceiling” of the salary cap is £7million for each club, which has risen considerably over the last few years, the figure having being £4.76m for the 2014-15 season.
The salary cap works by setting a cap on the transfer of value (usually salary) from the club to the player during each salary cap year. The cap applies to the combined value transferred to all players of the club and therefore places a restriction on the whole club spend, and not on the remuneration of any individual players.
How does the salary cap work?
As you may imagine, Premiership Rugby construe these rules widely, and will consider any transfer of value to a broad range of player connections such as their agents, family members and any company. Similarly, when looking at the operations of the club and whether it has complied with the salary cap, Premiership Rugby will consider the broader picture looking at any transfer of value from a wider pool including directors and their family members, any officer or employee or the club, a sponsor or any other company, trust or partnership.
When calculating whether a club has been compliant with the salary cap, Premiership Rugby will consider amounts which are paid or payable, either directly or indirectly, to the players of a club including amounts for salary, any bonuses, any loans, accommodation, payments in connection with media or image rights and any payment in kind that a player would not have received were it not for his involvement with the club.
Where is the potential breach?
The report from Sportsmail has drawn attention to a number of business arrangements involving Saracens and some of its key players which could amount to a breach of the salary cap rules. The report asserts that the owner of Saracens, Nigel Wray, has been involved in business ventures with four of their players; Owen Farrell, Mako Vunipola, Billy Vunipola and Richard Wigglesworth. Wray has also allegedly co-owned houses with former players, which could be considered to be a cost towards accommodation and if so, included within the salary cap total for the club.
The investigation found that investment property companies were set up in 2017 with Wray acting as sole shareholder and an associate of Wray acting as sole director. The company names were then changed to VunProp Ltd and Wiggy9 Investments, with the Vunipola brothers becoming joint directors and owning 33.3% of the shares of the former company, and Wigglesworth owning a 65% share in the latter company. Both are property investment companies, with substantial property portfolios of £1.5m and £875k respectively. Another company has been set up by a former director of the club, listing Farrell and Wray as the two shareholders, although the company is yet to file its accounts.
Next Steps
As mentioned above, the salary cap rules are wide, and take account of any relevant value transferred by directors or associates of the club to players including any payment in kind that a player would not have received were it not for his involvement with the club. The business dealings will likely come under close scrutiny by the Salary Cap Manager (a Premiership Rugby role) who has the ability to investigate whether any arrangement between club and player breaches the salary cap rules.
It is worth noting that the arrangements may fall outside the scope of the regulations and no wrong-doing may be found – particularly as the £7m cap does not include up to two ‘Excluded Players’ whose salaries sit outside the cap. It could also be decided that such consideration may be deemed to be too remote to fall under the salary cap rules.
Already on social media there is comment about whether such activities are in the “spirit” of the game. The question that the Salary Cap Manager will no doubt be tackling is whether or not such activities are related to the game and caught by the regulations or whether they are separate.
