Policing the salary cap

An interesting article, albeit on a rubbish website, with the guy who is charge of catching clubs who are cheating the system:

http://www.northamptonchron.co.uk/news/rfu-salary-cap-regulations-manager-andrew-rogers-speaks-about-its-place-in-rugby-1-3672261

Worth a read!

A couple of very telling paragraphs for me....


"Rumours of club’s using sponsors’ books to pay wages or offshore bank accounts fly around all the time. Rogers hears the same rumours, but nobody has been deducted points yet. Does that mean every club is abiding by the salary cap? Rogers is careful not to give a definitive answer.

“We have made massive strides in relation to the salary cap and the systems we put in place we believe are pretty good,” says Rogers. “I am confident we would discover failures. The consequences of a club breaching the salary cap are so serious. We have the points deduction now."


Says to me that they know there have been breaches in the past and are now trying to get on top of it and ensure that there aren't any more going forwards.

Interestingly I was having a discussion on Sunday with a man I met who owns a large catering firm. He has at various times been a business partner of two Premiership rugby clubs and I was very interested by his opinions of the cap and whether or not clubs regularly breach it.

Interesting article. I loved the explanation of how the Aussie RL broke their cap.

I will be accused of being biaised, but I do believe it is harder for a club like Tigers who are a plc to break the rules as so much more information is in teh public domain. Plus of course if they lie on their accounts (which they would need to do to also lie on the cap issue) that is a criminal offence with long jail terms possible.

Ozzy3213 wrote:
Interestingly I was having a discussion on Sunday with a man I met who owns a large catering firm. He has at various times been a business partner of two Premiership rugby clubs and I was very interested by his opinions of the cap and whether or not clubs regularly breach it.

That's interesting Pete, sounds like you learnt a bit. Which region were these clubs in? Midlands, West Country or 'London'

LondonTiger wrote:Interesting article. I loved the explanation of how the Aussie RL broke their cap.

I will be accused of being biaised, but I do believe it is harder for a club like Tigers who are a plc to break the rules as so much more information is in teh public domain. Plus of course if they lie on their accounts (which they would need to do to also lie on the cap issue) that is a criminal offence with long jail terms possible.

I think that you're being very naive if you think having PLC status prevents hidden or questionable money coming and going from a business. It is very difficult to prove that third parties are connected to a player or a club. I'd argue that because it is a PLC and because it needs to succeed as a business, then it is more likely to have the very best accountants and legal teams, ensuring that the extract maximum value out of the cap, most probably without explicitly breaking the cap.

Plus of course if they lie on their accounts (which they would need to do to also lie on the cap issue) that is a criminal offence with long jail terms possible.

Would also see the auditors and accountants in a lot of trouble, possibly struck off by their regulatory bodies. The directors as you say, could face criminal charges as they are fraudulantly misleading share holders, at Tigers the fans own the shares.

The interesting paragraphs for me were:

“And it includes any benefits; a house, car, money to wife, image rights, most things. It is easier to say what is excluded. That is any money a player gets from international representative matches and there is an education allowance of up to £5,000, so a club can pay for a player to go to university or become a carpenter. That is not included in the salary cap.”

“There have been administrative breaches, not deliberate attempts to breach the cap,” says Rogers.

Rogers does reveal that the regulations mean a club is fined £3 for every £1 it is over the cap and since 2009/10 clubs can be points deducted as well, with a sliding scale going up to 20.

Which tells me that a) there's a big loop hole for any player that wants a post rugby career (uni then professional body qualifications could be a nice incentive over a long term contract). b) some people have been playing it pretty close and have been given a bollocking and c) if you get caught expect to be fined and dumped out of HEC qualification (financially that could ruin or damage some clubs).

Bathite wrote:

Ozzy3213 wrote:
Interestingly I was having a discussion on Sunday with a man I met who owns a large catering firm. He has at various times been a business partner of two Premiership rugby clubs and I was very interested by his opinions of the cap and whether or not clubs regularly breach it.

That's interesting Pete, sounds like you learnt a bit. Which region were these clubs in? Midlands, West Country or 'London'

One in the Midlands, and one in London. Having had the conversation, which I won't go into minute detail of as it would be unfair on the person I was talking to, I think it is fair to say that in years gone by the rules around the cap were not as tight as they are now. As a result, I don't think clubs have actually 'breached' the cap per se previously, but some have clearly been able to ensure that players have received payment which would be above the £4 million total by utilising a few holes in how the rules of the cap were worded.

I find it slightly worrying that he sort of acknowledges that he needs whistleblowers to catch clubs

Image rights was something that featured heavily in my conversation on Sunday.

And sponsorships are a big area that's hard to prove, I don't know the answers, just pondering

For example, if a player drove a BMW (possibly branded) from the local delearship for free. The dealership gets free advertising from the players and potentially a few reduced fees on corporate boxes that season. Seems all legit, garage gets free advertising, player gets free car, club gets corporate sponsorship links.

Would that be breaching the cap, doesn't seem to, but would save a player what, £40k for the car and pay no servicing etc. That would make a big difference to your paycheck and would certainly suit players who come from abroad and don't bring their cars.

A very interesting article, as you say Ozzy, it reads like they know there were breaches in the past and they are working to tighten up in the future. Although the cap is becoming more generous next season of course, so maybe less fiddling will be involved.

I'm still a bit skeptical that all 3rd party payments can be accounted for, it would be hard to connect some income streams to clubs I'm sure. This is presumably why he says whistleblowers are needed to catch clubs?

Its good to know that they are at least trying to police the system though.

Also, what if the club or members of the board, all any other rich dude connected to the club owned multiple properties. They could rent these out to whoever they want and charge what they want.

Clubs could entice players to join with the prospect of a free house and a free car, now thats approx 20-40% of monthly outgoings, so represents a pretty substantial net pay increase and again wouldn't be breaking any salary cap rules.

I'm in the wrong job, going to check the careers section of Bath RFC!

Bathite see "And it includes any benefits; a house, car, money to wife, image rights, most things. It is easier to say what is excluded." If the owner of the club owned a block of flats and gifted/rented one to a player I'm sure they'd pick up on that pretty quick in a forensic accounting team. Lists of directors are readily available through Companies House and it isn't that hard to trace who owns what given the time and the ability to interview the individual involved.

This is presumably why he says whistleblowers are needed to catch clubs?

As you say it's very difficult to monitor third part streams, say payments from the club to a supplier who in turn pays another supplier who in turn pays a member of staff that is the players wife. Only would become obvious if those 'suppliers' were actually shell companies for the club and that this was agreed via an 'alternate' contract to the one the club forwarded to the RFU.

Some of the biggest and most blatant frauds of our time were uncovered by whistle blowers. Enron didn't come crashing down until a disgruntled employee blew the whistle after she joined to find everything in a mess. That was some pretty extensive fraud as well. Sometimes they authorities can know what's going on but lack the evidence until someone steps forard and gives it to them.

I'm just thinking out loud here but for example if a player bought a flat and rented out the rooms, he might be able to get an above market rent for it and that wouldnt be checked by the cap police surely? As long as the tenant wasn't X RFC of course.

There must be ways around it as long as you arent too blatent about it and start assembling a Toulon style dream team. Mind you, I would rather a little fiddling but still broadly the same for everyone than a football style situation.

Sam, your last sentence ties in with what the article hinted at I thought, I'm sure they have suspicions here and there.

I know it is in the cap with cars and houses, but if individuals or companies decide to gift players houses or cars and they are not directly linked to the club, what is the issue? Just playing devil's advocate, I think it would be pretty easy.

On the subject of Enron, if you haven't seen 'smartest guys in the room' you really should, so interesting!

I'm just thinking out loud here but for example if a player bought a flat and rented out the rooms, he might be able to get an above market rent for it and that wouldnt be checked by the cap police surely? As long as the tenant wasn't X RFC of course.

If a player bought property and rented out himself that wouldn't be an income stream from the club. Same as Castro's restaurants are owned partly by him, the revenue from them doesn't count towards the cap because it's nothing to do with the club. I know that Ben Woods has rented rooms in his house to team mates previously (he said it was his best ever purchase in an interview) but it's not money coming from the club so it wouldn't matter.

formerly known as Sam wrote:

I'm just thinking out loud here but for example if a player bought a flat and rented out the rooms, he might be able to get an above market rent for it and that wouldnt be checked by the cap police surely? As long as the tenant wasn't X RFC of course.

If a player bought property and rented out himself that wouldn't be an income stream from the club. Same as Castro's restaurants are owned partly by him, the revenue from them doesn't count towards the cap because it's nothing to do with the club. I know that Ben Woods has rented rooms in his house to team mates previously (he said it was his best ever purchase in an interview) but it's not money coming from the club so it wouldn't matter.

What I meant Sam was if the tenants were paying more than then should but were being helped by a club sponsor, or in Castro's case, a club sponsor could have given him a discount on a fit out etc etc. So not connected to the club but clearly a bonus to the player and so effectively a top-up to the salary.

That would be hard to regulate but income streams from club sponsors to players would be carefully watched I'd imagine. If they were going to do that I'd imagine they'd use shell or sister companies rather than straight up payment from the sponsor as a forensic audit would surely make a cursory look over that sort of thing.

It might happen but I think the idea of sending forensic accountants in is to make it really difficult to orchestrate. How many companies are going to want to spend their time filtering money to players through sister or shell companies. A lot of hard work when they'd just rather pay the publicised prices for access to players, which is pretty easy (or was on the old website).