Premiership's new revenues all going into player wages, says Leicester chief

From Rugby Paper:

Leicester Tigers chief executive Simon Cohen believes Premiership Rugby’s policy of linking the salary cap to central funding is wrong and could have wider implications on local communities.

Cohen predicts spiralling player wages will force clubs to cancel ground develop projects and community initiatives.

A Rugby Paper survey reveals that, including the many add-ons, this season’s salary cap will be worth £8.8m – a whopping £2m increase on last season’s ceiling and double that of the £4.4m cap which applied as recently as season 2010-11.

Premiership Rugby claim the increase will be covered by the new £225m, eight-year deal struck between top-flight clubs and the RFU, but TRP understands a shortfall in budgeted revenue due to European Rugby’s failure to attract sufficient commercial partners has contributed to a £12m black hole that clubs are struggling to fill.

With the Premiership’s wage bill skyrocketing by upwards of £20m this summer, Cohen has aimed both barrels at his own umbrella organisation, as well as the chairmen who voted through salary cap rises that will see some top earning players double their money while commercial staff are left to pick up the pieces.

Cohen told The Rugby Paper: “The strategy whereby the salary cap is linked to any increase in central revenue seems to be flawed at best. What it means is that all that money, any increase in revenue, goes straight to the players and that there’s no money from central proceeds to cover any other increases in costs.

“Whatever you want to put money towards, be it medical, training facilities, better marketing or community programmes, there’s absolutely nothing from the increase in central revenue.

“It was clear to those of us that were involved in dealing with agents that it could only have been inflationary, but it was still a policy that was implemented and we’ve gone from a situation where top players used to be paid around £250,000 to one where there are now £500,000 players dotted all around the league.”

Cohen dismisses the new deal between the RFU and PRL as a false panacea, adding: “The increase in revenue brought about by the PRL/RFU agreement does absolutely nothing for anybody in the game but the players.

“We can accommodate our cashflow position, but we would like to invest in infrastructure and that ability is significantly compromisedby the huge amounts that are now going into the hands of players and agents.”

RFU boss Ian Ritchie, below, has trumpeted the new deal as a triumph for player welfare, with England players who play a certain number of minutes throughout the autumn series now afforded a mandatory one weekend rest period over Christmas.

“Player welfare, as ever, is a priority for us all, and so further rest periods have been built into the season,” Ritchie said.

However Cohen takes a contrary view and also accuses the Rugby Players’ Association of failing to act in the best interests of its members.

He explained: “If we’re serious about player welfare I think it’s an opportunity missed because if we need senior players to play fewer games, then we have to accept that there’s less revenue and that salaries can’t rise as quickly.

“If we had gone with that premise and then looked at taking games out of the calendar instead of adding games simply to fund the new agreement and pay the players, that would have been a better way of looking at it.

“You could have looked at a 10-team league, no fourth international or June Tests and reduced the overlaps between club games and internationals.

“But the RPA seem to be more interested in ensuring the money is right for their members than they are in looking for the sort of solution that involves a reduction in matches and wages, which I believe are now infinite.

“We had a chance to learn from football, but sadly we’ve blown it.”


He doesn't mince his words, does he?

"TRP understands a shortfall in budgeted revenue due to European Rugby’s failure to attract sufficient commercial partners has contributed to a £12m black hole that clubs are struggling to fill."

Say it ain't so !

I suspect only the clubs who are self sufficient are struggling to fill the "black hole". Wasps, Bath and Sarries will look to their owners interests to provide.

formerly known as Sam wrote:I suspect only the clubs who are self sufficient are struggling to fill the "black hole". Wasps, Bath and Sarries will look to their owners interests to provide.

Well I read this morning that Wasps have signed Willie le Roux as their replacement for Piutau. Not bad business at all.

They mustn't be missing the odd million from their budget...

Well Pot Hale the salary cap has increased (see above) a d Wasps lost both Piatau and Smith at the end of last season (as well as releasing 11 others). They were bound to have some cap to play with especially as I said now that they've got wealthy backers.

formerly known as Sam wrote:Well Pot Hale the salary cap has increased (see above) a d Wasps lost both Piatau and Smith at the end of last season (as well as releasing 11 others). They were bound to have some cap to play with especially as I said now that they've got wealthy backers.

Yep I know. There's a few media articles with commentary questioning the sense of the latest deal and does it really point to a dependency on English RFU cash to sustain some of the clubs.

And if all or most of the increased revenues is going towards meeting inflating salaries, where's the real gain?

It's not the RFU making the difference it's the PRL being able to sell the broadcasting rights for a fortune to BT Sport. There is no gain which is the concern of clubs like Leicester who need to raise capital to fund various projects such as a new deso pitch and training facilities. Unfortunately there's a core of AP clubs who have managed to push the cap increase in line with the new sources of income and left the like of Leicester to put those projects on the back burner.

Worth noting Cohen is answerable to the fans who own the club.

formerly known as Sam wrote:It's not the RFU making the difference it's the PRL being able to sell the broadcasting rights for a fortune to BT Sport. There is no gain which is the concern of clubs like Leicester who need to raise capital to fund various projects such as a new deso pitch and training facilities.  Unfortunately there's a core of AP clubs who have managed to push the cap increase in line with the new sources of income and left the like of Leicester to put those projects on the back burner.

Worth noting Cohen is answerable to the fans who own the club.

What's the value of the comparative deals between the TV rights and the English RFU money, former Sam? Surely £220m over 8 years is not to be sneezed at? Particularly, if the European Cup proposed monies have not materialised to the tune of a £12m black-hole?

I'd be very interested if journalists could tell us what the battle lines are in rugby over key debates. Cohen isn't happy with this result but presumably people voted for it, so it would be good to know who did, and who argued against it.

He says the Rugby Players’ Association has the wrong approach but I'm not clear what input they had. Most of the time, the RPA complains about being left out if decisions on scheduling.

I get frustrated hearing constituencies in rugby blaming each other for something not happening with regard to

- international eligibility
- global calendar
- player welfare
- global expansion

I suppose you can just say "follow the money" but, as Cohen's comments suggest, that doesn't tell you very much unless you know what everyone's priorities are.

Rugby Fan wrote:I'd be very interested if journalists could tell us what the battle lines are in rugby over key debates. Cohen isn't happy with this result but presumably people voted for it, so it would be good to know who did, and who argued against it.

He says the Rugby Players’ Association has the wrong approach but I'm not clear what input they had. Most of the time, the RPA complains about being left out if decisions on scheduling.

I get frustrated hearing constituencies in rugby blaming each other for something not happening with regard to

- international eligibility
- global calendar
- player welfare
- global expansion

I suppose you can just say "follow the money" but, as Cohen's comments suggest, that doesn't tell you very much unless you know what everyone's priorities are.

Mate, I can't agree more. Firstly, I think it's comical to believe Rugby is now flush with money. We are a small sport on the cusp of showing on the global radar, and have a little more cash coming in but is still small potatoes. No doubts this is all growing pains, but that doesn't change your points, as I said, with which I agree. Ultimately, Rugby is growing in different places with different rules and different goals. Unfortunately, this lack of global vision could be, or rather, will be a problem as we go forwards. Seems virtually everyone involved is all about their own piece of the small pie.

Maybe we can get Putin to hack everyone's emails and make them public so we can see what people are thinking?

I have nearly no sympathy with Leicester, a big club, over the money issue. They spend a fortune on guys like Toomua, JP Pietersen and Betham. I guess the worst one is Tuilagi at the moment who can not stay healthy. If Leicester want to spend a few million upgrading facilities don't spend to the cap for a year or two.

I feel sorry for Newcastle and Sale who could not afford the previous salary caps. Exeter seem to be okay at the moment and I am not sure how Gloucester and Worcester are doing.

formerly known as Sam wrote:Well Pot Hale the salary cap has increased (see above) a d Wasps lost both Piatau and Smith at the end of last season (as well as releasing 11 others). They were bound to have some cap to play with especially as I said now that they've got wealthy backers.

I thought the money Wasps were spending came from the share issue from last year rather than the new owners

Pot Hale wrote:

formerly known as Sam wrote:It's not the RFU making the difference it's the PRL being able to sell the broadcasting rights for a fortune to BT Sport. There is no gain which is the concern of clubs like Leicester who need to raise capital to fund various projects such as a new deso pitch and training facilities.  Unfortunately there's a core of AP clubs who have managed to push the cap increase in line with the new sources of income and left the like of Leicester to put those projects on the back burner.

Worth noting Cohen is answerable to the fans who own the club.

What's the value of the comparative deals between the TV rights and the English RFU money, former Sam?   Surely £220m over 8 years is not to be sneezed at?  Particularly, if the European Cup proposed monies have not materialised to the tune of a £12m black-hole?

 

The TV deal was rumoured to be up to an 80% increase on the 152 million deal previously agreed. The 220m agreed with the RFU is nice but the TV package is supposed to be significantly more lucrative.

Marty, I presume the club don't think they have much choice. They haven't won a trophy in a while and they need to keep their reputation as one of the big boys to keep the sponsors and fans onside as they bankroll the club.

formerly known as Sam wrote:

Pot Hale wrote:

formerly known as Sam wrote:It's not the RFU making the difference it's the PRL being able to sell the broadcasting rights for a fortune to BT Sport. There is no gain which is the concern of clubs like Leicester who need to raise capital to fund various projects such as a new deso pitch and training facilities.  Unfortunately there's a core of AP clubs who have managed to push the cap increase in line with the new sources of income and left the like of Leicester to put those projects on the back burner.

Worth noting Cohen is answerable to the fans who own the club.

What's the value of the comparative deals between the TV rights and the English RFU money, former Sam?   Surely £220m over 8 years is not to be sneezed at?  Particularly, if the European Cup proposed monies have not materialised to the tune of a £12m black-hole?

 

The TV deal was rumoured to be up to an 80% increase on the 152 million deal previously agreed. The 220m agreed with the RFU is nice but the TV package is supposed to be significantly more lucrative.

Marty, I presume the club don't think they have much choice. They haven't won a trophy in a while and they need to keep their reputation as one of the big boys to keep the sponsors and fans onside as they bankroll the club.

Yeah - it's a bit tricky getting the finer details on it. I've tried to find where that 80% increase comment came from officially and the only one I could find was on BBC in March 2015 which headlined it as a new six year deal - 2016-2021 - because it included new highlights rights starting in 2015. They said it was rumoured to be an 80% increase on current deal. The question is 80% of what value?

The original deal announced by PRL/BT was for £152m for 4 years 2012-2016. That included the rights to the English European Cup matches. I don't know what value the European bit was, but probably in the order of £30m. That puts the value for the actual league coverage at £122m, which would make the current Premiership league deal worth £30m a year - £2.5m per club.

If the new deal - which covers league matches only and also the Singha 7s tournament - is an 80% increase, then that would value it at £220m. That deal, covers the 4 years 2017-2021 so the annual value would be £55m - about £4.5m per club. What's not clear is how much of the £220m is for the Singha 7s tournament which also includes the Welsh regions - do they get some of this money too presumably since Dragons won the comp last year? I doubt it would be very much though.

formerly known as Sam wrote:
Marty, I presume the club don't think they have much choice. They haven't won a trophy in a while and they need to keep their reputation as one of the big boys to keep the sponsors and fans onside as they bankroll the club.

Sorry but that makes no sense

I said shares it was actually a bond offer and they were hoping to raise over £25m, I took it this revenue was funding their spending spree

marty2086 wrote:

formerly known as Sam wrote:
Marty, I presume the club don't think they have much choice. They haven't won a trophy in a while and they need to keep their reputation as one of the big boys to keep the sponsors and fans onside as they bankroll the club.

Sorry but that makes no sense

I said shares it was actually a bond offer and they were hoping to raise over £25m, I took it this revenue was funding their spending spree

Sorry was actually trying to respond to Hazel and got the wrong name from the wrong message. About time for an eye test.

Pot Hale wrote:

formerly known as Sam wrote:

Pot Hale wrote:

formerly known as Sam wrote:It's not the RFU making the difference it's the PRL being able to sell the broadcasting rights for a fortune to BT Sport. There is no gain which is the concern of clubs like Leicester who need to raise capital to fund various projects such as a new deso pitch and training facilities.  Unfortunately there's a core of AP clubs who have managed to push the cap increase in line with the new sources of income and left the like of Leicester to put those projects on the back burner.

Worth noting Cohen is answerable to the fans who own the club.

What's the value of the comparative deals between the TV rights and the English RFU money, former Sam?   Surely £220m over 8 years is not to be sneezed at?  Particularly, if the European Cup proposed monies have not materialised to the tune of a £12m black-hole?

 

The TV deal was rumoured to be up to an 80% increase on the 152 million deal previously agreed. The 220m agreed with the RFU is nice but the TV package is supposed to be significantly more lucrative.

Marty, I presume the club don't think they have much choice. They haven't won a trophy in a while and they need to keep their reputation as one of the big boys to keep the sponsors and fans onside as they bankroll the club.

Yeah - it's a bit tricky getting the finer details on it.  I've tried to find where that 80% increase comment came from officially and the only one I could find was on BBC in March 2015 which headlined it as a new six year deal - 2016-2021 - because it included new highlights rights starting in 2015.  They said it was rumoured to be an 80% increase on current deal.  The question is 80% of what value?

The original deal announced by PRL/BT was for £152m for 4 years 2012-2016.  That included the rights to the English European Cup matches.   I don't know what value the European bit was, but probably in the order of £30m.  That puts the value for the actual league coverage at £122m,  which would make the current Premiership league deal worth £30m a year - £2.5m per club.    

If the new deal - which covers league matches only and also the Singha 7s tournament - is an 80% increase, then that would value it at £220m.   That deal, covers the 4 years 2017-2021 so the annual value would be £55m - about £4.5m per club.   What's not clear is how much of the £220m is for the Singha 7s tournament which also includes the Welsh regions - do they get some of this money too presumably since Dragons won the comp last year?  I doubt it would be very much though.

Great analysis of the payments.  It's an interesting question about the 7s.  But I can't believe the 7s has too large of a piece of the money pie.  On the other hand would be interesting to find out.  £4.5m per club per year is not huge in the big picture, but does change the dynamic quite a bit.  If it enables some of the financially weaker clubs to spend more and spend closer to the big boys (or the clubs bankrolled by big boys), then it helps.  Still think it brings us back to the questions about transparency and the salary cap.  At least that is where I am concerned.