Plans to Ringfence the AP for 5 Years

First topic message reminder :

The Times have run a story about the RFU's and PRL's discussions on ringfencing the Aviva Premiership.

It's behind a pay wall but the Bristol Post have some info...

According to a report in The Times , automatic promotion and relegation between the Aviva Premiership and Greene King IPA Championship could come to an end as soon as next year.


And a dreaded two leg play-off could be introduced to decide who plays in the Premiership and who plays in the Championship for the next four or five years.

According to The Times the RFU and Premiership Rugby Limited (RPRL), who run the Aviva Premiership, are considering ring fencing the top flight for five years, with a play-off at the end of next season between the bottom placed Premiership club, and top placed Championship club to decide who gets that final place.

Tigers typically just about break even, though last year was a loss of 600k. Worcester's turnover at 10m was about half that of Leicester, with similar outgoings (excluding matchday expense).

When you put it like that Tiger, it shows the enormity of Worcester's task just to break even.

Just read a comment by Bill Bolsover (Worcester Chairman) that turnover is much improved during the 17-18 season and so it appears that loses should be reduced in this period. He went on to say that he anticipates that the shareholders will only be asked to contribute 50% of the amount of 16-17 season.

A step the right direction at least.

"Downsizing the European Champions Cup has been proposed as a way to protect player welfare if the Premiership is ring-fenced with more than 12 teams."

If this were just about player welfare then all of the clubs could simply agree that there would be a limit of 25 games maximum for any rugby player to play in a calendar year. Dropping relegation must be about more than this.

As for clubs in the premiership running a loss (with only one exception I read) aren't football clubs In England in the same position and yet still go on for decades running losses? Rugby clubs that turn a profit anywhere seem to be rare. I don't think this change to relegation will change much from a profit point of view.

As pointed out in the Quins message board, the rugby clubs are a business and olny 1 business of many that the owners usually own or have dealings on. There's a belief on the Quins board at least that the other business interests are doing ok and covering for any loss from the rugby, hence no panic.

I read similar reports about French rugby clubs. The majority run at a loss but they keep going anyway. I think this idea that it's a disaster if clubs run at a loss is not true at all. I think most of them find benefactors who are basically fans who support them. They're more like playthings for the rich.

For the long term, the whole business proposition of Premiership Rugby has to become profitable.  Increasing/violating the Salary Cap simply to chase the French clubs makes no sense.  

To me, ring fencing the Premiership does make sense if the criteria for inclusion of all clubs is based upon a strong financial plan to break even or become at least modestly profitable by the end of the ring fence period (5 years?).  Also, the Premiership as an entity needs a real financial plan.  And that is where the partnership with the RFU comes in, working it together.  

I do agree with the argument that relegation works against long term planning.  So here is the opportunity to prove it one way or the other.  

Of course, I doubt this will happen..........

If football clubs in England run at a loss for decades why can't the rugby clubs do the same? Who really invested in a rugby club in England recently expecting to turn a profit?

How would getting rid of relegation suddenly make them profitable entities? I don't buy it. As doctor grey just said it's the French clubs driving up the salaries so the wage bill won't decrease if there's no relegation and if that's the biggest expense then they'll still want a small pool of players to keep costs down. So no real rotation of players will happen because there'll still be no incentive to have larger squads. I don't see how stopping relegation will change much for the better.

The company behind Wasps are currently 3 months late in filing their accounts. Owners in discussions to try and refinance before the bond expires - with limited success. If the Coventry experience goes tits up there may only be 12 viable pro clubs for the next few years.

LondonTiger wrote:The company behind Wasps are currently 3 months late in filing their accounts. Owners in discussions to try and refinance before the bond expires - with limited success. If the Coventry experience goes tits up there may only be 12 viable pro clubs for the next few years.

Do they have any money themselves (owners) or are they just the typical business of leveraged debt so if it's come due they went have no way of paying it without refinancing.

Has the debt come down for them or would it be the same as the bond

Bonds normally don't reduce. It's just interest repayments then repay initial amount at end.

Intotouch wrote:If football clubs in England run at a loss for decades why can't the rugby clubs do the same? Who really invested in a rugby club in England recently expecting to turn a profit?

Well, as a Saints supporter I know the Barwell family invested their initial money 20 years ago then put in a business plan to break even or better. Only this past season did they have to break from the plan in order to keep up. Clearly, Bath is now a plaything as are Saracens, Bristol, and some others.

Why can the major American sports leagues and clubs make a profit and run like a business and Rugby can't? Part of the reason is unreasonable salary structures. But there must be more to it than that.

And I am a person who want our players to make as much as possible. Considering the physical nature of the sport, I think they are woefully under paid as compared to other sports. But we can't pay more than we have...........

formerly known as Sam wrote:Bonds normally don't reduce. It's just interest repayments then repay initial amount at end.

Sorry badly worded. People often clear one bond by issuing another (if it's less then the original one means less debt) or did they issue the first bond under the assumption that they would not need a new bond to clear it.

I thought Wasps were doing well on the side businesses and were starting to build a good foundation for securing their future, but once accounts are late it is rarely good

Brendan wrote:

formerly known as Sam wrote:Bonds normally don't reduce. It's just interest repayments then repay initial amount at end.

Sorry badly worded.  People often clear one bond by issuing another (if it's less then the original one means less debt) or did they issue the first bond under the assumption that they would not need a new bond to clear it.

I thought Wasps were doing well on the side businesses and were starting to build a good foundation for securing their future, but once accounts are late it is rarely good

Frequently bonds are re-issued to lessen the impact of the repayment terms.  Mostly extending repayment or taking advantages of interest rate changes.  I agree, late payments are almost never good.

I didn't know this about Wasps either.  Thought they were doing pretty well.

https://www.bbc.com/sport/rugby-union/43914210

"Why can the major American sports leagues and clubs make a profit and run like a business and Rugby can't? Part of the reason is unreasonable salary structures. But there must be more to it than that.

And I am a person who want our players to make as much as possible. Considering the physical nature of the sport, I think they are woefully under paid as compared to other sports. But we can't pay more than we have...."

These are good points Doctor Grey. However a more obvious question is why don't premiership football clubs make a profit the way that American sports leagues do? Then compare the salaries. What footballers and rugby players are paid in proportion to what the clubs earn is far greater than what you see in the States. There is a culture in the US of paying players out of the profits which keeps a direct relationship between what money a club makes and salaries, and in the american football system of ensuring that the weakest clubs get first pick of the next stars thus making sure that there is some evenness in how talent is distributed which helps to increase competitiveness across the league. Culturally it's more of an "earn profit first, players salaries" later approach. In England it seems to be the opposite. The distribution of young talent has a huge impact on the football league insuring that every team could have a year that turns into a great success which keeps supporters interested and excited too.

As an aside I was amazed to read here that there are fourteen academies in England in rugby. Why are so few making the jump to pro club level and international level? With fourteen academies there should be young jewels of rugby players joining clubs every year yet I so rarely see break out stars in English sides. It seems to be mostly the same faces. Are the academies not spotting and nurturing talented young players to a high enough standard? Are they not finding the best players to begin with?

I still don't see how this ring fensing will help with player welfare or is necessary for this. To help clubs to attract investment yes, since the risk of relegation will be gone, but this is not about helping the players.

Intotouch wrote:
"Why can the major American sports leagues and clubs make a profit and run like a business and Rugby can't? Part of the reason is unreasonable salary structures. But there must be more to it than that.

And I am a person who want our players to make as much as possible. Considering the physical nature of the sport, I think they are woefully under paid as compared to other sports. But we can't pay more than we have...."

These are good points Doctor Grey. However a more obvious question is why don't premiership football clubs make a profit the way that American sports leagues do? Then compare the salaries. What footballers and rugby players are paid in proportion to what the clubs earn is far greater than what you see in the States. There is a culture in the US of paying players out of the profits which keeps a direct relationship between what money a club makes and salaries, and in the american football system of ensuring that the weakest clubs get first pick of the next stars thus making sure that there is some evenness in how talent is distributed which helps to increase competitiveness across the league. Culturally it's more of an "earn profit first, players salaries" later approach. In England it seems to be the opposite. The distribution of young talent has a huge impact on the football league insuring that every team could have a year that turns into a great success which keeps supporters interested and excited too.

As an aside I was amazed to read here that there are fourteen academies in England in rugby. Why are so few making the jump to pro club level and international level? With fourteen academies there should be young jewels of rugby players joining clubs every year yet I so rarely see break out stars in English sides. It seems to be mostly the same faces. Are the academies not spotting and nurturing talented young players to a high enough standard? Are they not finding the best players to begin with?

I still don't see how this ring fensing will help with player welfare or is necessary for this. To help clubs to attract investment yes, since the risk of relegation will be gone, but this is not about helping the players.

Re: academies. It is making a big difference although it is inevitable that the talent coming through (and available places for them to go to) are both subject to variation in number. This year was a bad year all round but you only have to look at the performance of the U20's over the last few seasons to see that the young talent is there.

There's a pretty constant churn of new players into the league isn't there? As to those stepping up to England there are very few games available despite the numbers coming through. If there were a constant churn of players entering the team year on year you'd have to ask why they were being cast aside after 7 games.

Thinking about academies and the salary cap. Instead of raising the cap and causing more problems down the line, why not allow clubs to nominate two home grown players to be exempt from it? They must have been in the club's academy for a a year though.

Or say that all players from the academy only count 75% towards the cap?

Exactly Yappysnap, if there were new incentives for hiring home grown players this would have an impact. What is the average number of players from an English academy that go on to play pro rugby for their club each year? Does anyone know?

No7 I don't expect to see a constant turn over of players in the English team but I would expect to see one or two fabulous young players being given an opportunity each year.

Going back to ring fencing the premiership if it's cheaper for a club to employ a small number of players and use them over and over again rather than have a large squad and rotate them then ring fencing won't make a difference to player welfare. Clubs will still want to maximize their profits and salaries are a huge part of their expenses.

When you say fabulous young players, we have had in recent times:

Itoje
Tuilagi
Ford
Daly
Synkler
Genge
Farrel


Off the top of my head there and two are from a while back but they were all young talents.

That's a good idea, a salary cap waiver for home grown talent. Anything we can do to encourage development over bringing in other nationals would strengthen both club and country. Reading this again, it seems so logical, the powers that be would bugger it up.....

I thought there was already some financial incentive in English clubs to employ English players. Doesn't the union give money to clubs in some way that do this? Making English players exempt from the salary cap could cause a club more problems financially in the long run as the salary cap's purpose would be compromised. What the French do, using the JIFF system to ensure that more and more French players are employed is a more practical method than this.

To go back to the original post is there any more news on this topic? Is this actually going to happen?

Intotouch wrote:I thought there was already some financial incentive in English clubs to employ English players. Doesn't the union give money to clubs in some way that do this? Making English players exempt from the salary cap could cause a club more problems financially in the long run as the salary cap's purpose would be compromised. What the French do, using the JIFF system to ensure that more and more French players are employed is a more practical method than this.

To go back to the original post is there any more news on this topic? Is this actually going to happen?

From what I hear the clubs want it so it will likely happen. But the question and stumbling blocks seem to be how to squeeze 13/14 teams into a 12 team league, unless they choose the radical and probably foolish step of expansion. Also, the financial impact on the unlucky one or two. Also financial planning and 5 year plans for the lucky 12. I would guess if it has gone quiet then they are closer to the final stages of their plan. Otherwise, I think we would hear some negotiating through the press.

Hmmm. You say the clubs want it, but surely all the clubs hoping one day to be promoted are against it. Do they not have equal voting power to the premiership teams?

Well, I suppose if you are from one of the financially weaker clubs, likely one of the ones to be left outside, then not likely in love with the concept. I think almost all the negotiations are about the financials of it all at this point. And this is not something, in my opinion, the clubs have ever had a real strong consensus about.

Of course, some the people I hear this through are the medical people in different clubs and they might be self-medicating after a long season.........

The financial implications seem pretty clear to me. Those lucky enough to be in the premiership for five years will do nicely and those not will do badly. Or at least comparitively badly. If there are twelve professional sides about to be excluded I can't see how they wouldn't be united against this measure. But I don't know how the voting works in this system. Are some pro teams getting more votes than others?

Theres been a number of clubs in the championship who already state each season that they would accept promotion.

No 7&1/2 wrote:Theres been a number of clubs in the championship who already state each season that they would accept promotion.

Well of course they'd accept promotion. Maybe I'm misunderstanding you here. What I don't understand is why the Championship clubs would accept and vote for an end to promotion to the premiership. Or if the decision can be made against their will how this would be possible. Surely all professional rugby clubs in England have equal say in this. Or am i wrong here?

Decisions are made by the Professional Game Board, whose members come from RFU, PRL and RPA. So club's who are not shareholders of PRL depend on RFU to represent them.

The question I have is how would they work out who gets relegated after 5 years. As we know Worcester are struggling financially. If they know that it is the average place over 5 years. 3 years in the have finished last each year, what is the incentive for them to sign premiership standard players knowing they are going down and will have no money for 5 years. If it's the results of the last year why would they not save their money for four years, the last year they sign stars from the SH on 1 year contacts and finish 11th or higher. They and other lower teams repeat this every 5 years.

Any team that would go down would release all their high earners (or more likely players would have it that if relegated the contract is terminated). Top teams pick the best players, team coming up gets everyone else. Team coming up decides if they should spend or save the extra money for 5 years (no point in doing a London Welsh for 5years) and cycle repeats.

In Football getting the premiership money is the goal, they don't expect to stay and pocket the money and build up. Teams that go all out and still go down lose money and are not heard of again.

Thank you London Tiger. However I thought that all pro clubs were represented by the PRL so half their members would be against relegation. From what you say it is the RFU and RPA then who would push through this decision. Since no relegation in no way ensures better player welfare I don't see why the RPA would vote for it. Although I can see why the RFU may be in favour. So it's still not clear to me who exactly would vote this in and why.

Brendan deciding who gets relegated after five years is as easy as deciding who gets relegated after one year. Points could get added up after the five seasons and then the worst performer goes down.

Yes a team could become diabolical and still be competing in the premiership for five years and maybe if that happens it will encourage the powers that be to bring relegation back.

I believe that the voting rights in PRL belong to just 13 clubs holding P shares. Leeds had to sell their stake to Exeter back in 2012. This means that (I think) the 13 stakeholders with voting rights are the current 12 in the premiership and Bristol.

However as major decisions have to be backed unanimously, any one club can hold firm.

I think some of the criteria for promotion/relegation must be financial, not just wins and losses.  We know Worcester is not the strongest financially, and consequently bounces up and down to a point where it seems a successful season is one in which they avoid relegation.  

Ultimately, sports, and pro Rugby in particular, are a business.  Having sound finances give the opportunity to spend up against the salary cap and, again, the opportunity to compete.  So, to me, the real benefit of eliminating promotion/relegation is to allow teams to become stronger financially without the short-termism associated with lower teams fighting off relegation.  Then if they fail, they fail.  

To me, one of the things which goes hand-in-hand with this is clear and transparent salary expenditures, including relative to the salary cap, as in the NFL.  Unfortunately, right now it is secretive.  The salary cap main offenders - according to the rumour mill at least - were Bath and Saracens.   Saracens obviously did better than Bath indicating that money only gives the opportunity to succeed, and is not a guarantee.

At this moment, the salary cap may be too high, like some of us have suggested previously.  But we also need large squads to support the ridiculous 9 month season, which we need to bring in enough revenue.  Which of course, is another problem.  Perhaps the real benefit of a 5 year suspension of promotion/relegation is that it provides enough time for people to start using basic business practices and pull their heads out of their rumps.

I think they should:

Get rid of the two marquee player allowances as they have driven player inflation.

Review the overall salary cap as it was based on projected income that has not materialised. (Note that with removal of marquee players it may go up)

Introduce a minimum squad size.

LondonTiger wrote:I think they should:

Get rid of the two marquee player allowances as they have driven player inflation.

Review the overall salary cap as it was based on projected income that has not materialised. (Note that with removal of marquee players it may go up)

Introduce a minimum squad size.

I think you are right on the Marquee players. If you are joining club and are told you are a marquee signing you expect big bucks. All the other players want more because they think two players not much better than them are on massive money so they deserve more

If a goal of getting rid of relegation is to build depth and give opportunities to players who otherwise wouldn't get a chance to play (for fear that they'd mess up and the club could be relegated) then this could be accomplished by setting a limit of 26 matches maximum per year for any rugby player. It could be pushed by the players on health and safety grounds. I read not long ago that the chance of getting a concussion soar after a player plays more than 26 matches. This study was done in New Zealand. It's something that I think should happen anyway and would have the benefit of forcing clubs to rotate squads, building depth and giving more opportunities to younger players. Without this I could still see a scenario where although there's no relegation coaches still will want their best side playing, no matter how many times a player has played that year, because fans will always hate to see their team lose and the clubs still won't have any reason not to use the same players over and over again if they get the job done.