Premiership clubs unanimously agreed to reduce the salary cap to £5m for the 2021-22 season at a board meeting on Monday. All 13 clubs have agreed the move but with a view to returning the cap to its current level should revenues increase to appropriate levels in future seasons.
At present the cap is £7m which includes add-on credits of around £600,000. It will be reduced to £5m plus additional credits in a move that will spark fears a number of high-profile players – including England stars – will seek to follow George Kruis in securing lucrative deals abroad, which would rule them out of international contention.
The clubs were also expected to discuss doing away with the marquee system which allows for two players’ salaries to sit outside the cap after it was heavily criticised in the recent damning report written by Lord Myners, who deemed it, “inflationary, over-complex and unnecessary.” It is understood however, that the clubs have failed to reach a consensus on removing either one or both of them for 2021-22.
They were united in agreeing to bring down the cap but will not do so for next season because most contracts have already been agreed. Even though the decision is temporary it is likely to encourage clubs to press ahead with plans to make the blanket 25% wages cuts permanent, or at least until the cap reverts to its current level.
It is understood at least one club plans to do so despite opposition from the Rugby Players’ Association. That could lead players to seek legal action by lodging claims of unlawful deduction of wages.
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Even before the coronavirus pandemic there were moves to bring down the salary cap. Clubs are losing £50m collectively and with the Premiership on hold since March a financial crisis has set in. Clubs have been able to put players on the government’s furlough scheme but HMRC has said that when players return to contact training they are no longer eligible, which would cost clubs around £200,000 each. Leicester are already forecasting losses in excess of £5.1m for this financial year.
With the Premiership still planning on introducing a Covid-19 testing programme at a cost of around £20,000 a week per club when contact training begins, the financial outlook is particularly bleak.