Super League officials row over salary cap reduction

[whatmichaelsays]

5 minutes ago, Harry Stottle said:

Question to all who want to abolish the cap:-

How would you see the league system we presently employ in the UK, would it stay as it is or would it change into some other entity?

I'd personally replace the cap with a financial fair play-style system.

I think there is a place in the sport for some degree of financial levelling, but an arbitrary hard cap is a blunt instrument that arguably does more harm than good. We've had a salary cap for more than 20 years that has actually reduced one of the key costs of RL clubs by a substantial amount in real terms, yet in that time we seen:

• Just four names on the trophy.
• A long list of insolvency events in the sport.
• Reduced earning potential of players.
• A talent drain to other competitions. 
• A myriad of fudges being tacked onto the cap to try and help the sport compete on recruitment and retention.  

An FFP-style system is, in my view, a fairer and more progressive system. What I'd personally like to see is:

• Salary caps set at a percentage of club turnover. 
• A much higher ceiling to ensure that no one club can excessively hoard or out-spend the competition. 
• Restrictions on the influence of investor contributions or directors loans that are unlikely to be repaid in order to prevent "financial doping". 

Such a system would encourage clubs to invest in growing the business, rather than trying to drag the rest of the sport down to their level so that they can run their clubs on the thinest shoestring possible. If a club wants to compete financially with the big boys on the field,  they need to invest in growing the business off the field to pay for it.

Crucially, it would also give the players an opportunity to share in the success and growth of the clubs - something that they collectively cannot do under a hard cap that barely moves.  

[Hela Wigmen]

This is where you’d have expected Elstone to be the overall decision maker. Instead, I’m not even sure what he does now. 

[John WP Fan]

49 minutes ago, Harry Stottle said:

If the cap was reduced by 15%, all existing contracts could still be allowed to be paid, they could be named and would just be an exception to the new agreed level, it is not a difficult accountancy to perform.

I'm not understanding this; can you explain a bit?

For example, suppose a club has 15 existing contracts that add up to 90% of the new, lower salary cap. How much more are they allowed to spend on the remainder of their squad?

[Harry Stottle]

49 minutes ago, whatmichaelsays said:

I'd personally replace the cap with a financial fair play-style system.

I think there is a place in the sport for some degree of financial levelling, but an arbitrary hard cap is a blunt instrument that arguably does more harm than good. We've had a salary cap for more than 20 years that has actually reduced one of the key costs of RL clubs by a substantial amount in real terms, yet in that time we seen:

• Just four names on the trophy.
• A long list of insolvency events in the sport.
• Reduced earning potential of players.
• A talent drain to other competitions. 
• A myriad of fudges being tacked onto the cap to try and help the sport compete on recruitment and retention.  

An FFP-style system is, in my view, a fairer and more progressive system. What I'd personally like to see is:

• Salary caps set at a percentage of club turnover. 
• A much higher ceiling to ensure that no one club can excessively hoard or out-spend the competition. 
• Restrictions on the influence of investor contributions or directors loans that are unlikely to be repaid in order to prevent "financial doping". 

Such a system would encourage clubs to invest in growing the business, rather than trying to drag the rest of the sport down to their level so that they can run their clubs on the thinest shoestring possible. If a club wants to compete financially with the big boys on the field,  they need to invest in growing the business off the field to pay for it.

Crucially, it would also give the players an opportunity to share in the success and growth of the clubs - something that they collectively cannot do under a hard cap that barely moves.  

Thanks for your thoughts Micheal, so if your scheme was sanctioned and put into place, would we still have a 12 team SL, would the present incumbents still be in SL barring P&R, indeed would we still employ P&R.

Your first point was that we had only 4 WINNERS on the trophy, I am confused how under this system in what would effectively be allowing the richer clubs to spend more on it's playing roster how we would increase the number of trophy winners saving for replacing Bradford with Warrington or Hull FC.

Incidentally by growing the buisness off the field would this include non rugby contributions say renting the stadium for other functions, if so you do realuse you would be eliminating 2 of our bigger clubs from any stadium revenue gains, namely Wigan and Hull FC.

[John WP Fan]

There is another option apart from either keeping, lowering or eliminating the cap.

Major League Baseball (MLB) in North America uses a luxury tax system. There is a soft salary cap, and teams that spend beyond it must pay a fairly substantial tax on the excess amount. The funds collected through the luxury tax are split between the players benefits fund and teams that did not exceed the soft cap.

in 2020 (before the pandemic hit), the luxury tax was set at (maybe sit down for this) $208,000,000 per team.

[Harry Stottle]

3 minutes ago, John WP Fan said:

I'm not understanding this; can you explain a bit?

For example, suppose a club has 15 existing contracts that add up to 90% of the new, lower salary cap. How much more are they allowed to spend on the remainder of their squad?

The existing contracts would just be allowed to be honoured as an extra expense if any number of contracts exceeded the cap level, the next contract would be a discussion with the club and player concerned re his 'new' contract.

[Harry Stottle]

3 minutes ago, John WP Fan said:

There is another option apart from either keeping, lowering or eliminating the cap.

Major League Baseball (MLB) in North America uses a luxury tax system. There is a soft salary cap, and teams that spend beyond it must pay a fairly substantial tax on the excess amount. The funds collected through the luxury tax are split between the players benefits fund and teams that did not exceed the soft cap.

in 2020 (before the pandemic hit), the luxury tax was set at (maybe sit down for this) $208,000,000 per team.

Hi John, If our clubs could get any where near that figure per team I don't think this thread would have even been started, nor indeed some clubs requesting a reduced cap level.

[whatmichaelsays]

52 minutes ago, Harry Stottle said:

Thanks for your thoughts Micheal, so if your scheme was sanctioned and put into place, would we still have a 12 team SL, would the present incumbents still be in SL barring P&R, indeed would we still employ P&R.

Your first point was that we had only 4 WINNERS on the trophy, I am confused how under this system in what would effectively be allowing the richer clubs to spend more on it's playing roster how we would increase the number of trophy winners saving for replacing Bradford with Warrington or Hull FC.

Incidentally by growing the buisness off the field would this include non rugby contributions say renting the stadium for other functions, if so you do realuse you would be eliminating 2 of our bigger clubs from any stadium revenue gains, namely Wigan and Hull FC.

My personal preference (and it is just that irrespective of any financial handicapping), is for a franchised-based Super League. However, that may be another debate for another time.

But this salary cap model could easily be implemented in any structure - you could have P&R based on such a system and you could have as many or as few teams as you like. 

My point about there only being four winners of the competition is to demonstrate how the cap has been ineffective in one of its supposed aims to make the competition more competitive. Whilst we can point to cases such as Salford or Huddersfield, they are exceptions rather than the norm. If the top clubs are going to keep winning the competition anyway, it seems wrong to supress the earning potential of their players to maintain an illusion of competitiveness. 

The stadium situations at Wigan and Hull are frankly their issue and their business decisions to make. It's fair to say that the clubs knew and considered the pros and cons of playing in rented stadia. But I don't think it's unfair to suggest that there is an awful lot that clubs can and should be doing to improve their commercial performance. Crowds at Wigan have been on the slide for a couple of years there and they've had seemingly little success in arresting those declines. Attendances at other clubs have been consistently poor but clubs are effectively 'protected' from their lack of action/success in addressing those issues by keeping the competition on a leash. Clubs across the board seem to be behind the curve in areas such as ecommerce, media, marketing and merchandising. 

I appreciate that COVID changes things but in normal circumstances, wouldn't it be much better for us all if the way to create a competitive competition was not to impose a hard cap that hurts both the players and the product we sell to audiences, and instead to challenge every club to invest in addressing issues like falling crowds, lack of sponsorship and non-matchday income?

[Bostik Bailey]

Another example of the West Yorkshire clubs dragging the sport back. Not only do they want to play out dilapidated grounds they want the rest of the sport to drop down to their level.

As it has been pointed out there is no obligation to spend 2.1 miilion on players wages.

[TboneFromTO]

3 hours ago, Harry Stottle said:

Hi John, If our clubs could get any where near that figure per team I don't think this thread would have even been started, nor indeed some clubs requesting a reduced cap level.

The number is scalable to the league thou

I like that system personally.  Let's say we keep the cap at the 2.8 mill it's at, and have it as a soft cap with a 10% penalty fee (for simplicity's sake). Club 1 spends 3mill on players (going over the cap by 200k). They are then taxed 20k.  The clubs that dont exceed the cap gets to split that 20k as a reward for not breaching the cap.

If 6 teams breach the cap totalling 1 million across the six teams, the other 6 get to split the 100k as a payment

If a team like the Wolfpack for example want to spend 10mil over the cap on players (for what ever reason) and no one else goes above the cap what ever percentage the league decides they have to pay gets split across the team's that don't breach the cap.  In a 10%scenario that means 1 million to distribute to clubs who don't breach the cap.  

Those who wish to spend more can, and those who don't get financially rewarded at the end of the season.  You could even use the breach money to help fund the championship and league 1 if you wanted

[M j M]

2 hours ago, Bostik Bailey said:

Another example of the West Yorkshire clubs dragging the sport back. Not only do they want to play out dilapidated grounds they want the rest of the sport to drop down to their level.

As it has been pointed out there is no obligation to spend 2.1 miilion on players wages.

Not all clubs are fortunate to have multi millionaires or councils build stadia for them. Is the only criteria on here a compliant council or a rich backer? These aren't the ideal criteria for choosing the strongest clubs.

[Eddie]

13 minutes ago, M j M said:

Not all clubs are fortunate to have multi millionaires or councils build stadia for them. Is the only criteria on here a compliant council or a rich backer? These aren't the ideal criteria for choosing the strongest clubs.

They are decent criteria actually, it’s what happens in football across the globe and that game isn’t suffering too much. 

[Eddie]

I’d get rid of the cap altogether, dragging everyone down to the lowest level has significantly weakened RL in this country and hindered investment. 

[ojx]

I'm surprised the new players union hasn't chime in about this. They should stand together to block any salary cap reductions.

[Bostik Bailey]

1 hour ago, M j M said:

Not all clubs are fortunate to have multi millionaires or councils build stadia for them. Is the only criteria on here a compliant council or a rich backer? These aren't the ideal criteria for choosing the strongest clubs.

But quite a few clubs do have backers and and councils that see their sports club as a community asset. Should we hold these clubs and the game back?

[Liverpool Rover]

5 hours ago, whatmichaelsays said:

I'd personally replace the cap with a financial fair play-style system.

I think there is a place in the sport for some degree of financial levelling, but an arbitrary hard cap is a blunt instrument that arguably does more harm than good. We've had a salary cap for more than 20 years that has actually reduced one of the key costs of RL clubs by a substantial amount in real terms, yet in that time we seen:

• Just four names on the trophy.
• A long list of insolvency events in the sport.
• Reduced earning potential of players.
• A talent drain to other competitions. 
• A myriad of fudges being tacked onto the cap to try and help the sport compete on recruitment and retention.  

An FFP-style system is, in my view, a fairer and more progressive system. What I'd personally like to see is:

• Salary caps set at a percentage of club turnover. 
• A much higher ceiling to ensure that no one club can excessively hoard or out-spend the competition. 
• Restrictions on the influence of investor contributions or directors loans that are unlikely to be repaid in order to prevent "financial doping". 

Such a system would encourage clubs to invest in growing the business, rather than trying to drag the rest of the sport down to their level so that they can run their clubs on the thinest shoestring possible. If a club wants to compete financially with the big boys on the field,  they need to invest in growing the business off the field to pay for it.

Crucially, it would also give the players an opportunity to share in the success and growth of the clubs - something that they collectively cannot do under a hard cap that barely moves.  

I think that clubs won’t look past the bit in bold. IMO the salary cap over here was simply brought in to cut costs rather than anything to do with spreading out talent or creating an even competition.

[Angelic Cynic]

4 hours ago, Bostik Bailey said:

Another example of the West Yorkshire clubs dragging the sport back. Not only do they want to play out dilapidated grounds they want the rest of the sport to drop down to their level.

As it has been pointed out there is no obligation to spend 2.1 miilion on players wages.

  Yes.It's just surprising that it was Messrs Lenagan and McManus who didn't want the cap raised/removed when Dr Koukash was at Salford.

1 hour ago, ojx said:

I'm surprised the new players union hasn't chime in about this. They should stand together to block any salary cap reductions.

  The players union in the other code is having his say - at a time when they fear losing clubs.Who'd have thunk it?

  https://www.theguardian.com/sport/2020/may/20/fear-among-premiership-players-that-some-clubs-could-go-bust-by-christmas

[PREPOSTEROUS]

I don't see the point or the logic in lowering it at all. Its a maximum spend and if the club doesn't or cant afford to pay up to that limit then don't. 

I can see the benefit of a cap but after all the whinging I'd now like to see it scrapped and let those clubs who want to spend big on players do so, and when they go pop the lesser clubs can move up the ladder. 

[sweaty craiq]

There should be a cap, set much higher. As previous poster said, it is then up to clubs how much they spend.

one issue we have is that some owners of larger clubs benefit from lower caps, they do not have to pay premiums to attract the better players and so will win trophy’s with no financial input or growing the brand/sport

[Tommygilf]

2 hours ago, sweaty craiq said:

There should be a cap, set much higher. As previous poster said, it is then up to clubs how much they spend.

one issue we have is that some owners of larger clubs benefit from lower caps, they do not have to pay premiums to attract the better players and so will win trophy’s with no financial input or growing the brand/sport

Of course. The paymasters at top clubs love the cap. It means Leeds, Wigan and Saints can offer smaller wages to more better players.

All 3 clubs have also shown less ambition with their successes in the past decade or so also. Considering what has actually been achieved by these clubs the declining marquee event interaction with their cities/towns is appalling.

Some attitudes are changing thankfully, but its going to have to take the likes of Warrington, Toronto, Catalans and even Hull FC and Leigh to change this. Koukash tried whilst at Salford but found no allies. 

[ATLANTISMAN]

6 hours ago, Tommygilf said:

Of course. The paymasters at top clubs love the cap. It means Leeds, Wigan and Saints can offer smaller wages to more better players.

All 3 clubs have also shown less ambition with their successes in the past decade or so also. Considering what has actually been achieved by these clubs the declining marquee event interaction with their cities/towns is appalling.

Some attitudes are changing thankfully, but its going to have to take the likes of Warrington, Toronto, Catalans and even Hull FC and Leigh to change this. Koukash tried whilst at Salford but found no allies. 

There is a lot of sense it what you say (I have been saying it for ages) the cap suits the top clubs more it needs raising badly to at least 3 million (Personally I would make it 5 million) and if clubs only spend 25% of that no problem.

This will also stop the ridiculous avoidance of taxes that has gone on for years with Aussie players benefitting from Hong Kong companies where a large chunk of the agreed contract would be paid to and collected at the end of the contract on the way back home granted not so much nowadays as the days of the Aussie superstars coming over have diminished sadly.

 

Paul

[Harry Stottle]

12 hours ago, PREPOSTEROUS said:

I don't see the point or the logic in lowering it at all. Its a maximum spend and if the club doesn't or cant afford to pay up to that limit then don't. 

I can see the benefit of a cap but after all the whinging I'd now like to see it scrapped and let those clubs who want to spend big on players do so, and when they go pop the lesser clubs can move up the ladder. 

Got to agree with that, it is like the urban speed limit of 30 mph most people actually think that is the minimum you are to travel at.

[Angelic Cynic]

An individual who thought our sport could match the other code now gives his reason as to why it is right to lower the cap...

https://www.yorkshirepost.co.uk/sport/rugby-league/cutting-super-leagues-salary-cap-would-send-right-signal-says-hull-fc-owner-adam-pearson-2858653

[whatmichaelsays]

8 hours ago, Tommygilf said:

Of course. The paymasters at top clubs love the cap. It means Leeds, Wigan and Saints can offer smaller wages to more better players.

This is certainly a big factor. 

Hetherington has generally voted against rising the cap in the past as he felt Leeds had a competitive advantage. During the early 00's and 10s, the club had been very good at developing a lot of first-team ready young players who could fill the squad cheaply but more crucially, unlike the likes of Wigan, they were even better at convincing those players to stay. Sinfield, McGuire, Burrow, Bailey, Ablett, JJB and Hall all had testimonial years at the club, whilst the club also got good years out of Watkins, Singleton and Diskin, along with brought-in players like  Peacock, Leuluai, Delaney, Lauitiiti and Donald.

Whether it was down to culture or some other reason, Leeds  retained their top talent and stopped it leaking away to competitors and the NRL at a time when, for one reason or another, Wigan were losing the likes of the Tomkins brothers, Williams, Bateman, Burgess, Gelling, Sutton, Gleeson and Hanson. Hetherington used the salary cap to press home that advantage.

I can understand that logic from a competitive perspective, even if I can disagree with it from the point of view that the sport should generally be looking after the players better than it is. But even from the competitive perspective, the case for voting along similar lines today seems to make less sense. Yes there is a good set of young players at Headingley, but nothing that other clubs would covet and certainly nothing like the class of 2002-03.

[Harry Stottle]

19 hours ago, TboneFromTO said:

The number is scalable to the league thou

I like that system personally.  Let's say we keep the cap at the 2.8 mill it's at, and have it as a soft cap with a 10% penalty fee (for simplicity's sake). Club 1 spends 3mill on players (going over the cap by 200k). They are then taxed 20k.  The clubs that dont exceed the cap gets to split that 20k as a reward for not breaching the cap.

If 6 teams breach the cap totalling 1 million across the six teams, the other 6 get to split the 100k as a payment

If a team like the Wolfpack for example want to spend 10mil over the cap on players (for what ever reason) and no one else goes above the cap what ever percentage the league decides they have to pay gets split across the team's that don't breach the cap.  In a 10%scenario that means 1 million to distribute to clubs who don't breach the cap.  

Those who wish to spend more can, and those who don't get financially rewarded at the end of the season.  You could even use the breach money to help fund the championship and league 1 if you wanted

The cap is 2.1M not 2.8M at present.

Do you remember the 10 year period when Wigan could outspend all the other clubs, not much competition for the prizes was going on then, in your system if any club had the  money and so decided to "win at all costs" it could be re-enacted, good for the speccies of that club, not good for the game as a whole to have one club totally dominant.