Over the top salaries have turned pro rugby into a fine mess

SA Rugby faces an uphill battle of note. Some of problems are self-inflicted. It’s perhaps an understatement to say that rugby in SA could be run a lot better.

If Super Rugby is to survive, SANZAAR also needs to freshen it up so that it regains some of its lost appeal.

At the same time one cannot overlook the most serious external contributor – player salaries abroad. This is having a major impact on domestic rugby’s cost of staying competitive. In an effort to curb player drain, something that is vital to keep local supporters interested, the big local rugby unions are dragging themselves closer to the red. Some might even be operating in it already.

Recent evidence of the financial pressure was the scrapping of the SA under-19 provincial rugby championship, a decision born out of economic crisis management rather than sound, strategic long-term planning.

As for the other two Southern Hemisphere big guns, there’s enough evidence to suggest that the Aussies are having a torrid time as well despite having signed a vastly improved TV rights deal a few years back. Although the New Zealander’s continue to retain most of their best players, play attractive rugby and have admirable structures in place, they too are feeling the pinch, in that more of their second choice players are departing, meaning it’s evolving to a point where New Zealand risk having to turn to third choices if their top guys are injured or suspended. They have so much depth and quality though that it might not be noticed. More worrying talk is that if SA pulls out of SANZAAR, the Kiwis will start sinking too, because in the past the broadcast deals have relied so heavily on the widespread demand in South Africa. Eeek! What if that demand is diminishing?

With some of the Northern Hemisphere heavyweights offering top South Hemisphere players very attractive contracts, the financial problem poser for the South is where to draw the line when it comes to their own player packages so that the balance sheet does not look too sick.

Based on the contracts being dished out, a reasonable assumption would be that in a wealthy country like England, rugby is financially rosy. Not quite so!

Of the 12 English Premiership clubs, only Exeter made a profit last year. The other 11 all ran at a loss. This is in spite of a salary cap being in place. Their problem is even though there is growth in popularity and turnover of the English game, player wages are eating up the revenue. The Premiership wage bill accounts for over 60% of revenue. The overall is that anyone who invests in Premiership rugby is bound to lose money. It sounds insane but it’s a reality.

Why not just lower the wage bill?

Well believe it or not, English clubs are trying to keep pace with French club rugby from a competitiveness point of view. In the Top 14, rich club owners are willing to pump in millions of Euros and have very few restrictions, means they are the ones driving up the market price of players to a point where it’s creating a threat to the wellbeing of pro rugby as a global sport.

Aside from the overseas player pulling power, the imbalance in France is even having an impact on the underperforming French national team, where the selections and form seem to create a distinct impression that it’s very much club over country nowadays.

French club rugby is enemy number one of professional rugby!

Yes it’s great that rugby players who put their bodies on the line in a high risk of injury sport which for most has a career span at the top of less than 10 years, are being well remunerated but there has to be an equilibrium. If Top 14 club owners continue to only look out for themselves, it spells bad news for the future.

If Europe’s clubs could set a salary cap of say £5m pa (€5.65m), this would go a long way towards making the English Premiership clubs profitable (current cap is £7m pa + two marquee players) and it would give the Southern Hemisphere a better chance of retaining top players, which in the longer term would definitely be a better path forward to protect world rugby as a global sport. English club Bristol signed former All Black Charles Piutau as an outside the cap marquee player on a contact worth £1m per year. That’s like R18 million and could probably fund as many as six good players at in a top Southern Hemisphere team. Incidentally Ireland, France and Wales operate on wage budgets peaking around the £5m pa marker at present.

As the rate things are moving forward at, pro rugby is on course to become a sport played by the best North of the equator with little more than development and lower quality matches taking place in once thriving regions of the Southern Hemisphere.

Outrageous French Club budgets for 2018/19 season

Top 14 Club In Euros (‘mil) In GBP (‘mil) In Rands (‘mil)
Stade Français € 34.0 £30.1 R529.6
Clermont € 32.5 £28.8 R506.2
Toulouse € 32.0 £28.3 R498.4
Toulon € 30.0 £26.5 R467.3
Lyon € 29.8 £26.4 R464.1
Montpellier € 27.0 £23.9 R420.5
La Rochelle € 25.6 £22.7 R398.7
Pau € 25.0 £22.1 R389.4
Racing 92 € 24.0 £21.2 R373.8
Castres € 23.7 £21.0 R369.1
Bordeaux Bègles € 23.0 £20.4 R358.2
Glenoble € 18.0 £15.9 R280.4
TOTAL € 324.6 £287.3 R5,055.7

On the point of sustainability, English Premier League football club Manchester United makes for interesting reading.

United has been a pro sports world leader for a long time now. They are still setting revenue records even though they are no longer winning like they once did under manager Sir Alex Ferguson. United generated revenue of £590 million for 2017/2018 season. But forget the actual values for a second and focus on the revenue breakdown percentages which is very revealing, as it shows that the football club focuses on various income streams.

Man Utd Category £’million %
Gate and match-day income £110 19%
TV and broadcasting £204 35%
Sponsorship £173 29%
Retail/Merchandising £103 17%
Total Revenue £590 100%
Paid out in salaries -£295 -50%

To be a success story, TV revenue, fill the stadium, maximising on sponsorships and retail/merchandising all have a huge part to play. So does keeping the player salaries as part of operating costs at bay.

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