Rugby Top-flight To Review Salary Cap

The 12 teams in rugby’s Guinness Premiership are to meet in January to discuss proposals for a reduction in the salary cap as the economic recession begins to bite.

With a number of clubs reporting significant downturns in finances in recent months, the proposal would see the ceiling for salaries per club for next season cut from £4m to £3.5m.

‘There may be a chance we bring it down slightly,’ said Premier Rugby chief executive Mark McCafferty.

‘We would have to make that decision in January and in time for next season. If we don’t do it, we will take a range of other cost measures.’

Last month Bristol, operating at a £1m annual loss, issued an appeal for new investment to ‘remain competitive’.

Newcastle are also operating on a shoestring, while it has been predicted that England’s leading clubs will lose between £12m and £20m this season.

The decision to reduce the salary cap, which was introduced in the late 1990s, would require a 75% majority vote from the clubs when they meet on 14th January and again in early February.

An 80% increase in the cap, from £2.2m per club to £4m, was agreed ahead of this season to help clubs cope with demands of playing in Europe and the domestic league.

Gloucester, Leicester and Northampton were the only Premiership clubs to make a profit last season.

McCafferty, however, added that there ‘is light at the end of the tunnel’ as a new television deal with Sky Sports and Setanta will bring in £54m in 2010, earning each club £1.5m – a 45% increase on current arrangements.

‘Over the next 18 months we are going to have to work extremely hard on the short-term financial issues and work with the clubs to try and keep their own positions stable,’ added McCafferty.

‘We will take the policy measures to make sure the competition stays competitive and the likes of Bristol and others can afford to run their club.

‘If we bring the salary cap down there is a risk we will lose a little bit of an edge in Europe – but we are all focused on the fact the league needs to remain strong.

‘The Premiership brings in 70% of our revenue. We want our clubs doing well in Europe but this is our core product and everything else comes after that.

‘Our job is to turn clubs into businesses that are sustainable without the required indulgence of shareholders.’