Premiership Rugby has ordered an independent review of its Salary Cap Regulations (the “Regulations”). The review is being conducted by Lord Paul Myners, the former Financial Services Secretary who served under Gordon Brown’s Government. The “comprehensive review” aims to strengthen the Regulations to “ensure that Premiership Rugby has a world leading regulatory system in terms of investigatory powers and robust sanctions”.

All Premiership clubs are set to participate in the process, while there has also been a public consultation. From 30 January to 20 February, anyone with an interest was invited to complete the online consultation form. This consisted of 34 questions on the key elements of the Regulations. It is intended that the review will produce recommendations in the second quarter of 2020 for implementation ahead of the 2020-21 season.

I have submitted a response to the consultation, and this article will set out the key recommendations made therein. Tweaks to the definition of “Salary” and “Connected Parties” are put forward, whilst the most drastic suggestions relate to the creation of individual responsibility (including on players) and stronger sanctions. Overall, it is clear that radical change is required across the board – not isolated to the Salary Cap.

This is a long (but, I hope, comprehensive) piece, so here is a list of contents to aid with navigation:

1. Defining Salary
2. Connected Parties
3. Preventing Circumvention
4. Individual Responsibility
5. The Salary Cap Manager
6. Sanctioning
7. The Disciplinary Process
8. Independent Governance
9. Transparency
10. Objectives of the Regulations
11. The Level of the Salary Cap
12. Concluding Comments

1. DEFINING SALARY

1.1 Changes to the scope of Salary (Schedule 1 of the Regulations)

The examples of Salary listed in Schedule 1 are largely comprehensive, and certainly capture the purpose of the Regulations. However, in light of the PRL v Saracens decision (the “Decision”), doubts remain about the classification of direct co-investments. At paragraph 169 of the Decision, it was made clear that money invested directly into property with players – as opposed to through Joint Venture Companies – is not treated as Salary. The exact basis for this remains unclear, particularly given the broad wording of paragraph 1(p) of Schedule 1.

It is suggested that the better view is that such investment should be considered salary, given that players are able to benefit from it in a way they would otherwise not have been so able. For example, a player who buys a house jointly with a club owner as an investment obtains a benefit that many players at other clubs cannot – i.e. any increase in value in the property. Players at other clubs where the owner is not so readily able to invest cannot profit from such arrangements. Thus, the club in question is more attractive to players than other clubs: they have an indirect financial advantage. The playing field the Salary Cap Regulations try to create (see Regulation 2.2(c)) would not be level and, therefore, this type of transaction should be classed as Salary.

One way of achieving this would be provide for this specific example: explicitly prohibiting any sort of co-investment with players.

Further, or in the alternative, the definition of paragraph 1(p) could be expanded slightly. It currently classes as Salary “any payment or benefit in kind which the Player would not have received if it were not for his involvement with a Club”. This could be extended to include any “equity, profit or increase in value”.

Of course, there may be difficulties in valuing such equities or contributions. However, this extensive definition would likely incentivise clubs to avoid such arrangements altogether, meaning that valuation would rarely be in issue.

That said, valuation was a contentious issue in PRL v Saracens, as regards the co-investments. A set of accounting principles that can be used to value such benefits ought to be incorporated into the Regulations, in order to make this process more transparent. On the other hand, not publishing such principles would incentivise consultation with the Salary Cap Manager over such transactions.

1.2 Everything received by a player from a club should automatically be deemed Salary, subject to a specific exclusion

The Regulations would be more effective if everything received by a player from a club (or a Connected Party) was automatically included as Salary, unless it falls within a specific exclusion. The same reasoning as in 1.1, above, applies here – i.e. that some clubs and their connected parties may not be as readily able/willing as others to give payments/benefits to players.

It may be that there are circumstances in which payments/benefits should not be deemed Salary, but this can be dealt with by closely defined exceptions. For example, payments from sponsors in respect of genuine commercial arrangements which are entirely separate from the club and its ownership might be acceptably excluded from Salary (see 2.1 below).

This blanket rule would also largely resolve the uncertainties noted in 1.1 above.

1.3 Would a principle-based approach to Salary be preferable to the current rules-based approach?

A principle-based approach would not be preferable. The certainty of a rules-based system is desirable from various perspectives. Firstly, it will be much easier for clubs to plan and budget if they are able to determine exactly what will and will not be classified as Salary. The Regulations should be drafted in the clearest terms possible so that there can be no grey areas. A principle-based approach would inevitably be grey.

This, in turn, would likely lead to more strongly contested decision-making. Clubs would be more inclined to challenge decisions of the Salary Cap Manager if there is room for argument. If the rules set out the scheme in precise terms, there can be little room for such argument.

Consequently, the Regulations will be much easier to enforce. In proceedings before a disciplinary panel, it will be far easier for the Salary Cap Manager/PRL to prove its case if the Regulations are certain.

The Regulations ought to be drafted in a way which minimises dispute and promotes transparent and predictable behaviour. A principle-based approach would not aid such a state of affairs.

2. CONNECTED PARTIES

2.1 Are there any circumstances in which someone connected to a club should be allowed to give something to a player without it being considered Salary?

I would submit that there are circumstances in which a Connected Party to the club should be allowed to give something with financial value to a player without it counting as Salary and that this does depend upon who that party is.

Genuine commercial transactions which are separate from the wage-work bargain at the heart of the player-club relationship should not necessarily be objectionable. However, where the financial benefit comes – directly or indirectly – from those who fund the club, or those who are employed by the club, it becomes necessary for the benefit to be classed as Salary. This is because the benefit is provided, directly or indirectly, as a result of the club’s own financial resources. For example, a wealthy club owner providing benefits to players is not an advantage every club will necessarily have. This is simply financial good fortune – there is nothing sporting about this.

By contrast, sponsors, though contributing to the club’s resources, are not so fundamentally, financially linked. Wealthy sponsors tend to be attracted to successful teams – i.e. teams that perform well in the sporting sense. As such, clubs earn sponsorship through success. If a sponsor is also then willing to pay a player in respect of genuine commercial opportunities quite apart from the sponsorship of the club, there is less of a cause for concern. The players are not gaining an advantage from simply being at a club owned or run by rich individuals; they are indirectly gaining an advantage from on-field success. There is no clear justification for denying players the opportunity to exploit sporting success in this way, and the level playing field set out in Regulation 2.2 is not fundamentally disrupted.

Of course, such sponsorship arrangements must be genuine, and care will be needed where sponsors are owned or otherwise connected to owners/directors of the club itself.

Other parties such as family members of club owners should also be able to enter into commercial transactions with club players, provided that they are genuine. Though there may be a link to the club’s ownership, it is just as likely that the family member is an independent businessperson interested in contracting with rugby players.

It is therefore submitted that a distinction ought to be drawn between connected parties employed by or owning part, or all, of the club and other connected parties. Any payment/ benefit by the former group must always be classed as Salary, while there could be an exception for “genuine commercial transactions” with the latter.

2.2 How should this be monitored?

Sponsorship is relatively more easily monitored than many other transactions, as it often involves public broadcasts in various media. In this sense, it may be possible for the Salary Cap Manager to keep an eye on such arrangements. However, keeping tabs in this way on every Premiership player would be onerous. Indeed, there may be other types of connected parties with whom players may genuinely transact.

An approval system could be put in place whereby players (and, where relevant, their agents) are obliged to notify the SCM prior to entering into any agreement with a connected party. The player may only then enter into the agreement if it is approved by the SCM.

This could be monitored by players providing information from their tax return (see 4.1 below) and can be enforced by providing for sanctions (fines) for breaching such requirements. The fines here could be expressed as a percentage of the amount the player receives under the agreement in question (for example, 30%).

2.3 Re-defining “Connected Party”

In light of my comments at 2.1, above, it is suggested that two new categories should be created – perhaps “Closely Connected Parties” and “Remotely Connected Parties”. The first category should include directors, officers, employees, agents and shareholders of the club (and any company they are a shareholder of). The second could comprise sponsors, family members and any companies they are shareholders of.

All payments directly or indirectly from Closely Connected Parties would be Salary (under the general rule – see 1.2 above), while those from Remotely Connected Parties would need to satisfy certain conditions to show that they were genuine and not commercially connected to any Closely Connected Party.

In the absence of such radical change, it is suggested that the requirement that a shareholder of a club must own at least 5% of the share capital to qualify as a Connected Party should be removed. Payments from any of the ownership, no matter how small their stake may be, undermines the concept of a level financial playing field.

3. PREVENTING CIRCUMVENTION

3.1 How can circumvention be prevented, particularly as regards the “loan exemption”?

Imposing obligations on individuals would be one way to minimise the risk of circumvention, as it would incentivise greater transparency and communication. This shall be discussed in section 4 below.

As regards player loan agreements, specific obligations could be placed on both loaning and borrowing clubs – and individuals – to notify the Salary Cap Manager of (a) the commencement of a loan agreement; (b) the termination of a loan agreement; (c) any changes to a loan agreement; (d) any games played by the loaned player (for either club); and (e) where the player is training. This will allow the Salary Cap Manager to monitor the situation and to enforce the Regulations properly. Fines for failures to disclose should apply to such information.

4. INDIVIDUAL RESPONSIBILITY

4.1 Players should be obliged to disclose information to the Salary Cap Manager

Creating personal obligations on players (and other individuals) would be an effective way to strengthen the Regulations. I would suggest that players should be obliged to notify the Salary Cap Manager of any payments or benefits they receive from the Club or any Connected Party. One way that this could be achieved is by requiring players to disclose a copy of their tax return each year.

Imposing notification obligations on players is somewhat onerous but aligning this with their tax return would reduce the administrative burden the additional obligations would bring. However, the meaning of Salary under the Regulations may be broader than what is considered as Income for tax purposes. Thus, the tax return information may be insufficient. A broader obligation of disclosure may, therefore, be more appropriate.

Failing to disclose, or making a false disclosure, would bring disciplinary sanctions (see 4.2 below).

4.2 Should players have other obligations and liability to disciplinary sanctions?

Apart from notification obligations, and the obligation to seek prior approval for sponsorship arrangements (as discussed in 2.2 above), players could bear responsibility for compliance with the Regulations in so far as they relate to their own Salary. In other words, where a club is found to have exceeded the Senior Ceiling, players could be liable to sanctions in respect of the amount of that breach that corresponds to them. For example, if payments to player X and Y were not declared and were in excess of the Senior Ceiling, player X would be liable to pay a fine in respect of the amount they received, and Y in respect of the amount they received. The fine could be calculated as a percentage of the amount received.

This does impose a significant burden on players, and I am not fully convinced that it is appropriate, but it would incentivise a fully transparent and cautious approach to the paying of players. Clubs would be far less likely to breach the Regulations if there would be consequences for players but, more importantly, players would be empowered to seek assurances that their club was abiding by the Regulations. Indeed, in legal terms, players might seek warranties and indemnities in their contracts as regards Salary Cap obligations.

This would create a cards-on-the-table, open and honest approach to the Salary Cap, allowing the Regulations to be more effective and more readily enforced.

It might be thought that a strict liability approach for players might be too burdensome as the machinations of the Salary Cap are ‘above their pay-grade’. However, the players do, ultimately, benefit from the ‘unlawful’ conduct and thus ought not be ignorant of the way in which clubs are able to pay them. Further, to mitigate against the severity of strict liability, defences could be created for cases such as where players have been deceived by clubs or agents as to the true state of affairs. Indeed, there might also be a ‘de minimis’ rule such that players are only fined when the breach exceeds a certain amount. Fines in respect of inadvertent, negligible and technical breaches would be inappropriate.

Another advantage of creating individual responsibility, would be the increased incentive for whistle-blowers. If individuals are concerned that they may be personally sanctioned for their involvement in Regulation breaches, they will be far more likely to blow the whistle on breaches that they are aware of, or suspect. This would be a significant improvement on the current Regulations which simply “encourage” people to come forward (see Regulation 2.6). This would further promote transparency, strengthening the Regulations.

4.3 Agent accountability

The suggestions in 4.1 and 4.2 I think can be applied to agents. Notification obligations could be placed on agents – for example, to notify the Salary Cap Manager of contract-signings and commercial transactions.

Of course, not all players necessarily have agents, but individual responsibility would have the same advantages as set out in 4.2, above. Further, it would seem inappropriate to make players responsible, but not agents. Given that agents often drive commercial negotiations and deal with the contractual side of the player’s careers, it would seem unjust if players could be disciplined, while agents were able to conduct business without the same restraints. Indeed, such an approach would leave a gaping hole in the Regulations’ enforceability and coherence. Agents should therefore be responsible to the extent that they are involved in transactions which breach the Regulations – or for failures to notify the Salary Cap Manager of the required information.

The same sanctions and de minimis rule should apply. There could be a defence where the agent had no knowledge of the transaction and could not reasonably have been expected to know of the transaction, or where they had been deceived.

4.4 Should club directors be personally liable?

Removal from office (under Regulation 14.7) is a sufficient punishment for those sitting on the board of the club. Personal fines in the same terms as players/agents could be considered in addition, though removal from office seems sufficiently severe.

4.5 Individual responsibility on administrators

Those who are responsible for recruitment and composition of the playing squad should also bear responsibility under the Regulations. Those who are individually involved in contracting players should be responsible for ensuring the club complies with the Regulations. For example, heads of recruitment, club administrators and, in some cases, directors of rugby are at the heart of the club’s contractual negotiations. It therefore seems appropriate that they should be individually responsible. The whistle-blowing points in 4.2 and 4.3 above also apply here.

Fines in respect of transactions these individuals are involved with would be appropriate, with defences available in cases where the individual had no knowledge of the transaction and could not reasonably have been expected to know of the transaction, or where they had been misled by others within the organisation. A ‘de minimis’ rule would also be appropriate here.

5. THE SALARY CAP MANAGER

5.1 Changes to monitoring and investigative powers

If the increases in the scope of the Regulations envisioned in my responses above did come to pass, it would be imperative that there is a separation of powers between the investigatory/ monitoring branch of the Salary Cap operation and the decision-making branch, in the interests of impartial decision-making. A separate ‘Salary Cap Investigatory Unit’ could be created to report to the ‘Salary Cap Manager’ on its findings. The Salary Cap Manager would be responsible for bringing charges and making decisions on whether transactions are be included as Salary etc (similar to the current role). Disputes should then be referred to an arbitration panel, as per the current Regulations.

In particular, the current Regulations (as amended this season) allow the Salary Cap Manager to investigate a club when they have committed a serious breach within the past 12 months (Regulation 4.9(d)). This seems inappropriate. There ought to be a separation between investigations and decision-making. This will strengthen the independence and impartiality of the decision-making, and give the appearance of a robust, reliable and thorough regulatory process – which is just as important as the actual process itself. In any event, given the potential for increased monitoring, it seems likely that the Salary Cap Manager will need the support of a bigger team. Delegating the investigatory/monitoring process to a separate body would thus have multiple advantages.

Indeed, though the Regulations provide for broad investigatory powers, these could go further – if exercised by an independent unit. For example, the power to order a search could be extended. The Regulations would be more easily enforced and monitored if an investigation could be conducted unannounced, in the same way that anti-doping testing is carried out under the World Anti-Doping Code (the “WADA Code”).

The current powers in Regulation 4.9 provide that the SCM may order an investigation on notice, when there are reasonable grounds for suspecting a breach. Removing the notice period would be one way of making the Regulations more comprehensive. Equally, the requirement of reasonable suspicion could be removed – although any investigation would want to be intelligence-led to not waste resources. The looming possibility of a random investigatory visit would incentivise compliance.

5.2 Increased disclosure and an obligation to consult

The payment of any sum or the provision of any benefit outside of that provided for in the player’s contract (already disclosed to the SCM) by a club should be notified to the SCM for approval, prior to it being paid or provided. A more tightly controlled and more heavily regulated approach will make the Regulations more effective and will assist monitoring.

Furthermore, an overarching obligation of consultation should be added. Clubs should be expressly obliged to consult with the Salary Cap Manager over any doubts they might have as to the Regulations’ application. This would make compliance more achievable and would also reduce the scope for a club to argue they have breached the Regulations unknowingly.

5.3 Is the pace of investigations and disciplinary proceedings appropriate?

Ideally, the process from investigation through to disciplinary decision would be quick and could deal with breaches in the season that they happen. This would be preferable due to the way in which a Regulation breach may detrimentally affect opponents during the season, and the way in which sanctions are liable to affect a team’s league standing.

However, the Senior Ceiling is measured across the course of the whole season so, except in the most flagrant of cases, it will be difficult to establish a breach other than after the end of the season. Indeed, the time limits in Regulation 12 seem entirely appropriate and it would be difficult to shorten them at all, given the potential complexity of the issues.

The downsides of such an approach can be offset by the stronger investigative powers, individual responsibility and stronger, retrospective sanctions (see 6.1). If the SCM is able to conduct mid-season investigations more readily, and individuals are more incentivised to whistle-blow, there is a greater chance that issues can be dealt with before the end of the season. In addition, increasing the size of the Salary Cap ‘team’ would assist with making the process quicker – for example, by creating the aforementioned ‘Salary Cap Investigatory Unit’.

6. SANCTIONING

6.1 Breaching the salary cap: points deductions, title-stripping and relegation

Firstly, the “Overrun” threshold (discussed here) is an entirely appropriate concept – given the possibility of accounting errors etc – but it is arguable that it is set somewhat too high. Given that the Overrun Tax set out in Regulation 10.3 is the same for amounts over £200,000 as the sanction for breaches of over £350,000 (i.e. a fine of £3 for every £1 exceeded), it seems odd that breaches over £200,000 are classified as “Overrun”. It would be more appropriate, I would submit, if the threshold for breach was £200,000 – instead of £350,000. This would also reflect a tightening of the Regulations, and would further incentivise compliance, given the broader range of punishments that may flow from such a breach.

In line with such an approach, it is therefore suggested that the starting point for points deductions for breaches of the Senior Ceiling be lowered to £200,000. As such, the current points sanctions in Regulation 14.3(c) ought to be shifted upwards, in the existing increments (see below).

Moreover, it is suggested that the points sanctions ought to continue increasing incrementally for amounts in excess of £650,000. The current points sanctions provide for the same punishment regardless of whether a club has exceeded the Senior Ceiling by £650,000 or £6,500,000. Though the fines increase indefinitely, the points sanction is capped at 35. This is somewhat incongruous. The points sanctions ought to correspond to seriousness of the breach in the same way that the fine does and, though the Disciplinary Panel has a discretion to increase sanctions, it is suggested that compliance and transparency (as between clubs and the SCM) would be greatly incentivised if more onerous deductions were provided for. This approach would also accord with the principle of proportionality – particularly if there remained a residual discretion to reduce sanctions according to the circumstances.

As such, I would suggest the following scale:

£200,000 to £349,999.99             5

£350,000 to £399,999.99             10

£400,000 to £449,999.99             15

£450,000 to £499,999.99             20

£500,000 to £549,999.99             25

£550,000 to £599,999.99             30

£600,000 to £649,999.99             35

£650,000 to £699,999.99             40

£700,000 to £749,999.99             45

£750,000 to £799,999.99             50

£800,000 to £849,999.99             55

£850,000 to £899,999.99             60

£900,000 to £949,999.99             65

£950,000 to £999,999.99             70

£1,000,000 or over                         75

The average points total of the club relegated from the Premiership over the past 10 seasons (excluding the outlier of 2014-15 when London Welsh got only 1 point) is 23.9. The average points total of the club in first place at the end of Round 22 over the same period is 80.1. Therefore, on average, a points deduction of 56.2 would be sufficient to relegate even the best-performing club. On the above scale, this would correspond to a breach of over £850,000. That exceeds the Senior Ceiling by over 12%. This seems appropriate.

At this juncture it is worth considering the comments of the panel in the PRL v Saracens case, to the effect that relegation – even in such a “very serious” case – would have been a disproportionate sanction. With this in mind, perhaps the sanctions suggested above are too onerous. However, a distinction can be drawn. The panel found relegation to be disproportionate against the background of the points sanctions as provided for in the current Regulations – where the maximum points sanction provided for is 35. It was deemed disproportionate to combine the points sanctions from two separate seasons. If the Regulations provided for harsher sanctions to begin with, it is submitted that relegation would not necessarily be disproportionate, as long as there was a clear scale of severity and a discretion for reductions. The objection in PRL v Saracens was owing to the accumulation of sanctions.

Indeed, it seems appropriate that relegation be given mention in the Regulations. The RFU Regulations provide for relegation explicitly as a possible sanction for misconduct (RFU Regulation 19.11.7), while World Rugby provide for “expulsion” from tournaments as a sanction in World Rugby Regulation 18.6.1(b). It is therefore submitted that it would not be inappropriate to include relegation as a possible sanction within the residual discretion of the disciplinary panel – for the most serious of cases.

As regards the disciplinary panel’s discretion, the approach set out by the panel in PRL v Saracens as to how it should be used seems logical and ought to be followed. To further strengthen the enforceability of the Regulations and to ensure that a consistent, fair approach is adopted, it is suggested that the principles of proportionality and totality – referred to by the panel in PRL v Saracens (see para 139) – be given explicit mention, as principles by which the discretion shall be guided.

Lastly, it is strongly suggested that ‘title-stripping’ be added as a sanction. This is included in the NRL’s salary cap regulations and, in 2010, Melbourne Storm were stripped of their 2007 and 2009 titles. Indeed, title-stripping as a punishment is not uncommon throughout sport. Arts.9 & 10 of the WADA Code provides for the disqualification of results and the forfeiture of any medals, points and prizes. Given that salary cap breaches can be considered ‘financial doping’, there is a strong argument that similar principles ought to apply.

Elsewhere, in football, Juventus were stripped of their 2005 and 2006 Serie A titles over findings of corruption. The “withdrawal of a title” is a sanction expressly provided for in Art.6(1) of both the UEFA Disciplinary Regulations and FIFA Disciplinary Code. It is an entirely appropriate sporting sanction that supports the idea of ‘fair play’ and a level playing field.

Title-stripping would be particularly appropriate for the Premiership’s Salary Cap Regulations because breaches are only typically sanctioned after the conclusion of the season in which they occur – as explained in 5.3. Applying points deductions retrospectively is entirely impractical from an administrative point of view, given the implications for relegation and European and play-off qualification. However, title-stripping is a meaningful way of imposing sanctions retrospectively.

In such a situation, the title ought to be awarded to the team who lost in the Premiership Final, given that they were otherwise the second-best team. This sanction should only be available in respect of breaches of £200,000 or more (in line with the recommended amendments above).

The current financial penalties for club breaches seem appropriate.

6.2 Failure to co-operate

There is a strong argument that sanctions for failing to co-operate should be as severe as sanctions for breaching the salary cap itself. Failing to co-operate may obstruct the application of the Regulations and cover up breaches, frustrating the very purpose of the Regulations. As such, it should be seen as an extremely serious offence. Such an approach is taken under the WADA Code, where punishment for refusing to submit to doping control is as serious as punishment for testing positive (see Arts.2.3 and 10.3). Harsher sanctions would incentivise compliance and cooperation with the SCM at every stage of the regulatory process.

I would suggest that a fine of up to £2,000,000 would be more appropriate, along with a points deduction of up to 75 points. If a club flatly refused to submit to an investigatory audit, any sanction would need to be as severe as it would be for the underlying suspected breach. Of course, this sanctioning power would be discretionary, and it would be rare that sanctions at the top of the available range are imposed. Nonetheless, it seems vital that they are available to the disciplinary panel.

The reasonableness of such severe sanctions would be endorsed by even stronger guarantees of independence. If there is a strong separation of powers between the Salary Cap Manager, the investigatory unit and the disciplinary panel (see 5.1 above), there would be little room to argue with strong sanctions in this context.

6.3 Failure to disclose

The current financial sanctions for failing to disclose arrangements with players range from £100 to £800. It is submitted that these should be increased ten-fold: from £1000 to £8000.

6.4 Additional measures on clubs in breach

I do think there ought to be additional measures imposed upon a club that has been found to have breached the Regulations seriously. One such measure might be that the club has to provide an undertaking that they will remedy their breach within a period of time or face further punishment. A grace period of between 3 and 6 months would be appropriate, given the potential administrative and legal complications involved in undoing a breach. Of course, if a breach continues throughout the following season, it is only right that the club is sanctioned further, because they will have obtained a further advantage over other clubs.

Further monitoring powers may also be appropriate, to allow the Salary Cap Manager (or the investigators) to ensure the club is making attempts to comply. The right to compel an independent investigatory audit, at the end of the grace period referred to above, ought to be available to the SCM, while it might also be useful to require monthly disclosures of payments. The ordinary sanctions should apply for failing to co-operate/disclose payments.

6.5 Compelling a change of ownership?

I do not think that there should be a power for Premiership Rugby to be able to compel a change in ownership of a Club. Rugby is already in a financially precarious position. One only needs to look at the attempts of Leicester Tigers and Saracens to sell their clubs to realise how difficult it can be to find new owners for a Premiership rugby club. Deterring those willing to invest significant amounts of their personal funds into professional rugby – even in the name of upholding the Regulations – would not be prudent. The power of Premiership Rugby to compel a director to resign is sufficient.

7. THE DISCIPLINARY PROCESS

7.1 Appointing the Disciplinary Panel

The current approach to panel appointments (i.e. via Sports Resolutions UK) is a perfectly proper approach and one which has, so far, produced an outstanding result for the league. To have had a former Master of the Rolls on the panel of PRL v Saracens is truly remarkable and is something that out to be commended. This approach is in line with best practice across the world of sports dispute resolution.

7.2 Amending the appeals criteria

The current ‘appeals’ process provides for a review on the grounds of ultra vires, irrationality or procedural unfairness (Regulation 13.2). In the interests of finality and of resolving sporting disputes quickly (in the interests of sport itself), a review rather than a de novo appeal does not seem inappropriate. Indeed, this is the default position provided for under World Rugby Regulation 18 (Appendix 1 para 4.5), and RFU Regulation 19 (19.12.1).

However, both governing bodies also provide for a de novo appeal in exceptional circumstances. World Rugby Regulation 18 (Appendix 1 para 4.3) provides for a de novo hearing when it is necessary “in the interests of justice”, while RFU Regulation 19.12.5 allows for one where “the circumstances are exceptional and there are compelling reasons”. An amendment to the Salary Cap Regulations to allow for such an appeal, in limited circumstances – the wording of the RFU seems preferable – would be worthwhile, as an additional safeguard. This is particularly so if the sanctions are increased as recommended above.

As regards the grounds of appeal, it is suggested that Premiership Rugby again looks to World Rugby and the RFU for guidance. The appeals criteria at RFU Regulation 19.12.1 are particularly clear – a party may appeal on the grounds that the panel:

(a) came to a decision to which no reasonable body could have come; or

(b) made an error of law in reaching its decision; or

(c) failed to act fairly in a procedural sense.

(d) the sanction imposed was so excessive as to be unreasonable

It is submitted that this is a clearer set of criteria, particularly because the term “ultra vires”, in Administrative law, can be seen as an umbrella term to cover any unlawful decision or more narrowly as meaning that the decision-maker had no authority. However, to the RFU’s list, lack of authority (ultra vires) should be added, as should reference to “natural justice”, “proportionality” and “material error of fact”. In other words, the appeals criteria ought to mirror the principles ordinarily applied by the courts in judicial review, to provide maximum protection against injustice. As such, I would suggest the following appeals criteria be adopted:

(a) the panel came to a decision to which no reasonable body could have come (irrationality); or

(b) the panel made an error of law in reaching its decision; or

(c) the panel made a material error of fact in reaching its decision; or

(d) the panel failed to act fairly in a procedural manner; or

(e) the panel failed to comply with the principles of natural justice; or

(f) the panel lacked the authority to make the decision; or

(g) the sanction imposed was so excessive as to be unreasonable and/or disproportionate.

This approach would be comprehensive and clear, allowing for appeals where a material injustice had occurred, while respecting the principle of finality. Indeed, it is desirable that there is consistency across the sport’s disciplinary sanctioning regimes (as there is in football).

7.3 Appointing the appeal panel

The existing system of selecting appeal panel members – again via Sports Resolutions UK – seems appropriate, provided that no member of the original Disciplinary Panel may also sit on the appeal panel. It also seems sensible to impose the requirement that at least one member of the appeal panel be a QC (Regulation 13.7) and that the appeal panel be composed exclusively of legally qualified individuals, given the focus of appeals on the legality of a disciplinary decision.

It is worth mentioning, though, that appointing someone as experienced as Lord Dyson on the original disciplinary panel would make it difficult for an appeal panel to overturn the original decision, and difficult for an appeal panel to be more experienced. It might be thought, therefore, that someone of Lord Dyson’s experience should only be eligible to sit on an appeal panel, and not the first instance disciplinary panel. However, such an approach should be resisted. It is in the interests of sport that disputes are resolved quickly and having someone of Lord Dyson’s experience on the disciplinary panel is only likely to further that aim. It makes it more likely that the first decision will be correct and will thus not require challenge.

8. INDEPENDENT GOVERNANCE

I am not at all comfortable with the role that the Premiership Clubs play in relation to the Salary Cap Regulations or, indeed, the role that they play in controlling the league as a whole. If the Premiership is to be a competition with an entirely level playing field, if inflationary pressures are to be curbed, and if the league is to be run with integrity and in the best interests of the sport, the Premiership clubs’ role must be diminished. A radical overhaul of the league’s governance is required, and Premiership Rugby should become independent of the clubs.

The way in which the Saracens debacle has played out this season – since the disciplinary panel’s decision – has been embarrassing for the league and for the sport. The leaked comments about an “ultimatum” is amateur in the extreme and highlights the fundamental lack of independence within the structure of Premiership Rugby. That it was Saracens’ league rivals that decided to relegate them, and subsequently amend the Regulations to ex post facto permit such action to be taken, is not the way that a modern sports organisation acting with integrity should behave. It smacks of an old-boys’ club. Indeed, it conflicts with the principles set out in UK Sport’s ‘A Code for Sports Governance’ which, though not binding on Premiership Rugby, is an indication of how things ought to be done.

I am aware that this is a radical suggestion and one which could not happen overnight; but it is one I believe is necessary if modernising change is to be brought about. One only needs to look at American and Australian sport to see how this can be achieved. It would strengthen the legitimacy of decision-making, as decisions would be more objective and in the interests of the league (and sport) as a whole, as opposed to being influenced by stronger clubs or those with an axe to grind. In particular, it would make an important difference with regard to setting the level of the salary cap (see 11 below) and would improve the legitimacy of the investigatory and disciplinary processes.

9. TRANSPARENCY

9.1 Administering the Regulations

It is fair to say that the administration of the Regulations could be more transparent. Given the complexity of the Regulations, and their length, it might be beneficial to produce an ‘explainer’ piece on the Premiership Rugby website detailing the basic obligations and rules, as well as the way in which the Regulations are administered day-to-day.

9.2 Updating the Regulations

There is next-to no transparency on this process, because the amendments are decided by the clubs. For example, the mid-season changes this year came entirely out of the blue and appear to have been implemented ‘ad hoc’. It is evident that there is an annual reviewing process, but it would be in the interests of transparency to publish reasons for changes etc. This review is (intentionally) a great step in the right direction – independent governance would be another.

9.3 The disciplinary process

The processes of the Disciplinary Panel are sufficiently transparent, from the publication of the Regulations, but I have significant concerns over the transparency of their decisions.

Transparency and accountability are core principles enshrined in UK Sport’s ‘A Code for Sports Governance’ and are widely seen as fundamental principles of ‘good governance’ in Administrative law. Accountability depends upon transparency and, thus, a lack of transparency significantly undermines the good governance of a sports governing body.

World Rugby Regulation 18 (Appendix 1 para 1.4) provides that Disciplinary Tribunals shall be entitled to publish reports of their proceedings as they think fit and, though the current Regulations allow for a summary to be published, I do not think this goes far enough. All decisions of disciplinary panels ought to be published, subject to the redaction of confidential/private information. Indeed, such an approach was endorsed by Lord Dyson himself in an interview given to LawInSport.

If individual responsibility is provided for in the Regulations, names ought not to be redacted, only financial details. The proceedings themselves should remain confidential, in accordance with the principles of arbitration, and in line with RFU and World Rugby procedure.

The disciplinary decisions affect clubs, players, coaches, fans, the league and the sport as the whole and, thus, it is in the public interest to publish all decisions. If an exception was to be created, it ought to be only for cases where publication would be contrary to the public interest.

10. OBJECTIVES OF THE REGULATIONS

10.1 To what extent do the Regulations achieve the objectives stated in Regulation 2.2?

(a) Financial viability – the Regulations go some way to ensuring this but are not all that effective given that every club, bar Exeter, makes a significant financial loss each year. Though the Regulations may prevent this from being even worse, they are not entirely effective. However, the Regulations alone should not be expected to bring financial viability.

(b) Controlling inflationary pressures – again, the Regulations have gone some way to achieving this aim, but the significant increase from £5,500,000 to £6,400,000 and then to £7,000,000 has not helped. As the league continues to grow financially, more money ought to be directed towards the financial viability of the clubs as opposed to the salaries of players. Thus, a medium-term freeze on the Senior Ceiling would be desirable. Implementing such a change would be easier under independent governance.

(c) A level playing field – the Regulations purport to create this but the way in which they have been enforced and monitored to date suggests that there is much left to be desired. The fact that Saracens were found to have exceeded the Senior Ceiling every season from 2016 to 2019 suggests that there has not truly been a level playing field. Further, to genuinely achieve this objective, additional equalisation measures are required, such as a salary ‘collar’ (i.e. a minimum spend), a fixed squad size, and a properly funded second-tier competition.

(d) Ensuring a competitive league – see (c) above.

(e) Enabling European competitiveness – the Regulations do adequately fulfil this aim. By the time marquee players, injury, academy and international credits are taken into account, the Premiership salary cap is not all that different to the TOP14’s. Though the Pro14 does not have a salary cap, the English clubs are generally well-placed to compete.

In any event, this needn’t be the priority of the Premiership. The primary focus ought to be on the financial viability and competitiveness of the Premiership. If financial Regulation in the Premiership is successful and the league becomes profitable, other leagues will inevitably follow. This review provides the opportunity for the Premiership to become the market-leader in financial regulation within Rugby Union; it ought to be taken.

11. THE LEVEL OF THE SALARY CAP

The level of the Salary Cap should be fixed for the foreseeable future, and the criteria for its increase should be set out explicitly – as an appendix to the Regulations or separately.

As regards the criteria/factors, these should reflect not what a handful of clubs are willing to pay but what the impact on the league would be as a whole. With the exception of perhaps Exeter, every Premiership club loses money every year at an alarming rate, and the league’s overall deficit is staggering. To contemplate an increase in the level of the Salary Cap when the game is in such a state would be inappropriate and reckless. The sustainability of the game depends, ultimately, on its financial viability. A more stable, financially viable model should be found before increases can be considered. A freeze on the salary cap in the medium-term ought to be imposed.

As such, the factors to be considered should be at a ‘macro’ level. They should be designed to assess the state of the game generally, with a particular focus on the levels of debt.

Further, this approach can realistically only be achieved if the level of the Salary Cap is set by a body independent of the Premiership clubs. By paying their players more, clubs stand to have greater on-field success. There is hence a tendency for clubs to want to push the level of the Salary Cap up. An objective, independent assessment is required to set the level at one which is in the wider interests of the English game. This could be achieved by creating a new, independent governance structure (see 8 above), or by outsourcing the level-setting function to an independent agent.

12. CONCLUDING COMMENTS

Overall, reform of the Premiership needs to be wholesale rather than piecemeal, and changes are required across the board – not only to the Salary Cap Regulations. If the aims of the Salary Cap Regulations are to be realistically achieved, the Salary Cap regime needs to be better enforced, and additional regulation is required. The attempt to equalise the league to date has been half-hearted.

A ‘salary collar’ is necessary to ensure clubs are spending a broadly similar amount. Over the years, there have been plenty of clubs that could not afford – or at least have chosen not – to spend up to the Senior Ceiling. Even this season, it has been widely rumoured that Wasps are not spending even close to the Senior Ceiling. If the league is to genuinely be a level playing field, and be competitive, this cannot be. If the Senior Ceiling is too high for some clubs, perhaps it ought to be lowered. In any event, a minimum spend should be imposed – perhaps £600,000 below the maximum.

Fixed squad sizes are also necessary. This would ensure that salaries are distributed evenly throughout the league, and that clubs are equal in terms of depth. This is an equalisation measure seen in American sports, the AFL, NRL and, indeed, in the Premier League.

Increased funding into the Championship would also be advisable, to ensure that promoted teams are competitive and that those who are relegated are still able to thrive. This would aid financial stability/viability, and the level playing field. The recent announcement of reduced funding is counter-productive and hugely disappointing. Of course, an alternative measure would be to ring-fence the league and remove relegation. However, this would bring its own issues with regards to competitiveness and would also be contrary to the fundamental principles enshrined by the RFU (see RFU Regulation 3.1).

One further way to enhance competitiveness and the financial viability of the clubs would be to consider awarding prize money – as in the Premier League. This would incentivise those clubs in the bottom half of the table, in particular, to continue fighting. However, it is somewhat contrary to the essence of sport, as it would make the ambition of clubs financial as opposed to sporting.

Of course, the overarching issue which I believe needs to be addressed is that of independent governance. The authority and legitimacy of Premiership Rugby would be greatly enhanced by a shift towards independence, and the Salary Cap Regulations themselves would benefit notably – as discussed above. The current shareholder model inhibits the aims of the Salary Cap Regulations which, ultimately, are the aims of the league itself. Radical change is needed.

The other change needed across the board relates to transparency. This would be aided by independent governance, no doubt, but the transparency of decision-making, both disciplinary and administrative, ought to be better. To withhold the PRL v Saracens decision and to publish such a bare summary, then to relegate Saracens behind and subsequently amend the Regulations to legitimise it was a slap in the face for transparency, and Premiership Rugby should be better in this regard. Indeed, the Premiership Regulations are unavailable on Premiership Rugby’s website and nor are the Minimum Standards Criteria for promotion into the league. Far from being transparent, this is opaque governance.

A final comment relates to collective bargaining. It has been suggested by some that a Collective Bargaining Agreement is necessary for the Salary Cap Regulations to be lawful. This argument was rejected by the panel in PRL v Saracens as regards the current Regulations (see para 40) and though there might be concerns about the doctrine of restraint of trade, the scope for justifying such restraints as being reasonable appears to be broad (for example, Stevenage Borough FC v The Football League, per Carnwath J).

However, if the suggestions in section 4 above are adopted – imposing obligations upon individuals – it is submitted that a collective bargaining process may be advisable, as the risk of a challenge to the Regulations validity would significantly increase. Further, the current shareholder model of Premiership Rugby means that the clubs – upon whom the existing obligations primarily lie – have explicitly consented to the imposition of such duties. An individual responsibility approach would, without a collective bargaining agreement, lack such a ‘defence’. The major American sports, the AFL and NRL all have such arrangements.

The radical nature of some of the changes outlined herein means that wholesale reform may not be possible prior to the start of the 2020-21 Premiership season. Some of the ideas discussed may be seen as long-term ambitions as opposed to short-term tweaks. Indeed, any collective bargaining process would likely extend the time needed to implement change. Nonetheless, I would urge Premiership Rugby to be bold and not to shy away from radical measures. The long-term viability of the league and, indeed, English rugby, depends on it.

Acknowledgment: it is right that I credit ‘Unholy Union’ by Michael Aylwin with Mark Evans, as it provided inspiration for some of the above. The book is well worth a read for anyone interested in rugby and/or professional sport, and can be found on Amazon here.