This is Part 2 of my review of the Myners Review.

On 14 May 2020, Premiership Rugby published the report of the independent review of the Premiership Rugby Salary Cap Regulations (the “Regulations”), conducted by Lord Myners. Publication of the report, commissioned by Premiership Rugby in December 2019, followed an open public consultation to which approximately 450 individuals and organisations responded. I submitted my own proposals (here) and was pleased to see a number of my suggestions adopted; though I am sure I was not alone in making them.

The Myners Review followed the disciplinary case against Saracens in 2019 for breaches of the Salary Cap in three consecutive seasons – discussed in detail here – and their subsequent relegation from the Premiership (discussed here). It made 52 recommendations on how the Regulations should be reformed, spanning independence and transparency to player and agent accountability.

Part 1 of this article (see here) considered the recommendations on independence, transparency and the definition of “Salary”, while this second Part will address the recommendations on sanctions, the accountability of individuals (including players) and the powers of the Salary Cap Manager (“SCM”), before arriving at some general conclusions.

1. Club Sanctions

With regards to the sanctions imposed on clubs for breaches of the Salary Cap, Lord Myners recommends increasing their severity and the level of discretion available to the disciplinary panel.  He recommends lowering the starting point for points sanctions to £200,000, while increasing the top-end sanction has been increased from 35 to 50 points (page 36). The financial sanctions have also been increased for low-level breaches:

Recommendation 4.1 – The entry level for points sanctions should be increased.

While I suggested a graduated system of points sanctions – increasing in increments of 5 with each £50,000 of breach above £200,000 – Lord Myners has recommended a more discretionary system (page 36):

Level of Breach:

£200,000 to £399,999.99              15

£400,000 to £599,999.99              35

Over £650,000                              50

Around this framework, he recommends a “greater degree of discretion to make sure that the sanction is appropriate”, finding that narrow bands could be “too prescriptive” (page 37). This seems sensible to ensure that the panel can impose “proportionate sanctions” by taking account of a wider range of factors including the level of the breach, whether arrangements have been concealed, and whether the club has been found to have breached the cap in more than one season (page 37). Lord Myners also suggests that the factors are weighted by, for example, doubling the sanction where a breach is found to have been reckless or deliberate:

Recommendation 4.2 – The disciplinary panel should be entitled to take into account a wider range of factors and be given more guidance in relation to how those factors might influence their decision and their relative weighting. 

With regards to regulatory offence of “Failure to Co-operate”, Lord Myners recommends increasing the sanctions to a level equivalent to the sanctions available for breaching the Salary Cap itself (Recommendation 4.3). This is in line with my own suggestions and is an important change to encourage co-operation and compliance. As Lord Myners suggests, clubs should not be able to accept a lower penalty as a “cost of doing business” (page 37).

Moreover, the report recommends removing Regulation 14.8, which was inserted this season to deal with Saracens continuing non-compliance, by imposing an automatic 70-point deduction when a club refuses to submit to an audit. Lord Myners found the sanction to be excessive and, rightly, considered it a matter for a disciplinary panel to deal with under the failure to co-operate provisions (page 38).

Lord Myners also recommends imposing more severe sporting sanctions:

Recommendation 4.4 – Make additional sporting sanctions available, including relegation, suspension, stripping of titles and return of prize money.

This was something that many people (myself included) had been calling for, and these sanctions can be found in other major sports regulatory systems (for example, those of World Rugby, FIFA and WADA). Such strong measures will make the Regulations significantly more robust and will greatly enhance their deterrent effect.

When a club is found to have consistently breached the Salary Cap, Lord Myners further suggests the following:

Recommendation 4.5 – Provide the disciplinary panel with the power to install an independent monitor for consistent and serious breaches.

This would involve an independent individual being sent into the breaching club – at the club’s cost – with full access to the club’s workings, to report on their continuing compliance. Lord Myners considered this a “draconian measure” and hopes it would never be used, but nonetheless considered it a tool with which to procure compliance (page 39). It seems appropriate for the most serious cases.

Finally, the report recommends increasing the sanctions available to the SCM for less serious breaches of the Regulations, such as the late or non-submission of required documentation (Recommendation 4.6). The existing sanctions starting at a £100 fine are, frankly, laughable, so I am glad to see that Lord Myners has recommended an increase. The fines now start at £1000 and, in certain circumstances, a points deduction may also be applied. I agree with Lord Myners that such sanctions are “reasonable and proportionate” as long as “clubs are entitled to a full appeal before an independent disciplinary panel” (page 40).

2. Player Accountability

One of the more controversial recommendations of the report is the creation of player accountability. Lord Myners noted how individuals may have been “flexible with the truth” in relation to the Salary Cap and identified the lack of consequences as a key reason for it (page 40). Player accountability is used in the salary cap regulations of Super League, AFL and across the major US sports. I argued in favour of this approach in my submissions to the review:

Recommendation 5.1 – Tie players into the regulations so that they have accountability with respect to the salary cap.

Concerns were raised about players’ ability to understand their financial arrangements and the Regulations. Lord Myners dismissed these concerns, as those players with complex financial arrangements ought to take professional advice anyway, and he recommended that PRL provides training to the players on their regulatory obligations (page 41). It would be interesting to know how many players were consulted during the review, and to what extent they were aware of the RPA’s own representations to Lord Myners.

Recommendation 5.2 sets out the suggested obligations for players. First, Lord Myners recommends that players must sign a “player declaration” setting out their anticipated earnings, including all payments under and excluded from the cap, at the start of the season, as well as a declaration of their actual earnings at the end of the season. Players must also disclose the details of bank accounts to which these payments will be received.

Second, he recommends that players must report to the SCM all companies and trusts in which they are involved, and any contractual arrangements entered into, within 14 days. Players must notify their club any transfers of value, while sponsorship must accompanied by a declaration from the sponsor that the deal is independent of any sponsorship of the player’s club. The SCM may then reasonably request further information from players. The report also states:

Players should also be under an obligation to notify the SCM if they become aware of an attempt to circumvent the salary cap. And players should be subject to severe sanction if they knew, or ought to have known, that they were involved in an attempt to circumvent the salary regulations.

Previously, Lord Myners noted that players should not be responsible for the salary cap for an entire club and should only be responsible for value they receive personally. He added (page 41):

It would be wholly inappropriate to ask them to take responsibility for the payments to any of their team-mates, aside from reporting any suspected circumventions of which they become aware

Does this mean that players would be under an obligation to blow the whistle on their club and teammates, and would face sanction if they failed to do so? Whilst it is clearly important to encourage openness and transparency, I feel that this would go too far and may risk undermining trust within teams, to the detriment of all involved. Further clarity is needed on this point.

Thirdly, it is recommended that there is a duty on players to seek clarification from the SCM when they are unsure whether a payment is prohibited or whether it should be included within the cap. A failure to do so will result in the entire payment being included in the cap and, if the payment is prohibited, sanctions. Presumably, the amount will not be included in the cap if it does not fall under the definition of “Salary”, but this could perhaps be clearer.

Lastly, there are obligations on the players to co-operate with the SCM by answering the SCM’s questions honestly, by making tax returns available on request (randomly or on suspicion of breach), by providing bank statements (if the SCM has a reasonable suspicion of breach) and by co-operating with the auditors in the annual audit. Lord Myners could perhaps have  gone further here by, for example, requiring players’ tax returns to be submitted as a matter of course, to gather the most extensive and accurate financial information possible, but his recommendations strike a sensible balance between procuring compliance and interfering in players’ affairs.

Sanctions

The report then recommends:

Recommendation 5.3 – Provide sanctions for players who are in breach of their obligations under the Regulations. These sanctions should include fines and sporting sanctions.

Lord Myners set out a table of recommended sanctions, ranging from a £1,000 fine for the late submission of the annual declaration up to a £250,000 fine and a playing suspension of up to one season where the player is “found to lie or providing false or misleading information to the SCM” (page 43).

The fines for low-level/administrative errors seem appropriate, but I have some concerns about the more severe punishments. Imposing sanctions for “providing false or misleading information” creates an offence of strict liability. A player could unknowingly mislead or provide false information to the SCM and be met with a quarter of a million-pound fine and be banned from playing for a year. Such a long ban could see playing contracts terminated and the fine could far exceed what most players earn in a season, resulting in career and financial ruin. A disciplinary panel would presumably ensure that any punishment is proportionate, but the creation of strict liability without any defence is incredibly onerous.

This is particularly so because players could themselves be misled by agents or their club. Strict liability is not in itself objectionable but any such offence under the Regulations should have a defence of “no fault” or “no significant fault”. The principle of proportionality should also be explicitly enshrined.

The same is true of the recommended offence of “failure to meet with SCM”, which has a suggested sanction of £10,000. Given how the vicissitudes of life could so easily intervene, it seems wrong that a single infringement could lead to such a significant fine. A three-strikes-and-you’re-out system, or adding the phrase “without reasonable explanation”, would be more appropriate.

One way for players to protect themselves, if the recommendations are materially adopted, would be to require an indemnity clause to be inserted into their next contract, under which the club would guarantee to compensate them in respect of any fine imposed as a result of their reliance on information provided by the club. Presumably, even under Lord Myners’ restrictive proposals, such sums would not count towards the cap. It would be advisable for players to do the same with their agency agreements.

As Lord Myners points out, a system of sporting sanctions would require the co-operation of the RFU. He suggests that one way forward might be to join the RFU to any disciplinary panel concerning a potential breach by a player (page 43). An alternative might be for the RFU to simply agree to recognise and enforce any sporting sanction imposed by a panel constituted under the Regulations as if it had been imposed under RFU Regulation 19.

3. Accountability of Others

As well as making players accountable, the report recommends imposing responsibility on other individuals including club owners, club officials and agents.

Owners

Recommendation 6.1 – Introduce a fit and proper test for club owners to be available to the Disciplinary Panel in extreme circumstances.

Lord Myners advocates giving the disciplinary panel the power to deem an owner “not fit and proper” if they are found to have “seriously and systematically” breached the Regulations (page 44). This would see the club initially put into “stewardship” and, if this does not prove effective, the ultimate sanction would be forced divestment.

The report acknowledges that such an approach may be susceptible to a challenge in UK competition law and, thus, this recommendation ought to be approached with caution. Indeed, although Lord Myners considered it “necessary to create gold-standard regulations” (page 44), the other proposed sanctions would surely be sufficient to reasonably fulfil the aims of the Regulations and, thus, such a draconian measure may not truly be necessary.

Club Officials

Lord Myners echoed my own view that club officials should be personally accountable for complying with the Regulations. If players are to be made accountable, so also must club personnel, who are the individuals responsible for budgeting and managing the club’s pay structure under the Salary Cap. Imposing personal obligations on such individuals ought to more strongly deter breaches of the Regulations and encourage greater openness:

Recommendation 6.2 – Define a category of “club officials” to include directors and shareholders with more than a 10% holding and each club official should register with PRL.

Elsewhere, Lord Myners extends this term to also include any “CEO, CFO and director of rugby (or personnel carrying out the roles associated with those titles)” (page 44). He was clearly struck by the fact that “Nigel Wray said that he had not read the regulations over the previous 20 years” (page 44) and thus suggested:

Recommendation 6.3 – Require club officials to sign a declaration confirming that they have read the regulations and agree to abide by them.

To incentivise greater attention being paid to the Regulations, the report recommends that the board of directors of each club should “proactively discuss their own salary cap compliance as a standing agenda item” (page 44) and that a board representative should “sign a declaration at the beginning and end of the season of the club’s anticipated and actual compliance with the regulations” (Recommendation 6.4).

As regards sanctions, Lord Myners states:

Recommendation 6.5 – Provide that any club official who knew, or should have known, about the breach of the salary cap and who has signed a false declaration or certification or has unreasonably failed to co-operate with salary cap regulations is subject to sanctions including a ban from PRL for up to two years (first offence) or up to lifetime (any subsequent offence).

It is not clear why this offence should have a fault requirement, while the players are subject to strict liability. The same approach should be followed for both categories of individual.

The possibility of a lifetime ban being imposed for a second offence raises questions of proportionality but, given that it would not be a mandatory period of suspension, it can hoped that a disciplinary panel would take account of this principle before imposing such a severe punishment.

Club Salary Cap Officers

Lord Myners also recommends that each club nominates a “club salary cap officer” to oversee the club’s salary cap systems, to be the point of contact for the SCM and with a duty to “disclose any information, knowledge or suspicion of non-compliance to the club board and to the SCM” (Recommendation 6.6). The officer must also sign a declaration at the start and end of each season setting out anticipated and actual earnings across for the club and must agree to co-operate with the SCM.

Given that such individuals will already exist in all but name and given that they are most likely to have knowledge of Regulation breaches, this recommendation seems wise, to improve accountability and to promote compliance.

Sanctions are also recommended for officers who fall do not fulfil their duties. Lord Myners suggests that where “proven duplicity is involved” (page 46), there needs to be a mechanism to remove them from their position within the club and to prevent them gaining employment with other Premiership clubs. This would be another severe measure, so ought only to be available where serious fault can be proved and, as the report suggests, an appeal to an independent disciplinary panel must be available.

Agents

In line with salary cap regulations in the NFL, Super League, NHL and AFL (and my own proposals), Lord Myners recommends bringing agents within the obligations of the Regulations. He suggests that obligations are imposed mirroring those applicable to players in relation to disclosure and co-operation (Recommendation 6.7). In order to bind agents to the Regulations, he recommends adding a provision to the RFU’s agent declaration that the agent agrees to comply with the Regulations (Recommendation 6.8), while Recommendation 6.9 provides for sanctions for breach, including “suspension of licence, forfeiture of any commission and/or fines”.

Any system of sanctions would, as with players and club officials, need to be agreed with the RFU, to ensure universality. Presumably the level of sanctions and (lack of) fault requirement would be similar to those imposed on players, though it is not clear. Lord Myners also suggests extending sanctioning powers to agency firms as well as individuals. I would think that this should only be appropriate where it can be shown that the firm has been involved in multiple breaches, as individual agents will, presumably, operate without much control from their employer.

Given these recommendations, it is most surprising that Lord Myners did not consult with any agents. He noted that “no agents replied to the consultation document” (page 46) and, though he “met and learned from many others at the heart of the professional English game” (page 3), agents were not among them. This is disappointing for both agents and players. Agents may feel aggrieved that they were not consulted before being subjected to the Regulations, while it also prejudices players – those who agents represent. More players would probably have engaged in the process if they had been contacted through their agent. This feels a significant omission, conflicting with Lord Myners’ comment that he “looked under every stone” (page 52).

4. Powers of the Salary Cap Manager

Finally, Lord Myners turned to the powers and resources of the SCM. The recommendations here focus on making the SCM’s job easier and making it easier to identify breaches of the Regulations:

Recommendation 7.1 – Extend system to allow central access to each club’s salary cap spreadsheet at all times.

Recommendation 7.2 – Require clubs to provide copies of documents such as new contracts to the SCM within 14 days.

Centralised access to salary cap data will make a significant difference to the SCM’s ability to monitor club compliance, while the 14-day deadline represents a sensible shortening from the existing 28-day rule.

In terms of investigation, the report puts forward:

Recommendation 7.3 – Clarify the power of the SCM to attend clubs without notice and require clubs to provide him with finance reports and access to management accounts.

Recommendation 7.4 – Allow the SCM to make requests to see players’ tax returns on a random basis.

As discussed above, the power to see players’ tax returns could have been extended though is probably sufficient – Lord Myners suggests 20 requests a year would be reasonable (page 48). The ability to attend clubs without notice is a significant improvement on the existing Regulations that I advocated in my own submissions to the review. The ability for the SCM to perform random checks, or to visit clubs under suspicion without tipping them off, should significantly encourage compliance.

Recommendations 7.5-7.7 aim to enhance the effectiveness of the annual audit process:

Recommendation 7.5 – Clarify that, as a part of their annual review, the auditors are able to obtain downloads of raw accounting data from each club’s system.

Recommendation 7.6 – Enhance the powers available to the auditors in their annual audit to include mandatory interviews, sampling of tax returns and more extensive provision of information and documents by the clubs.

Recommendation 7.7 – Introduce sanctions for clubs that do not comply with reasonable requests from auditors within a reasonable timeframe.

The “investigatory audit” – a forensic audit carried out where a breach is suspected – is also strengthened notably by the recommendations. The report recommends making the audit compulsory if the SCM has “reasonable grounds” to initiate one (Recommendation 7.12) – i.e. removing the ability for clubs to choose a 70-point deduction instead of undergoing a forensic audit (see Saracens’ relegation) – which is vital for transparency.

Recommendation 7.13 also suggests expanding the search powers in such an audit to include “pre-specified searches” of the hard drives of club shareholders and employees, and communications between players, via, for example, Whatsapp (page 50). This is extensive but seems necessary if such an audit is to be effective. This is further guaranteed by the following:

Recommendation 7.14 – Provide sanctions for any club or individual who is found to have deleted evidence post the notification on an investigatory audit.

Moreover, in the spirit of random compliance checks, the report recommends the introduction of “random mini investigatory audits for two clubs every year” (Recommendation 7.15). This measure is another strong recommendation to encourage compliance and to deter breaches, though will come at a cost. Indeed, Lord Myners was aware of imposing additional expenditure on PRL, particularly at this time, but noted that fulfilling his recommendations will be taken as an “indication of serious intent in enforcing the regulations as a whole” (page 50).

Given the increase in powers, the report inevitably suggests extending the resources available to the SCM:

Recommendation 7.9 – Change the title of the SCM to salary cap director.

Recommendation 7.10 – Appoint a deputy SCM to assist the SCD.

Recommendation 7.11 – Appoint a full-time data analyst.

Though I am sure that an even bigger team would aid the SCM further, these suggestions are probably sufficient – particularly in the current economic climate. The appointment of a deputy SCM will help, for example, with the new educational role created for the SCM:

Recommendation 7.8 – The SCM should work with the Rugby Players Association and RFU to provide a programme of education for players and agents so that they understand their obligations under the regulations.

Each of the recommendations in relation to the SCM will go a long way to making the Regulations more robust and are perhaps one of the best features of Lord Myners’ report.

5. Conclusions

The Myners Review is a significant moment in the history of Premiership Rugby. It marks a step towards greater transparency and suggests a willingness to take the Salary Cap more seriously. Against the backdrop of the scandal that has plagued the 2019-20 season, the robust recommendations are, on the whole, very welcome.

However, nothing has yet been changed. The recommendations are now in the hands of PRL, who must turn them into a revised set of regulations, before the clubs vote on whether to adopt them. A “supermajority” of 10 out of 13 clubs is required to agree changes to the Regulations. Whether this can be achieved before the start of next season (whenever that might be) remains to be seen. Certainly, it seems unlikely that the new measures will be in place before the start of the next “Salary Cap Year” on 1 July 2020.

Importantly, Lord Myners made clear that his recommendations (page 4):

…should be viewed as a package of measures which, if taken together, will go a long way to restoring the integrity of the regulations. They should not be viewed as a menu of options from which to pick and choose.

Such a warning to the clubs seems important, but it would, in my view, be detrimental to adopt all 52 of the report’s recommendations without question. As explained above, I feel that the proposed definition of “Salary” goes too far, and that greater nuance is needed in relation to the accountability of players (and agents). The recommended measures impose significant restrictions on players, to the detriment of their welfare, and require some re-evaluation. Equally, it is my view that the recommendation on the marquee player rule requires a more thorough financial analysis before changes can sensibly be considered.

Players should be concerned by these recommendations, as they will have a significant supressing effect on their earnings, may severely restrict their ability to conduct business and may result in severe sanctions being imposed without any fault on their part. It is disappointing that players’ interests were not afforded greater consideration.

It was also disappointing that the report did not consider alternative methods of financial regulation, nor other methods of achieving the Regulations’ aim of a more competitive league. The absence of any other equalisation measures will continue to inhibit the effectiveness of the Salary Cap.

Nonetheless, though the recommendations could have gone further in relation to protecting the independence of the regulatory process, Lord Myners’ proposals on transparency and the separation of powers represent significant improvements to the existing regime. Indeed, the Regulations’ effectiveness will be greatly strengthened by the broader investigatory and sanctioning powers, and by the introduction of individual accountability.

It is hoped that the Myners Review will lead to a more robust, transparent and honest salary cap system in the English Premiership, but that a further review of the league’s governance will follow in the near future.