With all the recent talk around salary cap breaches in rugby, we thought it would be interesting to look at the ways in which a club can get around the cap. Whilst some of these points may be obvious to even the most casual observer, some may come as more of a surprise to even long-term rugby fans…
Often clubs can establish sponsorship deals through operating companies in order to ‘top up’ a players base salary. Dan Carter’s upcoming move to Racing Metro 92 will be utilising this practice where his base salary of €500,000 will be topped up by an additional €300,000 from the operating company of Arena 92, Racing’s new home from 2016 that will also host concerts and business conferences.
Toulon owner Mourad Boudjellal is a big fan of establishing commercial enterprises for some of his players in order to top up their base salary. For example he established the brand ‘10’ for Jonny Wilkinson which allowed him to receive additional payments via the sale of hats, t-shirts, polos, etc that would not be included in Toulon’s balance sheet when it came to calculating salary expenditure.
3.Provision of goods
It has been rumoured that a number of clubs have provided new star signings with homes or cars for use during their stay at the club. Whilst the players may not necessarily be provided with ownership of a new property or car, they are often able to ‘rent’ them at an artificially low price as they are often owned by holding companies of clubs commercial directors and management.
4.Employment of spouse
There have also been rumours circulating that clubs have boosted a players salary by hiring their spouse on an inflated wage. Whilst the spouse is unlikely to ever be directly hired by the club, they may instead be hired by a parent company or a secondary company of one of the clubs management team. This option isn’t necessarily limited to the players spouse however, and could extend to close family.
5.Sliding scale contracts
This one can be a little messy so is unlikely to be employed with any regularity, but none-the-less is still an option. This is a contract where a player is paid a larger amount in either their first or final year with the other years dropping off somewhat. This means a team can sign a big money player for a large sum when they have a number of players on low value contracts and then even it out when it comes to renewals.
Offshore payments is one of the most controversial areas surrounding salary cap breaches, and despite a series of allegations has still yet to be proven. This method is exactly how it sounds, with a holding company making a payment to a players overseas account, or even to a family member. This method could also work by purchasing property or land for a player overseas.
It’s hard to justify this method as a breach of the salary cap, however it can be considered an additional payment for players. For example some clubs will take their players (and sometimes even their families) away on organised holidays, or even provide facilities such as a creche that players can take advantage of. Whilst this obviously isn’t a payment, it does leave players better off in real terms, even on lower salaries.
Have you heard any stories of salary cap breaches?