The demise of London Irish as a Premiership entity triggered alarm bells that chimed across the rugby world this week.
They follow Worcester Warriors and Wasps into suspension from the Premiership due to their dire financial status. The Warriors were placed in administration, while Wasps went into enforced suspension after not meeting obligations as set out for Premiership participation.
Other Premiership clubs are also said to be sailing close to the wind, which all serves to cast a dark cloud over one of the most established leagues in professional rugby.
Though the Premiership has done some pioneering work in helping take the game professional in the mid-1990s, it has failed to put in place a framework to safeguard the long-term sustainability of clubs.
The climate of greater peer review was put in place when the local industry was forced to adopt drastic austerity measures in the wake of the pandemic
It is perhaps that lack of oversight in England that places it at a disadvantage compared to the game on these shores. Sure, the rand doesn’t measure up to the pound, but the domestic game is more geared to operate within its means.
SA Rugby runs a far tighter ship and its more centralised financial controls enable it to spot red flags when unions drift off course. It is the sort of early warning system that is absent from the game in England.
One of the reasons those controls aren’t as stringently applied in England is its ownership model. Clubs are privately owned entities and are thus less likely to be told how to run their affairs. There too they are bound by a salary cap, but other expenditures are at the discretion of the clubs.
In South Africa, teams regularly have to submit financial statements to prove they are compliant.
Moreover, the climate of greater peer review was put in place when the local industry was forced to adopt drastic austerity measures in the wake of the pandemic. They entered into a collective agreement that paved the way for salary adjustments. Everybody felt the pain for the greater good. That would not have been possible had there not been a climate of close co-operation between SA Rugby, the South African Rugby Employers Organisation (Sareo) and My Players (including the rugby players association, Sarpa).
It is worth recalling the local rugby industry learnt brutal lessons from the financial demise of the Southern Kings and the Valke.
There was still the sentiment that unions did not face real consequences for trading recklessly. SA Rugby moved to change that by stripping voting rights of unions placed in administration. Western Province, despite the success of the Stormers, are still hamstrung by that ruling.
Still, and much to the envy of their countrymen in the United Rugby Championship, the Stormers managed to stay ahead of the pack.
They achieved that under the control of SA Rugby and without the input of an equity partner. That could change in the coming months and it should place the Stormers on a similar spending trajectory as the Sharks and the Bulls, who have dabbled in the transfer market with alacrity over the last two seasons.
Though yet to be formally announced, local franchises will have their salary cap increased from R67.2m to R85m and they will be able to sign four marquee players outside that cap.
Acquiring the services of four highly paid players not bound by the constraints of the salary cap will give franchises greater flexibility, but will only really apply to franchises who have the financial means to do so.
While SA Rugby opened up more possibilities for their franchises to spend, it has done so prudently and with careful consideration aimed at keeping the financial integrity of the local industry intact.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.