Rugby can learn financial fair play from America

From outside the Premiership circle it seems that if you have a group of clever people running these clubs, who, in their own business lives have been very successful, they should be able to work together to agree on a workable, financially sound way forward.

- JEREMY GUSCOTT

You would think that part of the success club owners have achieved in the various businesses in which they have made their fortunes, can be applied to their rugby business – and a big part of that is managing the costs.

If you look at the finances of a professional league like the English Premiership, keeping control of costs is the main reason for agreeing a salary cap.

However, a few years ago, because a number of Premiership clubs felt disadvantaged in the Heineken Cup compared to the size of squads and salaries available to French and Irish clubs, it became one of the main drivers behind increasing the salary cap.

Whether or not it has been a success is divisible in so many parts. It depends whether clubs consider winning European trophies to be success, or being part of a successful model for developing young players, or being a crucial part of a successful community.

However, what you want in any business is a degree of financial stability for owners, stakeholders, and shareholders. In the world of sport that does not mean you cannot carry a degree of debt – which is something that giant football clubs like Manchester United and Chelsea have to a huge extent.

Part of this is because, even with the hundreds of millions in football, they still struggle with the size of their squad wage bills – and now, even though it is on a much smaller scale, Rugby Union clubs have run into a similar problem.

One of the issues that has been highlighted by the lockdown is that while some Premiership clubs feel they can get to a sustainable financial model, the wage bill has become an issue.