Tuesday 9 June 2020 12:44, UK
Premiership Rugby are expected to confirm a new salary cap for the 2021/22 season on Tuesday.
Sky Sports News reporter James Cole explains why this decision has been made and what the knock-on effects could be…
Clubs have agreed to cut the league's salary cap from £7m to £6m for the 2021/22 campaign.
The salary cap has been cut to ease the pressure on clubs following the coronavirus pandemic. The crisis has exposed the fragility of Premiership Rugby's financial model.
A recent report into the Saracens' salary cap scandal, by Lord Myners, found the clubs collectively lost £89m over two years. Exeter were the only Premiership club to make a profit last season.
Premiership players have already been forced to take 25 per cent pay-cuts due to the coronavirus pandemic, so a similar reduction in the salary cap was always likely.
Current contracts will be protected - but this shift signals the prospect of long-term pay-cuts for Premiership players. The new cap will not come in immediately - not until July 2021 - so most players will only feel the effects in their next contract.
This could result in an exodus of top players, if they decide to head overseas rather than earn less here.
Japan is becoming an increasingly popular destination, with England lock George Kruis and Wales centre Hadleigh Parkes heading there next season.
However, that comes at a price too - RFU rules prevent players representing England if they are based outside the Premiership.
The greatest changes could take place at Bristol and Saracens. It will be difficult for Sarries to keep hold of Owen Farrell, Maro Itoje, Jamie George, Elliot Daly and the Vunipola brothers, while saving in excess of £1m.
Clubs may have to choose between keeping their internationals and enforcing bigger pay-cuts across the wider squad.
Bristol have warned that reducing the salary cap will result in English clubs struggling to compete in Europe.
Lord Myners' report also blamed the marquee player system for the league's rapid wage-inflation since 2013. The scheme allows clubs to have two players whose salaries are not counted towards the cap.
The fact that the marquee system has been retained - for now - will help the likes of Saracens and Bristol. But its long-term viability is in doubt - and the plan is to cut it to one player in the 2022/2023 season.
