Rugby union transfer fees: The negatives (Part 3)

Part 1 looked at how transfers can be introduced. Part 2 was about all the positives the plan had for Super Rugby. This third part will consider all the negatives that could face Super Rugby if we do see the introduction of transfer fees.

Money is a funny thing, the more you have of it, the more you seem to need. As soon as you have enough for the rainy day, it rains and washes it all away.

Rugby Australia is not known for being especially financially prudent, so it’s key that we understand the negatives before the South Pacific unions jump headlong into this potential can of worms.

Negative 1: being the middle man.

Benfica have carved out a niche market that they and a few other clubs fill, and that is the middle man. In football there are reportedly over 3000 professional clubs around the world. There’s need for there to be middle clubs that bring players from all over the world into Europe before being presented to the top table.

With England alone having about 6000 players, no club – not even any of the City Football Group’s 11 clubs, which includes Melbourne City – is able to manage the work itself.

In rugby it’s a lot simpler, as there are few players who come up through the local ranks into the top leagues of each region automatically. The hierarchy makes it a lot simpler to spot good players without middlemen. The top leagues are the Top 14, the English Premiership and the United Rugby Championship. THe top of these three is the Top 14, with their cap on wages from rugby sitting at about $17 million.

Next come the middlemen leagues for the top leagues, which are Super Rugby, Pro D2 in France, the English Championship, the Currie Cup and the European Super Cup. Feeding into these leagues are a bunch of domestic and regional leagues around the world, such as Major League Rugby, Super League of American Rugby and, more locally, the Hospital Cup, Shute Shield and the National Provincial Championship.

While some players will skip leagues and other players come through local set-up, most are following these routes. If transfer fees were introduced, most young players would be taken from the thrid-level leagues and put into a holding club in the European-affiliated leagues. If a player can play Super Rugby, he is not guaranteed to be able to fit into the structured environment of the top leagues. Of they can make it in the Pro D2, they are much more likely to make it into the Top 14.

This will lead to the Top 14 shopping in the Hospital Cup and Shute Shield for players rather than Super Rugby as it is now, and then loaning them to a nearby Pro D2 team. It won’t be long before the Pro D2 start shopping in the same leagues, snapping up players and also removing these players from Super Rugby. Super Rugby will become like the Brazilian and Argentine leagues of soccer, picked over by leagues once their juniors, like the Portuguese league.

Negative 2: Super Rugby versus grassroots.

This leads to the next problem, that the pathways in Australia and New Zealand will come into conflict internally. Rather than working as stepping stones for players, each club will want to keep their own players. At the start Hospital Cup and Shute Shield teams will be happy to get extra funding via the fees paid for by Super Rugby. They will start to produce more players to a higher standard and then start selling them overseas.

If you are the head of Randwick, do you sell the best players to Super Rugby at an Australian discount or do you sell them overseas for twice the price and provide the club with more income? With more money teams like Randwick or Bay of Plenty would be looking to force their way into Super Rugby by showing they have the money to be professional. By selling players overseas these teams would receive more money and also reduce Super Rugby’s selling on margin.

The Premier League was created in England in 1992. There have been six clubs that have played in all 31 seasons, those being Liverpool, Everton, Manchester United, Arsenal, Chelsea and Tottenham. There are then 44 more teams that have been in the league since its creation. With the Premier League came commercialisation. Some teams adapted and some didn’t. Rugby would be no different.

Rugby in Australia and New Zealand is hierarchal, and as a result each team has income to reflect their place and needs the level above to support them. Transfers will rip this up and allow some teams to become as powerful or even more powerful than those above them causing massive upheavals.

(Photo by Bradley Kanaris/Getty Images)

Negative 3: player power.

Since the arrival of Sonny Bill Williams, Australia and New Zealand unions have become less able to say no to player demands. Either they agree to the demands or the player will find somewhere that can. Transfers hand financial power to players, as they can veto any deal they want. If a rising star of the NPC or Shute Shield decides that they only want to move to Toulouse, then the club can only sell the player to that team or let them see out their contract.

This allows clubs to lowball the club and highball the player. If Toulouse have $5 million to spend on a player including fees and wages, it can be made known to the player unofficially that they are happy to give the player a five-year deal worth $600,000 per year and a $1 million sign-on bonus if the club is willing to accept $1 million in a transfer fee. Other clubs can come along and offer the club $2 million, but if the player is only offered $500,000 per year and no signing bonus he will make it clear it is Toulouse he must be sold to.

This will put the union and the Super Rugby clubs in an even weaker position than they already are. With the long off-season in Super Rugby, newspapers would be full of stories about all these future stars moving for big money. It can be great for increasing the price, but like Real Madrid in soccer, there are certain clubs who get the player they want regardless.

Negative 4: commercial power

MVM Holding in partnership with Roc Nation bought a 51 per cent stake in the Sharks South African rugby team. From that moment on it stopped being the team that Super Rugby fans knew. Instead of being a selling club, they were now a buying club and are getting the players they want. This in part is due to Roc Nation’s influence. While the Sharks have a wage cap of about $5.5 million, they are able to outbid English and French teams with bigger budgets because of commercial deals done outside of the wage cap with Roc Nation and their partners.

With the signing of Eben Etzebeth and players like Cheslin Kolbe and others being offered eye-watering figures, things have changed massively for South African rugby because of companies like Roc Nation turning players into commercial assets.

(Photo by Phil Walter/Getty Images)

This will only speed up with transfer fees, and the market of a middleman league will not be the same as for one of the top leagues. Super Rugby seems to be union-run rather than a standalone organisation like the URC. With Roc Nation’s partners, including Chelsea FC and the NFL, joining with URC was big for rugby.

Ardie Savea is a Roc Nation sportsperson. Do you think that they want him in Super Rugby or in a league where they can maximise his potential? As rugby becomes more commercial, more companies like Roc Nation will enter the scene and will want all their players playing in the Champions Cup, just like they want all the best footballers playing in the Champions League.

While this is already coming, fees will speed it up, and with Super Rugby unlikely to buy any players at the higher end, it will reduce their commercial income compared to Europe.

Negative 5: international Test players.

At the 2018 FIFA World Cup, where each team took a 23-man squad for a total of 736 players over 32 teams, 14 (43.75 per cent) of the teams were from Europe but 543 players (73.78 per cent) played their club football in Europe. Italy did not qualify for the tournament but had 58 club players attending, making 2.5 squads from Italy. The seven top domestic structures providing club players to other countries were European for a total of 357 players or 15.5 squads.

This is because the Champions League is seen as the top level that any player can play at club level and is possibly as good as the World Cup itself. While we are heading this way with rugby and the Champions Cup, fees will speed it up significantly.

At the 1999 World Cup, from 575 players, Super Rugby had 96 players (16.7 per cent) and three teams (15 per cent). By contrast, what would become the three big European leagues had 207 players (36 per cent) and six teams (30 per cent).

By 2019 these figures had changed. From a total of 620 players, Super Rugby had grown to four teams (20 per cent) and had 115 players (18.5 per cent). The three European leagues still had six teams (30 per cent) and 268 players (43.2 per cent).

If fees are introduced, Test players in Super Rugby will need to decide if they stay in a low league or make the big move to the centre of the rugby world. We have seen with Argentina that any players who were with the Jaguares were absorbed into the three leagues. The few players who stayed in Super Rugby were quickly taken on contract renewal. The Drua and Moana Pasifika are intended to bring through more players for internationals, but it is unlikely that the players who go to the World Cup would make up a significant number.

This would mean like Brazil and Argentina, the soccer equivalent of Australia and New Zealand, domestic-only rules would be scrapped. This is because having a player worth a lot of money only matters if you are selling. If the unions are selling the best players, they then can’t play internationally

Negative 6: long contracts

Fees are paid only if the contract is broken meaning, five-year deals. Is Super Rugby ready to offer every player a five-year deal to make it work, taking up future wage spend and critical squad spaces? If a player is to leave Super Rugby, the team would have to sell him or terminate the contract.

Conclusion

A lot of the negatives are going to happen anyway, but like most things in rugby, it will slowly get there. This will allow the unions to adapt if they want. By doing the nuclear option and bringing in fees, they will need to have all their ducks in a row, which I don’t think they can do. I think that the unions should look to bring in fees but make sure they have competent people with experience running it.