Salary Caps and Competitive Balance in Professional Rugby - Assignment Example

Salary Caps and Competitive Balance in Professional Rugby Introduction Rugby, just like any other sports, has experienced significant changes in the sporting industry. Rugby, a sport that was once played for leisure and pride has been transformed in to money oriented professional sport (Andreff and Szymanski 2005). The entertainment factor of the sport leads to competitiveness of the game and improvement in fan appreciation and attendance to sporting events. Competitiveness of Rugby depends on the wellbeing of the players and their employment conditions together with the central control by the Rugby unions. Unlike other industries, professional sporting heavily depends on the high degree of competition in order to be successful (Andreff and Szymanski 2005). Uncertainty of the outcome of the matches appeals to spectators since they prefer close game and tight competitions to predictable matches (Andreff and Szymanski 2005). Survival of sporting competition can only be secured through controlling the employment contracts of the players by imposing fixed employment contracts and salary caps. Dabscheck asserts without controls of employment contracts the rich teams would secure the star players thus destroying the sport by dominating the leagues (Dawson and Downward 2002). Rugby fraternity has never had a chance to share their thoughts and discuss rugby matters of mutual trust. With the increased exposure to advertising channels and professional approach to the game, rugby has surely become a global business (Dawson and Downward 2002). Rugby revenues have kept soaring with the international team’s performances improving due to conditioning and technical expertise of the game. Professional rugby is now on positive profile and threatens to overcome all other world sporting events including football and athletics as the most watched game in the world. On an interesting note, many people are currently volunteering as either salaried or non-salaried staff in coaching, refereeing and administration of rugby. A considerable number of rugby unions all over the world have joined IRB, therefore IRB regulations have shaped the direction of the game. IRB influence has overcome any other sports governing body and the number of professional players is on the increase (Dawson and Downward 2002). Rugby is a commercial sport business and the growth in participation and quality of the games will elicit more interest in fans participation. Quality rugby leagues will enhance the political recognition of the game and create new opportunities for sponsorship. Just like any other commercial sport, professional rugby should ensure investors attain their fair share from investments in rugby clubs. Good governance and adherence to rules of the game will enhance the profile of the game and revenues collected from the fans (Dawson and Downward 2002). Promotion of rugby’s core values and ethics, the marketing strategy, the quality of facilities and refereeing of the game will enhance rugby competition for sponsorship from major multinational companies (Dawson and Downward 2002). IRB should enhance coach training programmes, facilities upgrade and marketing of the game to major sporting sponsors. Over the recent past, there have been many concerns on how best rugby participation can be enhanced. Modified varieties of rugby like beach rugby and touch rugby will enhance the fun of the game (Bravo, MacIntoish and Li 2012). Player welfare including health and safety issues slows the development of the funny sport. IRB has failed in maintaining a database of clubs and the number of players registered in those teams (Hutson 2011). Healthy and safety concerns are more than the physical injury of the players during training or during the competitions. Safety equipments including playing clothes and design of the playing fields will minimize chances of physical injury. Strict rules of the game will govern the misbehavior and dangerous contact from an opponent during the game (Bravo, MacIntoish and Li 2012). It is clear that a considerable number of players lack medical insurance and adequate medical attention, this hinders would be players from participating in the game. Due to the physical nature of the game, lax rules on moral safety of players have encouraged doping thus endangering the health of the concerned players (Hutson 2011). IRB should enforce compulsory injury documentation to safeguard the welfare of the players. (Spear tackles that may lead to spinal injury: retrieved from Guardian). According to numerous coaches, heath and safety issues in professional rugby should include medical services, club facilities and playing surfaces (Hutson 2011). Poor player tackles and coaching techniques have led to catastrophic injuries and unethical practices like treating children as adults during the training (Hutson 2011). All rugby clubs need to provide players with essential equipments like head guards, molded boots and gum shields that protect players from dangerous injuries and accidental falls during the game. Strategies like New Zealand Rugby Smart and IRB Rugby Ready have enhanced player safety though strict rules and penalties should be applied to dangerous tackles that threaten the rugby career of the opponents. However, the question on whether to select players based on weight or age has remained a dilemma amongst the rugby unions. Selection of weight basis will enhance the safety of the player after contact and create equal playing field in the game though selecting players on age is more economical to administer and regulate (Hutson 2011). IRB needs to consider including Rugby Sevens in Olympics competition so as to enhance the profile of the game and attract more sponsorship. 15-a-side games should be linked with Rugby Sevens in order to enhance the profile of the game. Women participation in professional rugby should be encouraged in order to attract more advertising revenues and sponsorships (Dawson and Downward 2002). Rugby unions should increase the funding and participation level of rugby clubs in international competitions. The amateur clubs should also be controlled by the rugby unions in order to enhance the commercialization of rugby. IRB should develop strategies of player retention and controlling the competitiveness of the rugby leagues. Individual clubs and unions should ensure domestic rugby does not lose its independence and professionalism. Player migration to the dominant clubs should be controlled by strict salary caps in order to enhance the competitiveness of the rugby leagues (Dawson and Downward 2002). Importance of competitive balance in professional Rugby In commercial sport business, relationships between Rugby unions, players and teams should be well structured. The key question in structuring professional Rugby business is on the right mixture of centralization and competitive balance. Competitive balance refers to relative measure of sporting capabilities amongst the teams. Former European Competition Commissioner Karel Miert is of the view that salary caps will address the complex competition problems in modern professional teams in Europe (Bravo, MacIntoish and Li 2012). Though central control hinders individual player responsibility, it is critical in maintaining competitiveness in the sport. The benefits of professional rugby are widely known. Introduction of money provides players with the opportunity to maximize their playing skills and attain achievements (Bravo, MacIntoish and Li 2012). The impact of high payments to rugby players will undermine competitiveness of all major rugby leagues thus reducing the profile of the sport to the rugby fans. Money can become the moderating factor in professional rugby thus central control is essential in maintaining the competitiveness of Rugby (Bravo, MacIntoish and Li 2012). Competitive balance in professional Rugby is maintained by implementing salary caps. Salary caps limit the earnings received by the player over a certain period of time and the amounts that clubs can spend on acquiring new players. Salary caps are well established in many sporting unions like baseball and Rugby (Bravo, MacIntoish and Li 2012). The wealth of club owners and the capacity to purchase international star rugby players can tilt the outcomes of league sporting events to particular clubs (BBC Sport 3). When an imbalance of clubs’ resources exists, high payments to players will create uneven distribution of star players among the clubs thus hindering development of new talented and younger players (Stoldt, Dittmore and Branvold 2012). Professional rugby business should have economic constrains in order to attain competitive balance and encourage sustainability of the sport. According to E.D. Hoben, the founder of New Zealand Rugby Footbal Union (NZRFU), rugby needs central control since the haphazard organization of fixtures, poor refereeing and lose of players to dominant clubs created losses to clubs that invest heavily in the development of new players (Bravo, MacIntoish and Li 2012). To maintain the faith of fans in their clubs, strict rules should guide the cross-ownership of the rugby clubs. No major investor should invest in two clubs that compete in the same league. World Rugby Corpoartion (WRC) facilitated professionalism of Rugby sport but quickly moved to self-destruction by allowing teams to spend unlimited amounts of cash on player payroll. Just like Former All Black Mike Brewer asserted, “to attract live television coverage, audience and sponsors, the sport must remain competitive. (Pedersen 2011) Without central control on club spending, the rich clubs attract the talented players and keep on getting rich at the expense of the other clubs. A single team produces not output itself but several teams in the competition produce the game that fans watch (Bravo, MacIntoish and Li 2012). Spectator interest and game attendance is high when the fans perceive competition is even distributed. Each rugby team has its own unique motives when acquiring new players but quality of the game depends on the playing strength of the teams and inability to predict the outcomes of the sporting event (Bravo, MacIntoish and Li 2012). When a single team acquires all star players, it increases its own competitive strength in the series but reduces the quality of the game by unbalancing competition (Lewis 446). Professional Rugby is an important industry in the world economy. Rugby has been acknowledged as the leading national sport in many countries like New Zealand. Since the sport attracts a lot of publicity and sponsorships from advertising companies, competition should not be predictable (Lewis 437). Large multinational companies and investors should not be able to predict the outcomes of sporting events since they channel resources to the dominant teams. Lack of competitive balance makes it difficult for smaller clubs to maintain their fan support and attract funding. Without salary caps, less competitive teams will experience dwindling fan attendances and increases in player spending ultimately leading to club losses (BBC Sport 12). Salary caps impose a ceiling on the amounts teams can pay the players thus leading to even distribution of spending and talents amongst the teams (Pedersen 2011). Since Rugby sport relies heavily on gate revenues, media coverage and sponsorships, sustainability of the funding can only be achieved when the sport remains competitive. Rugby fans desire exciting and challenging matches that depict the competitive strength of their favorite team (Burke 2011). Restricting the movement of players to other teams is essential in maintaining competitive balance. If the players have unlimited rights of movement, no money will be left for non-stars. Unrestricted movement will drive the salaries of players high thus many teams will hardly make any profits (Pedersen 2011). For instance, the salaries of super players have skyrocketed from a low of $ 60,000 in the 1990s to a average high of $ 800,000 in 2011 (Bravo, MacIntoish and Li 2012). Player draft and reserve clauses will maintain competitiveness in professional Rugby. These clauses regulate the movement of players from amateur to professional status by controlling the teams that can offer them employment (Burke 2011). Unless the team is willing to sell the player, the player is totally bound by the reserve clause on the earnings. Only one team is allowed to bid the services of the player thus limiting the ability of the player to attract higher offers from other teams (Burke 2011). Revenue sharing is another common tool that can improve the competitive balance of Rugby. Many sports leagues such as NHL, NBA and NFL engage in revenue sharing. Revenue sharing reduces the ability of dominant teams acquiring more talented players since gate revenues are shared equally among the teams participating in the league. This method reduces the incentives for clubs to purchase star players since revenues are shared amongst all franchises (Burke 2011). However, critics have argued that salary caps may reduce the incentives for players to improve their skills and talents when they perceived that their efforts have not been fully rewarded. Salary caps may hider the individual rights to bargain for higher salaries but lead to competitive balance in Rugby (Burke 2011). Conclusion Revenue sharing, salary caps and mobility of players are key issues that face professional Rugby. Health and safety concerns like doping crimes and catastrophic accidents due to poor facilities have raised a lot of concerns among the Rugby fraternity. It is the responsibility of the teams to ensure the safety of all players by providing enough protective equipment. Salary caps should be implemented in professional Rugby in order to maintain competitive balance. Bibliography: Andreff, W and Szymanski, S. 2005. Handbook on the economics of sport. Cheltenham. Edward Elgar. BBC Sport. Rugby Union. 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