How the Saracens Cheating Scandal Effects the Economics of Rugby – George McIntosh

Rugby prides itself on its moral code, the governing body, World Rugby lists the 5 values of the sport, the first of which being Integrity.

In November of 2019, it was announced that Saracens, the marquee Premiership Rugby Club had cheated for many previous seasons, by hiding payments to players through co-investments in businesses and houses to avoid being under the leagues £7 million salary cap and two players who don’t count towards the cap.

With the 12 teams in the leagues spending on players capped, it creates an artificially controlled industry, whereby player wages should not be able to be increased due to player counts remaining stagnant and the resource to pay them with being capped.

On the PPC curve for this, the amount of rugby players and quality rugby players is limited to the salary cap.

But this does not happen, as international quality players kept increasing in value, but international players were not becoming scarcer, and the resources to pay these international players did not appear to be there until you look closer.

The problem with this market is the price of top-grade players increased dramatically, international quality players cost at least £200,000 a year some as high as £1,00,000, though some are subsidised as they play for their country.

Worcester Warriors have 10 players are internationals, however, only 2 of whom has more the 10 caps, and only 1 of them is still first choice at international level, and yet they could not afford more international players. Saracens have 28 international players, 17 of them have more than 10 caps and of those players 13 still play at an international level.

When Saracens started signing these international players the price for high-grade players was driven drastically up, but as teams apart from Saracens limited there spending to the salary cap, players who weren’t internationals pay began to slip and decrease and has created a very problematic wage gap in the Premiership where some players in a squad can be earning £40,000 a year and others earning £400,000.

Another economic problem this Saracens dilemma has created is new international players, some players on 40,000 one year may become internationally capped and demand 4 times as they did the year before, and when there is no money for this player in the closed economy which is premiership rugby they are forced to leave England, which usually prevents them from playing for their country which stunts player progression.

The punishment for their breaches in the rules Saracens have been relegated from the Premiership after an 11-month investigation and after Saracens failed to comply with the salary cap for the fourth year in a row.