The summary below is intended to provide an overview of how the Rugby Football League seeks to regulate Club Financial Sustainability.
This information is intended as guidance only; for full details please refer to the relevant sections of the Operational Rules.
The core objectives of the Regulations are:
- To encourage financial discipline and self-sustainability and therefore protect the long-term viability of clubs;
- To protect and nurture a broad competitive playing structure by preventing Clubs trading beyond their means and/or entering into damaging and unsustainable financial arrangements;
- To protect the long-term viability and sustainability of the sport;
- To protect the welfare and interests of all Players.
In advance of each Season each Club is required to submit to the Rugby Football League an Operating Budget for the Season (in a standard form). This is scrutinised, where appropriate supporting evidence required and then signed off. This agreed Budget determines what a Club can spend on players to either breakeven or make a small permitted loss – this is called the Club Sustainability Cap.
Under the Salary Cap Regulations each Club is restricted to spending on players the lower of the Finite Cap and its Club Sustainability Cap.
A Club may increase its Club Sustainability Cap if it demonstrates that an equivalent amount has been invested in the Club in equity contributions, loans that meet specified conditions or covered by other appropriate security/ guarantees.
Clubs must notify the Rugby Football League of any event that has a material impact on its Budget and must demonstrate performance against budget in half year and full year returns. If a Club is not achieving its budget during a Season the Rugby Football League has the right to impose a signing embargo.
Championship and League 1 Clubs are permitted to spend up to the Finite Cap with the exception of Clubs who have been placed in Special Measures by a Sub-Committee of the RFL Board of Directors. Amongst other sanctions, Clubs in Special Measures may be required to submit a budget for review and a Club Sustainability Cap may be set as described above.
Clubs who are required to submit a Budget must notify the Rugby Football League of any event that has a material impact on its Budget and must demonstrate performance against budget in half year and full year returns. If a Club is not achieving its budget during a Season the Rugby Football League has the right to impose a signing embargo.
Any person wishing to be an Influential Person at a Club - broadly defined as a director, owner or other individual who has control over the affairs of the Club - must pass the RFL Owners' and Directors' Test or obtain a dispensation from the Board of the Rugby Football League.
In summary, to pass the Test the relevant individual must not: be subject to any disqualifying order: have been convicted of any relevant unserved offence; have been an influential person of multiple companies or any Club that has incurred insolvency events; have personally incurred an insolvency event; or be an Influential Person at another Club.
Where the Rugby Football League reasonably has concerns regarding a Club’s stability the Club may be placed in ‘Special Measures’ and restrictions placed on the value, duration and type of playing contracts the Club may enter into.
Each Club is required to authorise HMRC to share information with the Rugby Football League regarding its liabilities to HMRC. This information can be used to inform a decision on whether to place a Club into Special Measures.
The Rugby Football League is permitted to deduct from amounts that would otherwise be paid to Clubs amounts due to other Clubs or other Persons Subject to the Operational Rules. This ensures that inter-club debt is kept to a minimum.
If a Club does incur an Insolvency Event, then the Board of the Rugby Football League has the right to terminate that Club’s Membership of the Rugby Football League and grant Membership to another entity on such terms as it sees fit. The Board’s Insolvency Policy sets out how it will usually exercise its discretion and states that one of the conditions imposed on any new Member will, save in specified cases, be a sporting sanction of a 12-point deduction. This sends a clear message to Clubs of the unacceptability of Insolvency Events.
In addition to the above regulations, the Rugby Football League runs ad hoc best practice forums and training sessions and provides informal club support.