SA Rugby gets real and accepts its arbitrage status
Its new contracting model recognises it is going to lose star players and isn't going to stand in their way
The economic concept of arbitrage is that of trading products of equal quality, which command lower or higher prices depending on where they are traded. SA rugby is a sporting example of the concept as the same players can earn higher or lower wages depending on where they are contracted. An SA player in France generally earns more than he does in Pretoria. Which is why SA Rugby has tried to find a way to compete on an uneven playing field.
Initial reaction to SA Rugby’s new contracting model, announced last weekend, has been mixed because superficially it doesn’t really change much despite trying to appear revolutionary.
SA Rugby has built the new model on three basic pillars – it is widening the contracting net, it is scrapping a 30-cap restriction on selecting overseas-based players for the Boks, and it is serious about enforcing Regulation 9.
The last point is odd because Regulation 9, which is World Rugby’s law which forces clubs to release players for international duty, has been in place for years.
Basically, SA Rugby is saying it is going to police and enforce it more vigorously than before, which of course begs the question: why has it waited until now to play hard ball with clubs?
Regulation 9, though, is not as simple as it seems. Clubs and countries have often been at war and it's not unusual for a club to “punish” a player for going off on international duty.
Withholding match fees and bonuses, and in extreme cases threatening to withhold salaries if players go on international duty, have been known to occur. Club versus country tension is not new and it’s not unique to rugby.
But the message SA Rugby is sending out by writing to clubs in Europe, the UK and Japan is that they won’t benefit as much from SA players as in the past.
Essentially SA Rugby is saying that a world-class player will only be available for about half a club’s matches because he will be on Springbok duty for 14 weeks of the year. There will be no more gentleman’s agreements where SA Rugby allowed some players to miss certain parts of the international season to keep clubs happy.
One insider has already said that agents are complaining about SA Rugby’s tough stance on Regulation 9 because it will make SA players less marketable. That was the intention.
If a big French club is going to sign a top Bok for R15m a year, they will essentially be paying him R1m per game since he will only appear 15 times instead of 30.
It’s a message that will certainly make clubs rethink their options when signing a South African. And if players keep coming up with excuses when called by the Boks, they will be forced into a position to have to formally retire from international rugby. That will at least give the Bok coach a clear indication of who really wants to play Test rugby.
But the tightening of policing Regulation 9 is coupled with scrapping the 30-cap rule, which means any player can happily go overseas knowing he can be picked for the Springboks.
The 30-cap rule has already been bent and twisted so much that it made no sense to keep it, but it seems counterproductive when fighting harder on Regulation 9.
My interpretation is that SA Rugby is taking the realistic view that SA is an arbitrage rugby economy and that it is going to lose top, and up-and-coming stars and therefore it is not going to stand in their way.
But conversely it doesn’t want foreign clubs to block a player’s path back to the Boks if Rassie Erasmus comes calling.
The most interesting and possibly most important part of the new system is the contracting of 75 players from juniors up to senior Boks on differently graded contracts.
Essentially Erasmus and his inner circle can identify three of the best players in every position and contract them. The other 30 slots could be used to contract the best under-23s in every position.
The exact structure of how this contracting will work, how the players will be graded and by whom, and how they will be categorised has not been made clear. But it does give SA Rugby some leeway to spread a wider net.
The top five or six players in the country will always be able to command unmatchable salaries overseas, but this broader contracting system with an estimated budget of R130m will hopefully keep the next few tiers of players here for longer.
Instead of earning R6m to R8m overseas, an A-graded player might be able to earn R4m to R6m in SA, with his provincial contract added to his national top-up. The difference is still there but it’s marginal when weighed up against the comforts of home.
This is not a perfect solution, but in an imperfect market, it’s at least a pro-active step to keep SA’s domestic game relevant and strong.