Player's Contracts - the commercial issues

01 August 2000

Sam Rush

In the first of a two-part review, Sam Rush examines the issues which will have to be addressed by the various negotiating teams before the final form tripartite rugby union players' contract (between the RFU, the clubs and its players) can be unveiled.

In recent times Rugby Union has suffered from any number of false dawns that have had the cumulative effect of stunting its progress as a professional sport. For the players, 1 August 1998 was to be the date, under the terms of the Mayfair Agreement, when the new standard players' contract would be published and the hitherto uneasy relationship between players', clubs and Unions would be cured with a document representing the requirements of all sides. With all the uncertainty in the sport it is no surprise that to date such an agreement has not been produced but as various blueprints for Rugby Union move closer to enactment it will probably not be too long before the issue of players' contracts is resolved. While in 1997/8 when discussions were originally held, contracts needed to reflect the unique circumstances surrounding the transition from the amateur to the professional game, 2000 going forward is quite different. Clauses such as fitness maintenance, attendance at training and abstinence from conflicting sports, although still essential in new contracts, are now merely standard terms and to be expected in agreements between professionals at the peak of the sport. It is, however, the sophisticated issues of structuring remuneration, licensing and promotional activities and agreeing termination provisions that are likely to prove crucial in the new era. In the first part of this review I will take a look at 'the bread and butter' issues of remuneration, benefits, duration and termination of a contract. In the second part I shall discuss image rights, promotional activities, exclusivity and media related activities.

Structuring Remuneration

Naturally remuneration remains the dominant contractual issue with the complex job of balancing the requirements of the club and the player. For the club tied by the tight financial constraints of modern Rugby Union a remuneration package geared towards payment for performance would be ideal. A potential structure would involve a base salary but significant revenue to be derived from appearances, win bonuses and a successful team. In this way clubs are able to incentivise players' performance and limit the amount they pay out to an unsuccessful side. A player, on the other hand will be reluctant to sign up to uncertainty and would wish the majority of his money to be guaranteed with additional income to be gained from winning games, titles and perhaps scoring tries or points.

Clubs will also have to agree on their internal pay structure and how they wish to differentiate between differing levels of seniority within their club or the attaining of international honours, for example. Further, they will have to decide how they will address the issue of signing on fees (given the volatility surrounding the sport, players may well be keen to receive as much of their base salary as possible on signature) and so-called 'loyalty payments' which ensure that players receive a lump sum payment for seeing out the term of their contract.


The additional benefits included in a contract can often be a sweetener provided by a club to counter balance the perceived lack of base remuneration to the player. An increasing number of clubs own properties near to their ground which can be offered to players as a benefit but which also have the added advantage of ensuring that they are located within the community. Equally the provision of a club car is expected but each party will need to be aware of their responsibilities. The player will want the club to cover the majority of the costs of its upkeep but the clubs will want protection against any potential misdemeanours. With the changing corporate structure of clubs there is now the opportunity to offer shares rather than cash with the incentive that a successful season and its connected spin-offs is likely to lead to an increase in the worth of the stock.

Duration and Termination

For both player and club agreeing on the term of the relationship is a gamble. Clubs want to ensure that they have the player on their books for long enough to exploit his potential and avoid losing an individual in his prime but they do not want to continue paying a player who is unlikely to make a contribution to the team. A player, on the other hand, must ensure that he is guaranteed to earn a living for a lengthy period of time and protected against loss of form and injury but does not want to be tied to a team where either his first team opportunities are limited and he has the chance of playing elsewhere or the team is unsuccessful and superior clubs are keen to enlist his talents.

Incorporating additional termination provisions in an agreement may prove the solution to the above conundrum but can also be risky. For players it may not be wise to provide their club with the opportunity to release them during the duration of their contract and for clubs they are likely to resist any attempt from their players to escape before time save that in some circumstances they may consent to a provision allowing a player to leave if the club is relegated from their current league.

However, traditional termination provisions should be included in any contract and the clubs will want to have the power to dismiss a player for gross misconduct and fundamental breach. In the case of fundamental breach the club may have a choice as to how it wishes to proceed. It could either terminate the contract with immediate effect or, if for example in the event of a fundamental breach by a player wishing to transfer to another club without the consent of his current employer, could still play the player but refuse to assign any duties to him. Given the current playing field the player will want the opportunity to terminate the agreement should the club become bankrupt or fall into receivership.

First published in Running Rugby Magazine in August 2000. The second part of this article is in the October issue.