UK Law and Practice Contributed by: Jamie Singer and Flora Peel, Onside Law
Salary Caps Salary caps are becoming a feature of sport in the UK. To date, a sports governing body or league is generally free to exercise its discretion in setting salary restrictions in its rules, providing these are proportionate. Football In February 2021, the English Football League (EFL) set a salary cap on clubs competing in League 1 (third division) and League 2 (fourth division), and fixed a limit on how much clubs could spend on their total squad’s salaries. However, the EFL removed the salary caps for League 1 and League 2 clubs, which were ruled unlawful by an arbitration panel. The challenge was brought by the Professional Footballers Association (PFA), arguing the restrictions had come in without appropriate consultation and agreement. This was said to have breached the Professional Football Negotiating and Consul - tative Committee’s constitution. The EFL chair, Rick Parry, envisages the League could still see the implementation of salary control in the near future amid financial sustainability concerns. This continues to be under debate and will be an interesting area to watch. Rugby The salary cap in Premiership Rugby has caused numerous issues over the years with many dis- putes arising. Saracens FC were judged to have breached the salary cap three times in a row by failing to disclose player payments in the form of investment. The total investments took the total squad’s salary payments over the clubs permit - ted GBP7 million threshold. This consequently saw them receive a 70-point penalty and the team was thus relegated to the Rugby Cham - pionship.
Since the Saracens’ breach, there have been other examples of clubs potentially falling foul of the salary cap rules. Leicester Tigers were fined GBP310,000 for salary overspend, also suf - fering consequent damage to their reputation. Leicester Tigers had exceeded the salary cap by between GBP55,000 and GBP147,000 during four seasons from 2016/17 to 2020/21. There were arrangements in place so that a third-party company could make payments to the image rights companies of Tigers’ players. The salary cap rose in the 2024/25 season to GBP6.4 million. However, this has caused a split in opinion among the clubs, with some Premier - ship clubs feeling it simply “shoots Rugby in the foot” since there is evidence from this past season that clubs are already struggling to stay afloat. In recent years, Worcester Warriors, Lon - don Irish and Wasps have all entered administra - tion. It is a very interesting period for Premiership Rugby in the UK and will likely be a key talking point for years to come. There have also been numerous other examples of salary cap breaches across various different sports, as corporations and sports bodies often try to find a way to keep investments and thus search for alternative methods of paying players. Compatibility With Competition Law Salary cap rules can raise issues with wider competition laws and the common law doctrine of restraint of trade. Where a rule impacts upon an athlete’s ability to earn a living, the body imposing the rule must demonstrate that the rule is a legitimate restriction and is proportion - ate in its approach. In the Saracens case, it was found that the salary cap was legitimate and pro - portionate and promoted the financial health of Premiership Rugby clubs, so it was considered a permissible restraint.
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