Salary Cap Regulations

CHAMPIONSHIP SALARY CAP REGULATIONS CHAMPIONSHIP SALARY CAP REGULATIONS INDEX 1. PURPOSE, SCOPE AND APPLICATION OF THE REGULATIONS 2. INTERPRETATION, DEFINITIONS AND PRINCIPLES 3. SALARY CAP LIMIT 4. OPERATING BUDGET - INCLUSIONS 5. OPERATING BUDGET - EXCLUSIONS 6. SALARY CAP QUALIFYING COSTS 7. NON-SALARY CAP COSTS 8. ALLOWANCES 9. THE AUDITING AND MONITORING PROCESS 10. TIMETABLE 11. PENALTIES FOR LATE OR NON-SUBMISSION OF THE SALARY CAP RETURN AND/OR RELATED INFORMATION 12. BREACHES OF THE REGULATIONS 13. DATA PROTECTION 14. REVIEW OF HDPGS’S DECISION Operational Rules 2019 – Championship Salary Cap Regulations CHAMPIONSHIP SALARY CAP REGULATIONS 1 PURPOSE OF THE REGULATIONS 1.1 The overriding purpose of these Salary Cap Regulations (the “Regulations”) is to protect and promote the long-term health and viability of the game of Rugby League. Within that overriding purpose , the specific objectives are:: 1.1.1. To encourage financial discipline, self-sustainability and responsible spending and therefore protect the long term viability of clubs; 1.1.2. 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; 1.1.3. To protect all other clubs and competition integrity by ensuring that clubs do not suffer insolvency events during a playing season; 1.1.4. To protect the reputation of the sport to existing and potential broadcasters and other commercial partners and suppliers; 1.1.5. To protect the long term viability and sustainability of the sport; and 1.1.6. To protect the welfare and interests of all Players. 1.2 The Regulations shall apply to all Persons subject to the Operational Rules, including (without limitation) all Clubs, Club Officials, Players, Licensed Agents and any other Party participating in any capacity in any events or other activities organised, convened or authorised by the RFL, whether or not such Party is a citizen of or resident in the United Kingdom. Such Parties shall be deemed to have agreed: 1.2.1. to be bound by and to abide strictly by the Regulations; 1.2.2 to submit to the authority of the RFL and any member of the Compliance Team to adopt, apply, monitor and enforce the Regulations; 1.2.3 to provide all requested assistance to the RFL and/or any member of the Compliance Team (by delegation from the RFL) in the application, monitoring and enforcement of the Regulations, including (without limitation) by cooperating fully with any investigation or proceedings conducted pursuant to the Regulations; 1.2.4 to submit to the jurisdiction of any Off Field Operational Rules Tribunal convened to hear and determine charges brought pursuant to the Regulations; and 1.2.5 further to Clause 14 of these Regulations, not to bring (and to waive any right to bring) any proceedings or claim in any court or other forum that is inconsistent with the foregoing submission to the jurisdiction of the Operational Rules Tribunals. 1.3 The RFL may amend the Regulations as appropriate from time to time. Any such amendments shall be approved and shall come into effect immediately. All parties to whom the Regulations apply (including, without limitation, the Clubs) shall be deemed to be bound by the amended Regulations from that point. 1.4 The Regulations set out the principles and requirements of the RFL’s salary cap system only. Compliance with the Regulations should not in any way be taken to mean that a party has complied with its legal obligations to, or in respect of, other parties (for example, in respect of a Club’s employment law and/or taxation obligations). In addition, compliance with the Regulations does not necessarily mean that a party has complied Operational Rules 2019 – Championship Salary Cap Regulations CHAMPIONSHIP SALARY CAP REGULATIONS with the other provisions of the RFL’s Operational Rules or the RFL’s Standard Player Agreement. 2 INTERPRETATION, DEFINITIONS AND PRINCIPLES 2.1 The Regulations are to be interpreted and applied by reference to, and in a manner that advances, their overriding purpose and specific objectives, as detailed in Clause 1.1, including but not limited to when an issue arises that is not expressly provided for in the Regulations. Such interpretation and application shall take precedence over any strict legal or technical interpretations of the Regulations that may otherwise be proposed. 2.2 Capitalised terms used in these Regulations shall have the meaning given to them in Section One of the Operational Rules or (where not defined there) as follows: “Agreed Operating Budget” means, in relation to a Club, its Operating Budget that has been agreed by the HDPGS in accordance with Clause 3; “Club Sustainability Cap” has the meaning specified in Clause 3 of these Regulations; “Club Trained” shall mean a Player who has, for any 3 full Seasons before the end of the Season in which he ceases to be eligible by age to play at Under 21 level, been on the Club’s Register. Any dispute as to the status of a Player shall be referred to the Board in accordance with the Operational Rules in Section B1. Any time spent on the Register of another Club on Loan shall be counted towards the 3 full Seasons, unless otherwise determined by the RFL “HDPGS” means the Head of Delivery Professional Game and Salary Cap or any nominated representative of the HDPGS; “Operating Budget” means a budget for a Club in such format as the RFL may specify from time to time showing the operating revenues and costs for the Club in accordance with the principles set out in Clause 4 and 5; “Operating Loss” means any excess of relevant expenditure over relevant income (budgeted or actual) as calculated in accordance with the RFL’s template Operating Budget or Salary Cap Return; “Permitted Loss” means, in the case of each Championship Club, 7.5% of the central distribution to be received by the Club from the RFL in that Season in relation to its participation in the Championship; “Salary Cap Qualifying Costs” has the meaning given in Clause 6; “Salary Cap Return” means the financial return incorporating the information required by the HDPGS in the form specified by the HDPGS from time to time which must be provided covering the periods of the Salary Cap Year specified in Section 8 of these rules. “Salary Cap Year” means each 12 month period from 1 December in one calendar year to 30 November in the following calendar year (inclusive). 2.3 As financial reporting evolves over the years and different circumstances or transactions occur, it is clearly impossible to legislate for every possible eventuality. Consequently, the spirit of the rules and their objectives should take precedence over any technical interpretations. 2.4 In all matters of interpretation or judgement, the RFL will adopt policies that are consistent with the aforementioned definition of the purpose of the Salary Cap. Operational Rules 2019 – Championship Salary Cap Regulations CHAMPIONSHIP SALARY CAP REGULATIONS 2.5 Further, Clubs that would wish to establish certainty over any issue should contact the HDPGS who will provide a written judgement on the appropriate accounting treatment of any particular item, as regards the Salary Cap. 2.6 For the avoidance of doubt, the underlying principles in the completion of the Salary Cap Return are the normal conventions used in the preparation of accounts. In particular, costs and expenses should be accrued to match against the revenues receivable in any year. 2.7 In addition, retrospective adjustments will not be permitted. Therefore, all invoicing or Directors loan write-offs must be completed by November 30th in the year in question, for it to be included within the Salary Cap Return. Errors of omission, whether discovered by the HDPGS or disclosed by the Club during the course of the audit and the associated dialogue will be allowed until the HDPGS has determined that the individual Club’s process has been completed. 2.8 In matters of contention, the RFL will be guided by the treatment accepted by HMRC as to items that may be capital or revenue in nature. However, while this may assist the RFL in determining an issue, it would not bind the RFL, particularly where such a treatment may in fact be tax effective but, nevertheless, is in conflict with the primary purpose of these Salary Cap rules. 3 SALARY CAP LIMIT 3.1 Limit 3.1.1 A Club must ensure that its Salary Cap Qualifying Costs in any Season do not exceed the Club Sustainability Cap or such higher amount as it is agreed the Club can spend pursuant Clause 3.4 (provided that this shall be capped at a maximum of the Super League finite cap (£2,000,000 in the 2019 Season). 3.1.2 For the avoidance of doubt a Club’s compliance with Clause 3.1.1 shall normally be measured retrospectively based on a Club’s Salary Cap Return or Monthly Payroll Returns (as defined in Clause 9 of the Regulations) or any other information that the RFL requires at such frequency as determined by the RFL from time to time. 3.2 Definition of Club Sustainability Cap Subject to any dispensations granted pursuant to Clause 3.4 below each Club’s Club Sustainability Cap is the amount that a Club can budget to spend on items that would count towards the Salary Cap Values of its Players to ensure that its Agreed Operating Budget shows either: (i) a profit or breakeven position; or (ii) a loss of no greater than the Permitted Loss. 3.3 Setting Club Sustainability Cap 3.3.1 Each Club must submit to the HDPGS, by 15 October in each year, its Operating Budget for the following Season.

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