Uncertainty of outcome. Salary caps. Governance. We dive into how rugby is doing with competitive balance
Competitive balance in rugby
Sometimes things just get, you know… Out of whack. And in professional sports leagues, actually, ending with the unexpected can be a huge part of the appeal.
It’s why long-suffering season ticket holders ready themselves to be hurt again. It can turn the passing onlooker into a wide-eyed obsessive. It ensures overly-familiar fixtures stay fresh. It’s the what-if fuel for so many pub debates.
And what kills off some of that joy and wonder is certainty of outcome.
Tuning in for the sure thing, yet again, is like the holy water spa for vampires. It’s why league organisers all around the global sporting sphere are so willing to discuss competitive balance, because they know they need it in their racket.
There are different kinds of competitive balance. There’s fostering uncertainty of outcome in a specific match. But also uncertainty of outcome over the season, in terms of who’s going to win the league. And in the longer run, you don’t want the same team winning it season after season.
Yet in rugby union specifically, there is a curious lack of uniformity of league structures and set-ups across different markets. On top of this, as Paul Downward, professor of economics at Loughborough University, adds: “Competitive balance has been a bit variable and what research exists would identify that part of the volatility is the fact that it is a relatively new professional sport.”
With a hodgepodge of international competitions, would some of them be more competitive if they had a structural do-over? Are constraints brought in able to create greater balance? Downward tells us that, according to studies, “regulations like caps will help with balance”, but what other weapons can be used in the fight for equilibrium?
Maybe first, it’s worth assessing some of the work done on competitive balance in rugby union. It’s why Professor Downward aims us right at Pat Massey.
FAN APPEAL AND COMPETITIVE BALANCE
A specialist in competitive law and mergers, Massey remembers when he was brought in by the European Commission to look at Premier League football and the collective selling of broadcast rights. He laughs about cartel-like behaviour across different sports when it comes to broadcast rights and how, somehow because it’s sport, we let such things fly.
Why? For the pursuit of competitive balance.
From here Massey found himself looking more and more at sports economics. Competitive balance is a fascination, and he began looking at fan interest. In 2013, he helped write the Ronseal-titled paper Competitive Balance and Match Attendance in European Rugby Union Leagues.
They looked at three European leagues: the Gallagher Premiership, Top 14 and what was then the Magners League, assessing what might impact attendances over 15 seasons.
“We found if teams were of similar quality, it had a positive effect on attendances,” Massey tells Rugby World. “Similarly, if teams were in contention and needed to win to win the league or make the play-offs, depending on how the league worked, that also had a positive impact. Certainly for the home side. If the home team was in contention that had a positive impact.”
He adds: “If there was short-run uncertainty and medium-term uncertainty, as in who was likely to win the league, we did find in that paper that it had positive impacts on attendance. But they weren’t as important as the overall strength of the team – more people wanted to see a better team, so if the (home) team was doing well and was on a winning run, that had a positive impact on attendance.”
Obvious enough not to need a sports economist, you might grumble. But these guys were putting the time in to assess a huge number of previous games.
And when talking about all he’s seen on attendances, Massey talks of a fascinating U-shaped relationship with competitive balance, if you were to plot it. Inherently, he says, you want the chance of your team winning to be higher, but not so high that the chances of winning are overwhelming. That affects attendance.
Too close to being a certainty, attendance drops off. He explains: “A 66% chance of a home win more or less seems to be the point that maximises your attendance. If it gets beyond that, it tends to fall away again.”
With Massey’s 2013 paper, all the data came from a period up to around 2011, and across leagues where two had relegation, one didn’t. So of course it is never like-for-like comparisons. And there are elements of league building that makes sports like rugby wildly different from US sports, for example. Look at US player pools and their locality (relatively speaking), or their lack of comparative leagues in the same sport, in other countries, vying for your talent, or the possibility of ‘tanking’ for better draft picks.
There is another aspect of the US sports ecosystem that impacts competitive balance, according to Massey, and it’s perhaps something to be aware of in the wake of Worcester Warriors being suspended from all competitions and subsequently the termination of Worcester players’ contracts. It comes down to ownership.
“US team owners are generally seen to be ‘profit maximisers’,” Massey says. “Ultimately, they’re in it to make money.”
Here, we come screeching into an issue of modernising European sports and many will point to football, but perhaps some rugby owners leap to mind too. Traditionally, pro rugby has been run by ‘win maximisers’.
As Massey goes on: “Generally the studies show that makes a difference. Things like salary caps and so on have a different impact, depending on whether or not the owners are win maximisers or profit maximisers, in terms of whether or not they improve competitive balance.
“Another factor which has sometimes been observed, but is more true of the US sports where there’s no relegation, is what economists call ‘free riding’. Basically if you’re a profit maximising owner, and the team can’t be relegated, well, you can boost your profits by slashing costs and not paying for very good players, because it doesn’t matter. You got an equal part of the NFL pie anyway, so why would you bother?”
There are some sports, though, where the league has tried to bake in win maximisation as the driver for all. But there’s more on that later. First, let’s look at the most commonly-discussed mechanism for attempting to level the playing field.
When discussing the shaping of league structures over time, Professor Downward shares the view that “there’s been a bit of volatility and settling down about those things. And subsequent to that, what research has been done is focused on things like the need for the salary cap, and the salary cap does seem to produce a more balanced situation.”
And this is the point where Downward makes a note to introduce us to Massey. Because he has looked at this specifically.
Massey tells us: “I did a paper in 2018 where we specifically compared the impact of salary caps on competitive balance, comparing the Premiership and the Top 14. We covered the period from 1987-88 up to 2015-16, so it predated the professional era. We had (just under) 9,500 matches between the two leagues.
“And what we saw was that you had a decline in short-run competitive balance on certainty of outcome in both leagues, following the switch to professionalism. But that was reversed in the Premiership following when the binding salary cap was introduced there. So there’s some evidence to support the idea that in that case, the salary cap did have a positive impact on competitive balancing in the league, certainly in the period we looked at.”
Massey points out that the French cap has traditionally been much higher and came in later, but he adds: “That doesn’t seem to have particularly disadvantaged English teams, at least until relatively recently.” We are panicking now but we are looking at a relatively recent funk, in the grand scheme.
The comparison of the English and French systems has become a preoccupation for many rugby lovers lately. One seems to be thriving, nationally, while the other is trying to turn out of a violent skid.
However, Downward hits on an interesting notion. He believes that if the salary cap was detonated in English rugby, that competitive balance would completely blow up with it. However, without other measures, perhaps a cap is not enough. Is the Premiership, for example, too much of a hybrid between the English Premier League’s free-for-all approach and the US sports systems? Is that why we still see some juggernauts always near the top?
Taking us somewhere else entirely, Downward replies: “Which is exactly what most commercial markets are like – you end up with a small number of really big suppliers. That’s including car companies or airline companies or whatever. It’s almost like a natural economic process.
“And so, from an economist’s point of view, nothing particularly alarms you. What does alarm you is when people start putting on restrictions, alleging you’ll get change and the changes that you get still aren’t that significant – it doesn’t seem to matter what arrangements you’ve got, you still kind of end up with four or five teams dominating the sport.”
It’s an interesting topic for discovery. Particularly as we talk more and more about ring-fencing and leagues with relegation and without. With English eyes, look at the URC; look at France. Can we make any predictions here?
On this, Massey adds an interesting factor from intercontinental competitions where he believes that the combination of promotion-relegation and European competitions – where you can get extra money if you qualify – has had a very negative impact on competitive balance in European football.
Did someone say one big intercontinental competition? Well, Downward has a view on this that relates to the number of viable commercial entities in the sport. Strap in.
He tells us: “The issue you’ve got in rugby union is, it’s caught between… It’s almost like the Championship in football. It’s not quite got the lure of the Premier League, but equally the bottom-end clubs haven’t quite got the funds to compete in that structure.
“It’s almost like: what’s the ultimate size of the market?
“If you take a very hard economic look at it, you’d say you can’t support the number of teams you’ve got with the existing market, right? And so this is where the lure of more international competition comes in. So if you had effectively the Heineken Cup being played as a league, that’s potentially an economically viable unit.
“Because just about every team in there is financially viable. But that doesn’t sit nicely with traditional governance, which goes back to the amateur game and so on.
“From an economic point of view, it’s what can the market support and football to some extent can support a greater number of teams. Rugby hasn’t quite got there.”
With all of the above, then, it would be good to know how the Premiership feels about competitive balance…
THE PREMIERSHIP VIEW
“The competitive balance piece is something I can be a bit of a nause on,” says the Premiership’s salary cap manager Andrew Rogers. It is a big consideration in his job.
In fact, when Saracens put in a competitive law challenge recently, contesting the lawfulness and legitimacy of the cap, the Premiership brought in competition and regulatory economics expert Derek Holt to talk directly about competitive balance and the role a cap plays in maintaining or engendering that. The league came out on top.
According to Rogers, he measures the competitive balance of the league by looking at the short, medium and long term.
Explaining further he says: “In terms of how we measure our competitive balance within those three categories, we would say short term, the big one for us is closeness of games in the Premiership. So we’ve always felt that that’s a key metric around how many matches end within seven points.
“Just for example, last season 45% of our games were deemed close games – so finished within seven points – compared with the URC at 35%. We had our peak in 2018-19, when 51% of our games were close in terms of being within seven points. On average over the last few seasons, we’ve been tracking above Super Rugby, Top 14 and URC on close games. So that’s an indicator that within the short-term metrics we’re doing okay.”
Away from the empirical, Rogers also likes to look at the volume of scores that come in matches, trying to get in the headspace of fans. On a purely numbers level, though, he will look at the ‘Noll-Scully’ measure – an academic metric that calculates the standard deviation (SD) of the winning percentage of all the teams in the league, and slaps a number on it.
Noll-Scully was used by the Premiership when Sarries made their legal challenge. Boiled right down, the closer to 1 you are with the Noll-Scully metric, the more competitive the league is perceived to be. According to Rogers, in the last five seasons, the Premiership scored between 1.2 and 1.6 for that, which he sees as a big success and looks favourable compared to other leagues.
Back to measuring competitiveness over time, Rogers talks long-term, quoting some numbers.
“It’s also seasonal play-off qualification. Over the last six seasons 92% of our clubs have finished in the top four. So again, you’d say that’s a pretty good number. And obviously we’ve had four different winners in four years (Saracens, Exeter, Harlequins and Leicester). If you pull those all together, you’d say there is competitive balance in the Premiership.”
Can competitiveness have a perfect number? It’s hard to say. The irony at play with the above is that Sarries made ten play-offs in a row and won five titles between 2009-10 and 2018-19 – the same club the Premiership brought in expert economists to fight off with arguments about competitive balance.
You might remember before this Leicester making the top four every year between 2005 and 2017. Exeter made six finals in a row and only twice has the team that finished fourth in the league won the whole thing. The team in third has never won the Premiership.
Of course, these days you cannot talk about the cap without discussing lost talent.
In June 2020, at the height of Covid, the salary cap ceiling in the Premiership came down to £5m, plus up to £1.4m in ‘credits’. From 2024-25, the cap is due to climb back up to £6.4m. But even before the travails of Worcester and eyes being trained on beleaguered Wasps, there was talk of the ‘squeezed middle’, of a class of solid pro players lost to the Premiership due to a lowering cap.
On this Rogers says: “What is interesting is looking at the number of players in the churn leaving the Premiership over the last few years. From last season to this season it is lower than it has been for four or five years.
“We always see around 20-23% of players leaving the Premiership each season and that’s a natural thing. In the NRL in Australia, they have a similar top 20% of churn leaving the sport, so that seems to be natural. Obviously it’s very sad because it’s a difficult time for all players. No one wants to stop playing but it’s not unsurprising, those numbers, because they seem to be on par with most seasons.”
Constant assessment is needed, anyway. It’s why Rogers went to Paris in April to talk with the Top 14 cap manager. In recent discussions with other sports, cap managers have pressed Rogers on how they managed to see through recommendations from the famous Myners Report to gain access to player payments, tax returns, extended audits…
But if we look at other sports too, what can we learn? There are some interesting things happening in Australia.
LESSONS FROM DOWN UNDER
Walter Lee almost seems apologetic as he outlines ambitious plans for his sport. The head of the strategy team at the Australian Football League (AFL), he has seen some good times.
The league recently signed a bumper Aus$4.5 billion broadcast deal with Seven Network, Foxtel and Telstra, which will run from 2025 to 2031. They are happy with how competitive each team is and how financially stable their sides are.
“But 30 years ago we were broke,” Lee tells Rugby World. “There were clubs going to the wall. We had a league that couldn’t agree on a way forward and eventually we had to rip up the whole model. We were going broke because we didn’t have a system of competitive balance. You had teams winning every year and other teams struggling to get any fans into their games.”
So what did they do?
According to Lee: “The three things we really put in place here is the salary cap is the big one and a national draft, which is like the NFL draft – it’s equitable access to talent. And then the third one is the soft cap.
“That is on football expenditure. The simplest way to put it is (teams) spend 50-50: one is on the players, and that’s the salary cap. And then the other piece that they pay for is all the coaches and development staff, the high-performance staff, medical training, etc. We put a cap on that expenditure.
“About ten years ago now the league was in terrific shape. We were doing record broadcast deals, game revenues were through the roof. But we had six of our clubs going to the wall and accruing debts of hundreds of millions of dollars.
“So you look at that and go: what’s going on here? Because we don’t have a revenue problem. It turned out we had a cost problem. Football expenditure was growing at a two to one rate compared to the revenue growth in the competition. And so basically what we’ve worked out in that period was that clubs were spending more on their coaching, spending more on their football programmes.”
It sounds an awful lot like an arms race. The joke went that if one AFL team went to a training camp in Arizona, the next year everyone was doing the same. It felt counterproductive and businesses were tipping over. So they introduced a cap. You could break it, sure, but there’s a luxury tax so you’d have to fork over more.
There is more that makes the AFL vastly different to the rugby sides we see. Remember Massey talking earlier about win-driven ownership versus the upper caste extracting value from their product? Of the AFL, Lee says: “We’re unique in that we’re all member associations, our clubs don’t have private ownership. In our competition it’s all member owned. And so when you’re a member of a nonprofit organisation, your only KPI is to win.”
There’s central, independent governance too, which the league is very proud of. No confederacy of club representatives on a board shouting about what they want. It’s critical for the betterment of the whole, the AFL believes.
Without the AFL even coming up, Massey tells us of governance in sports leagues: “What’s in the interest of individual clubs doesn’t necessarily coincide with what’s in the best interest of the league.” In Aussie Rules, there has been an active step in the other direction.
It’s why, the suggestion goes, when the AFL identified the need to create expansion teams in Queensland and Sydney, to compete from the 2010s, there was agreement that being strong in those markets in 20 or 30 years’ time would help the sport hugely. It’s also why, Lee adds, there is a desire to give new or smaller clubs a bigger slice of the pie.
“It’s been just constant investment cycles,” Lee continues. “And so they (new entities) get a higher proportion of funding. They get a higher proportion of the TV rights, they get a higher proportion of talent access as well. And so the whole thing is actually deliberately geared to make those two clubs successful because we know that if they (do well, in terms of competitiveness), more of the population will grow up as fans and play more football and that actually serves the broader purpose of the game.”
And while market research may have created a Vegas-style flashbulb arrow pointing at the markets they already had a presence in without clubs, they are now setting their sights on markets they have a dwindling presence in. There is huge impetus behind creating a 19th franchise in Tasmania.
It seems to be working for them. But it feels a world away from some leagues where promoted sides have to hit the ground running. Good luck, all the best.
Survival of the fittest is certainly the traditional way. However, in the age of rugby teams slamming into the wall and then sliding into the dark, it’s worth a wider discussion around what else is going on in sport.
Which league do you think is the most competitive in rugby? Let us know at firstname.lastname@example.org or via our social media channels.
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