Section E5: Financial Sustainability Regulations Championship
The Salary Cap, finite upper limit, for Championship 2015 has been set at £1.0m.
Notwithstanding the above, no club may ordinarily have a Salary Cap Aggregate Liability in excess of 50% of Club Relevant Income, subject to the following provisions:
Clubs will submit to the Head of Salary Cap and Registrations, by 1 September 2014, their budget for the 2015 Championship season.
The Head of Salary Cap and Registrations will scrutinise this budget and agree a figure which represents 50% of Club Relevant Income (to be known as the Club Agreed Salary Limit).
A club may exceptionally seek a dispensation from the RFL to spend in excess of 50% of Club Relevant Income as a Club Agreed Salary Limit. Such a dispensation will not be granted unless:
(a) the Head of Salary Cap and Registrations is in agreement that the club can spend in excess of 50% of Club Relevant Income on its Salary Cap Aggregate Liability, having regard to the club’s financial history, the level of debts at the club, a liquidity assessment of the club and an assessment as to club’s overall club development strategy; and/or
(b) the club provides a personal guarantee or another appropriate form of security from a shareholder(s), director(s) or other business or entity associated or affiliated with the club, guaranteeing that that the club will meet the amount of the Salary Cap Aggregate Liability in excess of the Club Agreed Salary Limit.
- If a Club disagrees with any decision made by the Head of Salary Cap and Registrations under this Regulation, its sole remedy is to apply to the Chairman of the Operational Rules Tribunal (or his designated nominee) toreview this decision. Each Club waives any other right of appeal or challenge that might otherwise exist in respect of such decision.
- If the budget has not been received within fourteen days of the deadline, the club may forfeit the right for a dispensation to spend more than 50% of its Club Relevant Income. A failure to submit the club’s budget within one calendar month may result in the withholding of central distributions until such time as the budget is received
CLUB RELEVANT INCOME
Advertising Revenue – Advertising revenue should include all forms of advertising including pitch branding, hoardings, scoreboard and programme. Where advertising relates to individual matches, then the associated income should be shown in the period in which the matches were played. Otherwise, the associated income for the year should be spread equally over the playing season.
Bad debts – Any debts relating to income for the year, which will not be recovered by the club, must be netted against income for that period, as soon as the debt becomes irrecoverable.
BBC TV fees – Income should be accounted for as actually received.
BSkyB / News Corporation Distributions – These distributions should be accounted for on an actual basis taking into account the monthly distributions from SLE or the RFL.
Distributions receivable the RFL - excluding Challenge Cup prize money which is dealt with under Section 5. Other income should be accounted for when received.
Distributions receivable from SLE - Any annual distribution should be taken into income in the Salary Cap year in which it is received. This is a departure from the normal tenets of income recognition to reflect the fact that the annual distribution will not be known until after the Salary Cap deadline.
Donations - Donations from other sources should be included as and when received.
Gate Receipts – Income should be accounted for as actually received.
Gate Receipts – Shared – Income relates to cup and friendly games. For home clubs, income should be shown net of the away club’s share of receipts but before deducting match day expenses. For away clubs, income should be the actual share of receipts.
Investment income - Investment income relates mainly to interest receivable on deposits held at banks or other financial institutions and should be included as and when received.
Management Charges – Any management charges raised by fellow group companies must be netted against income.
Owners/Directors Contributions – Where a club director or Owner (which may be corporate) has decided to write off, or capitalise, all or part of his loan with the club then a signed, personal letter to that effect must accompany the Club return otherwise no income shall be deemed to arise from such an event. Clubs are reminded that in the interests of equity retrospective arrangements will not be allowed.
Prize Money – Any prize money received from SLE or RFL which the club chooses not to distribute to players.
Profit on programme sales - Profit/(loss) on programme sales relates solely to the sale less the cost of producing programmes. Programme advertising income should be included in “Advertising Revenue”.
Profit on hospitality sales – The associated income should be shown in the period in which the matches were played. (See Section 16 Definitions 2 & 3).
Profit on merchandise sales – Profit on merchandise sales should also take into account stock movements, damaged and obsolete stock as well as sales and production costs. (See Section 16 Definition1).
Profit on lotteries and similar activities - Profit on lotteries and similar activities relate to income, less prizes, from activities run by the club such as raffles, golden gamble, guess the score and club lotteries. Agents’ fees should be included within “Other Overheads” and not netted off against income. It should be noted that lotteries, which are run independently from the club, should not be included in this category. Any receipts from independently run lotteries should be shown under “Donations”.
Profit on other commercial activities – Clubs should identify the individual Income streams that are not included in other categories.
Season ticket sales – Although the majority of season ticket sales will be made during October to February, the total income from all season ticket sales should be apportioned evenly over the number of home league games during the season. The proportion equivalent to the total number of home games played to the end of the quarter should be shown in the return.
Sponsorship Income – Where sponsorships relate to the main club sponsor(s), kit and player sponsors then the associated income for the year should be spread equally over the playing season. For other sponsorships such as match and ball sponsors then the associated income should be shown in the period in which the matches were played. Please note that income deriving from the Owners/Directors of the club for this purpose will be deemed to be classed as an Owners’ Contribution.
DEED OF GUARANTEE
This Deed is made on
(1) The Rugby Football League (Governing Body) Limited whose registered office is at Red Hall, Red Hall Lane, Leeds, West Yorkshire LS17 8NB (the “RFL”) and;
(2) of [ ]; (the Guarantor).
IT IS AGREED as follows:
1.1 Headings used in this Deed are for ease of reference only.
1.2 A person who is not a party to this Deed has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Deed.
2.1 The Guarantor is a shareholder and a director of (the “Club”) and acknowledges and agrees that:
2.1.1 Under an agreement with the RFL and SLE (the “Agreement”) dated on or around the date of this Deed, the RFL and SLE has agreed to allow the Club to agree player payments in the sum of £[ ] in excess of the Club Agreed Salary Limit (the “Additional Payment”).
3. Guarantee and Indemnity
3.1 The Guarantor irrevocably and unconditionally hereby:
3.1.1 guarantees to the RFL punctual performance by the Club of the Club’s obligations under the Agreement;
3.1.2 undertakes that if;
a) the Club does not pay any amount due to the players when due; or
b) the Club is subject to an Insolvency Event (as defined in the Bye-Laws of the RFL); or
c) there is a Change of Control of the Club (as defined in the Bye-Laws of the RFL); or
then he shall immediately on demand pay an amount equal to the Additional Payment to the RFL or SLE as if he were the principal obligor.
3.1.3 indemnifies the RFL immediately on demand against any cost, loss or liability suffered by the RFL if any obligation guaranteed by he is or becomes unenforceable, invalid or illegal. The amount of that cost, loss or liability shall be equal to the amount which the RFL would otherwise have been entitled to recover.
3.2 If any payment by the Club is avoided or reduced as a result of insolvency or other similar event the liability of the Guarantor shall continue as if the payment, avoidance or reduction had not occurred.
3.3 The obligations of the Guarantor under this Clause 3 will not be affected by any act or omission which but for this Clause would reduce, release or prejudice any of their obligations under this Clause 3 including:
3.3.1 any time, waiver or consent granted to the Club or other person;
3.3.2 the release of the Club or any other person;
3.3.3 the taking, variation, renewal or release of, or refusal or neglect to perfect, take up or enforce any rights against or security over assets of the Club or other person;
3.3.4 any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of the Club;
3.3.5 any amendment (however fundamental) of this Deed;
3.3.6 any unenforceability, illegality or invalidity of any obligation of any person under this Deed or any other document; or
3.3.7 any insolvency or similar process.
3.4 The Guarantor waives any right he may have of first requiring RFL to proceed against or enforce any other rights or claim payment from any person before claiming from him.
4.1 If, at any time, any provision of this Deed is or becomes illegal, invalid or unenforceable in any respect neither the legality, validity or enforceability of the remaining provisions will in any way be affected or impaired.
4.2 No failure to exercise, nor any delay in exercising, on the part of the RFL any right or remedy under this Deed shall operate as a waiver, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in this Deed are cumulative and not exclusive of any rights or remedies provided by law.
4.3 This Deed is governed by English Law.
4.4 The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Deed.
This Deed has been entered into on the date stated at the beginning of this Deed.
Signed and delivered as a deed for and on behalf of the Rugby Football League (Governing Body) Limited
Signed and delivered as a deed by
[To be written on Solicitors' letterhead]
I refer to the terms of the Deed of Guarantee between ("my Client") and Championship (Europe) Limited (the "Company"). I hereby certify that:
1) I am a Solicitor, holding now and at all relevant times a current practising certificate.
2) Before the said Deed of Guarantee was signed I had advised my Client as to its terms and effect.
3) At the time I gave the advice there was in force a contract of insurance covering the risk of a claim by my Client in respect of loss arising in consequence of such advice.
4) I am not acting for or employed by the Company.
Insert Name of Solicitor Here