The agent v Premiership stand-off that could lead to a catastrophic exodus of talent

Could the Premiership be facing a player exodus of high-profile international stars to rival leagues in France and Japan or the United Rugby Championship?

Such a doomsday scenario could soon become a reality, according to some of the leading agents in England.

The problem? A deadlock over the payment of fees to agents for both new contracts and renewals of existing deals, that has led to the representatives of the players in the Premiership refusing to recommend their clients agree to any new business.

The agents claim that what started out as a rather dry tax ruling by HMRC on payment of agents’ fee in football is now threatening to spill over into the retention and movement of players, as well as the signing of top overseas stars to the Premiership.

One agent said an indication of the immediate of impact was Duane Vermeulen’s move to Ulster at a time when at least five Premiership club’s were looking for a top-quality ball-carrying No 8.

The ruling by HMRC has put the practice of clubs paying 50 per cent of the agents’ fee in any transaction under the spotlight. Previously, that portion of the payment would not be included in the ‘compensation’ package and would be exempt from tax. 

The agents claim that Premiership clubs have used that interpretation to exclude any payments to agents, in a move to sideline their influence from future deals and to try to reduce the estimated £400,000 annual cost of fees paid that are included in the salary cap.

The clubs’ motivation, according to the agents, in the longer-term is to exclude them from future negotiations at a time when there are strong rumours that the salary cap reductions that were brought in as a response to the financial impact of the Covid-19 pandemic are to be extended for at least another two years.

With the agents effectively downing tools in response, the warnings are that some of the leading players will be moved to leagues where fees are paid for agents’ services, most notably Japan.

“We have said we are not happy to recommend players sign new deals or renewals until we know the final position and how it will affect them financially,” said one leading agent.

“The result is that the Premiership will see some of its best players leave to go to other leagues and clubs are going to miss out on top-flight overseas signings.

“Rugby is so obsessed with constant cost saving it is actually now getting to the point where it's actually at the detriment of the league. It used to be all about investment and bringing the best players to the league in order to get a bigger TV deal but with all these cost savings, it is now about making cuts and hoping the values will stay the same.

“The agents provide a service to the club as well as the player and the concern is that the clubs will convince young players that it is in their best interests not to use an agent which could result in them not receiving the true value of their new contract.”

Another agent said that the move would likely lead to more ‘underhand dealings’ rather than removing any suggested conflict of interest.

“Currently everything is above board, over time it will become under board,” he said. “Agents will look to move players to leagues where they do get fees.”

The Rugby Players’ Association, which represents over 700 professional players has also indicated its concerns about the new proposal. In private correspondence, seen by Telegraph Sport, it has claimed that the proposal “does not have the best interest of RPA members due to the adverse effects it will have”.

The RPA highlights the claim that the PRL proposal instantly reverses “an accepted practice” that has been in place for over 20 years.

“Our members wish for it to be made clear that the proposal will have a significant and negative impact upon them, adding considerable financial pressures on them on top of the recent pay cuts for most Premiership clubs and the lowering of the salary cap.”

Phil Winstanley, the Premiership’s rugby director who has been tasked with leading the negotiations for the clubs, insists the motivation behind the proposal was not to cut costs but to remove any conflict of interest in future deals and put the player at the centre of the transaction.

“There's no attempt for us to undermine either the agent or to impact on the player,” said Winstanley. “The reality is that the player has to be responsible for the payment and therefore has to be at the centre of the arrangement.

“We've come from an environment where there's been a general acceptance that an agent can act on behalf of a club for a play. And the reality is, that's never been the case. So we've got a real conflict of interest.

“What we're trying to achieve here is put the player at the centre of the arrangement, and there's no doubt whatsoever the tax legislation and guidance is that the player is going to be responsible for all the taxes paid on any agents fees.

“It’s entirely appropriate that the play is put at the centre of the arrangement, and is responsible for one negotiating the level of the fee.

“And what that allows us to do is avoid any risks in future any tax investigations or tax issues that impact on the club.

“To label this as one issue, which will determine that certain players do or don't come into this market would be a little tenuous.”

The issue is due to go to mediation next week and at a time when the Premiership has enjoyed a high-octane start to the new campaign, it is an issue that requires a swift resolution to prevent it escalating further.