Why Japanese rugby needs to turn professional - and the legal challenges it could presentNan Sato, Sam Beer
The recent decision of the Japan Rugby Union Federation (JRFU) not to professionalise Japanese rugby has divided opinion ahead of this year's Rugby World Cup. This article explores the debate and considers whether the decision will prove detrimental to the development of Japanese rugby. It also puts forward the authors’ thoughts on why professionalisation is arguably a better way forward. Specifically, it looks at:
The status of rugby in Japan
The upcoming World Cup and the move towards professionalization
The two main reasons for remaining amateur (and the arguments against them)
Why professionalisation is arguably a better way forward
The potential legal issues involved in professionalisation
The status of rugby in Japan
Rugby Union is long-established in Japan. There are even reports of matches being played in Yokohama as early as 1866,1 before the sport was ever played in France, New Zealand or South Africa. In the early twentieth century, its growth was so strong that by the 1920s there were already almost 1,500 registered rugby clubs in the country.2
The Japanese royal family's keen patronage of the sport, most notably Prince Chichibu after whom the national rugby stadium is named, was a significant driver of the growth of rugby in Japan. Perhaps as a consequence of this, the game flourished particularly amongst the wealthy, first in Japan's private universities (as evidenced by the famous Keio v Waseda match that has been played annually since 1924) and then latterly in its major corporations, as pioneered by Kobe Steel in the post-war period. In recent decades though, overall player numbers have remained fairly steady following the rapid rise during the early 20th century. There were already 60,000 registered players in the 1920s3 and today, according to World Rugby's latest statistics,4 Japan has 105,695 registered players. While this growth is undramatic, this still leaves Japan with the eighth largest playing population in the world, ahead of major Rugby nations like Ireland, Argentina, Scotland and Wales.
Throughout its development, Japanese rugby has proudly identified as amateur. Its best clubs, following in the footsteps of Kobe Steel, are owned by large corporations, such as Toyota, Suntory, Toshiba and Yamaha. Though the top players have some of the most lucrative professional contracts in the world (both Dan Carter and Matt Giteau earn in excess of GBP 1 million per year at Kobe Steelers and Suntory Sungoliath, respectively5), the vast majority of players remain technically amateur and are employees of the corporate owner rather than their clubs. The exception to this is Japan's Super Rugby franchise, the Sunwolves. Founded in 2015, this is a fully professional team that only competes in the international Super Rugby competition rather than in Japan's domestic league.
Japan's amateur status was starkly in evidence when it was revealed that the amateur players in Japan's national team were being paid a stipend of only JPY 2,000 per day (around GBP 14) during their tour to the UK in November 2018.6 However, the inflated salaries of the international players in the Japanese league (a trend that originated as early as the 1970s; well before the professionalization of Rugby Union globally in 1995) has led to repeated criticisms for, so-called, "shameteurism".
The upcoming World Cup and the move towards professionalization
Once one of the most popular sports in Japan, rugby has been losing popularity with fans gradually since the early 1990s. When the professional football league J-League was established in 1993, rugby was far more popular than football. Even some of the colleage rugby games filled up the National Stadium, which has a capacity of 48,000 people.7 A serious challenge currently faced by Japanese rugby is the lack of interest and support from the general population. Despite the stellar performance by the national team in the last World Cup, the attention the Top League received after the World Cup was disappointing. Only 9,000 out of the 25,000 seats were filled at its opening match immediately after the last World Cup. Other Top League matches average fewer than 4,700 spectators per match. Currently, about 40% of the Top League match tickets are purchased by the clubs’ corporate owners themselves and are distributed for free.8 The slogan on a promotional flyer created by the Top League for the 2017 – 2018 season was “We are starving for support.”9
A similar failure to capture the imagination of domestic fans following major international success has been witnessed in a number of other amateur sports in Japan.10 These issues can be attributed, at least partially, to the lack of professional domestic leagues in these sports. Despite rugby’s popularity over football in the 1980s and early 1990s, football has managed to steadily gain the attention of Japanese fans since its professionalization 26 years ago. The average attendance at J-League games now dwarfs that of the Top League. In the 2017-2018 season, the J-1 matches had a total live attendance of nearly 5.8 million in comparison to 466,446 of the Top League.11 Because the teams in these semi-professional sports are owned by large corporations and a vast majority of the players are employees of the corporations that own the teams, it is not rare to see a player miss training due to conflicts with the work schedule.12 Even players who make the national teams are sometimes forced to prioritize company work over practice when they are over the age of 30.13 To put this in perspective, Dan Carter's man of the match performance in the 2015 World Cup Final came when he was 33 years-old and his captain Richie McCaw was 34.
As the host country of this year’s Rugby World Cup, Japan has a strong desire for its national team to perform well in the tournament. It is against this background that the discussion of professionalization of the Japanese rugby league, which was first raised in the 1990s, resurfaced. Intuitively, the stakeholders involved, from players to clubs to the league, understand that Japan cannot have a strong national team without a serious domestic league.
Initially, the goal to professionalize the Top League was set for 2020. However, for the reasons discussed below and to the disappointment of fans and many players, the JRFU has recently decided to cancel the plan of professionalization.
The reasons for remaining amateur
There are two main reasons behind the decision not to professionalize Japanese rugby:
First and foremost, the current system offers more job security to the players. Many players themselves are afraid of going professional for the fear of unemployment after retiring from their playing career. In a culture of lifetime employment, players often expect to remain an employee of the corporations that own their rugby teams after they retire from the sport.
The second argument for keeping the current system is to maintain the number of participants in the sport, which the proponents for this argument presume is the cause for a stronger national team. Since the corporations employ at least 40 players per team, many players who may not make it into a professional team have an opportunity to play thanks to the corporate ownership structure.
In the authors’ view, neither of these arguments are particularly strong:
In relation to job security, the current system seems to greatly benefit the players, but in reality, approximately half of the Top Leaguers resign from their companies within three years of retiring from rugby because they struggle to find their places in the companies outside of being a rugby player on the corporate team.14 Even those that do manage to stay can feel trapped in a job that they do not feel particularly passionate about.15
In relation to the number of participants, a higher rate of participation does not necessarily lead to a stronger national team. As discussed in the first section, Japan’s playing population is higher than that of some of the strongest rugby countries. The level of competitiveness, however, has never matched up.16 This is because Japan does not have an environment where talented players can be discovered, trained, and incentivized to reach their maximum potential. A professional league would offer a more financially attractive alternative to football and baseball for the most talented Japanese youth. The resources and expertise that come with professionalizing the sport would also ensure that the future stars are scouted and trained properly before entering the professional league.
Why professionalisation is arguably a better way forward
In the author’s opinion, the best way for JRFU to achieve sustainable growth and improvements in performance is to professionalise the sport as soon as possible. The main arguments for this are as follows.
If rugby was professionalized, players and coaches would be subject to more direct pressure to perform. Kensuke Iwabuchi experienced first-hand the relentless competitiveness of professional rugby when he played for the English team Saracens. When his team failed to qualify for the European Rugby Champions Cup (then Heineken Cup), some of his team mates were terminated and a number of supporting staff stopped showing up.17 He gave 100% to every pass and every play because he felt that everything might impact his future life and career as a player. Only when each player feels this way can the playing environment become more competitive and the quality of the sport be improved.
Professionalization would also lead to a more sustainable business model by focusing on offering a better fan experience. Each club would have its own home stadium and incorporate in the club names the cities where the teams are based, which will help gain support from local fans and revive popularity among the general population. In Japan, most sports stadia are multi-use and owned by the local municipality, so the newly professionalized rugby clubs could simply continue to use their current venues without constructing new facilities. The J-League, for example, has been successful with this model in attracting strong local support. According to a fan survey conducted by the J-League in 2017, 84.4% of the fans think the J-League clubs play an important role in their local communities and 81.8% say that the clubs contribute to their communities.18 If well managed, Top League clubs can expect similar fan support after the professionalization of the league.
The operating cost per rugby team per year is currently said to be around 1 – 1.5 billion yen (approximately GBP 7 – 10.5 million). With minimal ticketing and broadcasting income and nearly non-existent merchandising business, all teams in the Top League are suffering significant financial losses. The corporate owners are subsidizing the loss every year. Nonetheless, this model makes less and less sense in a competitive global economy where companies are under increasing pressure to put every penny into maximizing shareholder returns. Especially now that rugby no longer enjoys the popularity it used to, companies cannot even expect the advertising benefits it used to enjoy by owning a rugby team. The corporate-supported model has reached its limit. As a result, one can easily imagine a scenario where a rugby team is downsized or shut down all together due to changing corporate policy or financial situations.
Once professionalized, revenue would be expected to increase in the following areas: ticket sales, sponsorship income, merchandise, and broadcasting income. In order to become financially independent, clubs will be incentivized to increase their revenue by adopting a more fan-focused approach. An executive of the JRFU once commented: “Until now, rugby has only been something played by people who enjoy it, rather than something meant for the spectators. This may have to change.”19
The legal issues arising out of professionalization
Professionalising a sport is not straightforward; there will often be "growing pains" that present a number of different legal challenges. In this regard, Japan has the benefit of being able to learn lessons from certain teething issues experienced in other countries.
When the International Rugby Board suddenly professionalized rugby union on 26 August 1995 by removing restrictions on payments and benefits, much of the rugby world was thrust into turmoil. Players who had previously had day jobs had to quit and sign contracts with newly monetised clubs in an entirely unknown and untested marketplace. Nobody really knew how much players were worth.20 In such circumstances, naturally, the whole structure of the sport was transformed.21 These structural changes saw recurrent issues emerging in both the Northern and Southern hemispheres relating to team ownership, salary caps and player transfers.
In England debates raged for a decade over whether to raise or lower the Premiership salary cap22 (initially set at GBP 2.2 million per team but frequently adjusted) until it eventually started to increase to its present figure of GBP 7 million (with two excluded players).23 Answering such questions required stakeholders to balance the complex competing interests of: economic stability, player retention, competitive balance and competition law, amongst others. The results have not always been positive and a number of former top tier clubs (including famous names Richmond and London Welsh) have been forced into bankruptcy since professionalization.
In New Zealand, there were various legal challenges, particularly from a restraint of trade perspective, during the early years of professionalism, including:
In 1997, the High Court decision accepting the player transfer system (setting a quota of players permitted to change teams) and transfer windows;24 and
In 2006, the New Zealand Commerce Commission's acceptance that the salary cap did not breach competition laws (subject to certain conditions).25
Were Japan to professionalise no doubt some of the same issues would need to be addressed and big questions would need to be resolved regarding the model of professionalization to adopt. Speculatively, the authors imagine a model with the following features and issues:
The structure of the league would likely remain broadly similar. Since the Top League is heavily monetised and, in reality, already partially professional, a fairly smooth transition should be possible on a practical level. Eventually, it might be possible to create a regional competition through introducing teams from Korea, Hong Kong and China but this would certainly come further down the line. Whether the Sunwolves would continue to operate in the Super Rugby competition alongside a fully professional Top League depends on the season-length of the new league and who the players are contracted by (see further at (d) below).
Similar issues with salary caps are likely to arise considering the vast disparity in pay between the local amateurs and foreign professionals in the Top League at the moment. It would be hoped that the transition to full professionalization could occur fairly swiftly though. This would come at the cost of reducing the squad size of some teams but would bring attendant advantages to the senior amateur teams below them.
Ownership of the clubs would remain with the current corporate owners for the most part – both the professional baseball and football leagues in Japan retain strong corporate ownership structures so there should be limited issues there.
A difficult question will be whether the players should be centrally contracted by the JRFU (as in New Zealand with the NZRU) or contracted by the clubs with arrangements in place to release players for international games (as in England and France). The JRFU has previously experimented with central contracts for certain players but with considerable push back from many of the corporate owners in the Top League.26 Considering the need to reach an agreement with the current corporate owners, it is possible that the JRFU would have to sacrifice central contracts and allow the clubs to control the players' contracts.
In spite of the disruption and legal issues arising out of professionalization, from the authors' perspective, professional rugby has generally managed to maintain the positive values established during the amateur era. As Rob Andrew commented: "We have kept the values of the amateur game, the ethos of the sport is alive – whether that is in relation to respect for officials or respect for fans and players and players and other players."27 There is no reason that the same would not be true of Japan.
As Greg Ryan rightly points out in his introduction to The Changing Face of Rugby, there is a "diversity of traditions and contexts shaping quite distinct rugby cultures" and, naturally, professionalism could not be applied in the same way across such a range of jurisdictions.28 Japanese rugby is to be celebrated in many ways, as it will be at this year's Rugby World Cup and in the Sevens at next year's Olympics, but full professionalization in Japan – if established carefully and with respect for the corporate ownership structure of Japanese sport – would serve to enhance the game, for all involved.
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- Tags: Athlete Welfare | Commercial | Employment | Governance | International Rugby Board | Japan | Japan Rugby Union Federation (JRFU) | Regulation | Rugby Union | Rugby World Cup
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About the Author
Nan Sato is an attorney qualified in New York, Pennsylvania, and New Jersey. She advises international and Japanese players’ associations, commercial sponsors, clubs, and athletes in a number of sports, including football, baseball, rugby, and American football. In addition to contractual and labor issues, she has developed a strong focus on the intersection of technology and sports. Nan works in English, Japanese, Chinese, and Spanish.
Sam Beer is an (England & Wales qualified) solicitor based in Herbert Smith Freehills' Tokyo office. He advises a broad range of international and Japanese clients in relation to complex cross-border disputes – particularly focussing on international arbitration. Sam has experience working in a number of sectors but is developing a specialism in sports-related disputes and is currently studying for a Master's degree in International Sports Law at ISDE in Madrid.