Why the foreign players quota is bad for Welsh rugby

Following the 5 year participation agreement between the WRU and the four Welsh regions/clubs signed in 2009, Welsh Rugby has embarked upon a wave of protectionism. Too many foreigners, coming over here, stealing our jobs etc. seems to be the rallying cry. The argument holding sway at the top of the game is that foreign players at the four professional sides are ‘blocking the development’ of young domestic players, and that this is/will be detrimental to the national side. The only way to tackle it is to restrict the number of overseas players and insist on a certain number of Welsh qualified players in every matchday squad.

(Are the likes of Jerry Collins blocking the next generation of Welsh superstars? Picture from Planetrugby.com)

Even if that were the case (which I don’t think it is), let’s look at what the economic impact of such a cap will be. By putting a cap on immigration (in a rugby sense), you are effectively reducing the overall labour supply. As total demand is fixed, and as domestic rugby players are near perfect substitutes for overseas rugby players, the result will be to increase the demand for Welsh players as the four professional sides are prevented from hiring foreigners. As the supply of Welsh players is fixed, at least in the short term, this will undoubtedly lead to an increase in the wages of Welsh players.

So, with absolutely no increase in the quality of players, the effect is to inflate the wages of average Welsh players, who are now protected from the competition from overseas. The knock-on effect of this is that the four sides are forced to pay out a greater proportion of their limited funds on players that they have no choice to employ due to the quota system. Inevitably, this means that they will have less of their total wage bill left over to spend on overseas players. Since these players are free to work in any country that they choose, this means that the clubs will not be able to attract the same quality of player that they have done in the past, as higher wages will be on offer to them elsewhere.

So, the net result of the cap is that Welsh players get a wage increase without any increase in their own skill/productivity level, and as a result the pro sides are not able to attract the best overseas players to fill the limited places on offer. This won’t lead to any increase whatsoever in the quality of play, will disadvantage Welsh teams compared with teams in other countries who do not have such severe caps, and may ultimately lead to a decline in attendance as supporters grow frustrated watching their teams lose against foreign opposition with one hand tied behind their backs. Coaches are already beginning to hint at their frustration with the system, see for example Dai Young's comments as all four Welsh sides failed to compete in the Heineken Cup this year:
http://news.bbc.co.uk/sport1/hi/rugby_union/my_club/cardiff_blues/9366056.stm

What’s better for the Welsh national game? Having the best young players playing with and against the very best players in the world week in and week out, where they can learn from overseas players and develop their skills at high intensity, or having young players get lots and lots of game time in mediocre sides that get hammered by better foreign opposition?