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Saracens Relegated (Merged)

Northern Red

By Northern Red
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CyderInACan

CyderInACan

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3 hours ago, northsomersetred said:

Is anyone else thinking this could have serious consequences for English club rugby?

 

If the consequences are that clubs abide by the letter and the spirit of the laws, then that’s a great outcome. I wonder how this will have a longer term affect on Saracens; they’re a toxic brand, the most toxic ever in English club rugby. Sponsors must be thinking long and hard about their association with them. I don’t think it will have long reaching consequences for the game, though.

Unless - of course - there are more skeletons in the closet. 

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RedM

RedM

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On 18/01/2020 at 19:29, Kid in the Riot said:

Confirmed they'll be relegated this season!

Some weight off Bristol's shoulders with no threat of relegation.

Now, any good players we can pinch??

I can't believe that the Farrell and Vunipolas of this world will stick around in the Championship, even if it's only for one season?

Inevitably they'll manage to retain a fair chunk of their squad though and will piss promotion. Will still set them back years from their current position though.

Those players must surely be feeling very let down by the Saracens management... 

I guess many of the players can’t be snapped up as clubs already have their high earners?

I did read somewhere that relegation will affect their International careers too as the clubs they will be playing in the Championship won’t be good enough competition for them, so lack of quality match practice.

No doubt the players are feeling let down, but I thought a club could only have two high earner ‘star’ players ( or did I dream that?). Well that can’t have all looked around at eachother and wondered who were the two high earners. They knew and were happy to take the glory times as much as anyone. They must feel somewhat fake now though?

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phantom

phantom

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27 minutes ago, RedM said:

I guess many of the players can’t be snapped up as clubs already have their high earners?

I did read somewhere that relegation will affect their International careers too as the clubs they will be playing in the Championship won’t be good enough competition for them, so lack of quality match practice.

No doubt the players are feeling let down, but I thought a club could only have two high earner ‘star’ players ( or did I dream that?). Well that can’t have all looked around at eachother and wondered who were the two high earners. They knew and were happy to take the glory times as much as anyone. They must feel somewhat fake now though?

Interesting to read that Eddie Jones is planning on holding a "clear the air session" with his squad whilst at their warm weather training later in the weel, so to ensure that there are no "issues" between any of the squad

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MichaelRobartes

MichaelRobartes

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On 20/01/2020 at 21:58, westred1 said:

The amount of rubbish spouted on this thread Jesus ?

If PRL would allow for more info to be released... Sarries have done wrong and rightly punished but the clowns at PRL have mismanaged the whole circus.

Out of interest is this some of the info you were referring to? Are PRL lying through their hoop about Sarries blocking its publication?

 

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westred1

westred1

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1 hour ago, MichaelRobartes said:

Out of interest is this some of the info you were referring to? Are PRL lying through their hoop about Sarries blocking its publication?

 

It would be incorrect if I suggested otherwise. Won't be pretty reading for Saracens but all the falsities can be put to rights.

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phantom

phantom

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I've not actually seen this 103 page document anywhere (leaked or redacted version), but the below is from https://www.bbc.co.uk/sport/rugby-union/51222415

The key information

Although confidential information is redacted in the version published by PRL, the identities of those involved in the deals are in the public domain because of the full report having been leaked.

There are several new pieces of information revealed in the judgement:

  • Saracens' overspend was more than £1.1m in 2016-17; £98,000 in 2017-18; and £906,000 in 2018-19.
  • PRL initially wanted each breach to be treated separately but the panel decided this would have led to a 'disproportionate' sanction of 70 points. It decided 35 points was the right decision, which PRL accepted.
  • Former chairman Nigel Wray made almost £924,000 of contributions to property co-investments with players
  • Part of the breaches surrounded image-rights deals and hospitality payments relating to a player
  • A previously unknown property-sharing arrangement between the club's former owner and Wray and another player is revealed

More on those £924,000 contributions

The total contribution to property co-investments with players was £923,947.63. The names of the players are redacted, but the figures are £451,188.92, £219,932.36 and £252,826.35.

In this section of the report, the starkly contrasting positions of PRL salary cap manager Andrew Rogers and Wray are detailed.

Rogers says there was a "misconceived" and "concerted and deliberate attempt" to take those contributions outside of the salary structure.

Wray contested this view, saying he entered into "bona fide commercial transactions" - not for "an additional reward" for players.

He said: "While it is important to me to help the club's players prepare for a life outside rugby and it is certainly the case that where I know and trust an individual, I am more favourably disposed to an idea they pitch to me and to entering into a business relationship with them, my motivations when making investment decisions are ultimately always commercial."

Having regarded both positions, the panel ruled that "we are satisfied that these capital contributions were salary", relying on its finding that the loan from Wray was not repayable in the salary cap year.

An £800,000 overspend on image-rights valuations

In the report, it emerges part of the overspend in the 2018-19 salary cap year related to the image rights valuation of a player.

It says Rogers identified £800,000 of salary "on the basis of an alleged overpayment by Mr Wray, Mr Silvester [Saracens director Dominic Silvester] and Mr Leslau [Nicholas Leslau, a director of Saracens until September 2019]" - for "30% of the shares in [redacted]".

Rogers disputed the purchase price, but Wray and Leslau both defended the valuation they had used.

The panel decided "Mr Rogers was reasonably entitled to conclude that the purchase price for the [redacted] shares was above the true market value to the extent of £800,000".

Plus £95,000 of hospitality payments

The report also looks at the activity of a hospitality business called MBN Promotions - which has since become Premier Team Promotions Ltd and is owned by Wray's daughter Lucy and her husband Tony. Lucy Mercey - formerly Lucy Wray - was, until Thursday, a director of Saracens.

MBN paid a player £30,000 in 2016-17, £30,000 in 2017-18 and £35,000 in 2018-19, but details of these payments or the relevant agreement between MBN and the player were not disclosed.

The report also states "no evidence was provided by Saracens to show any events that [player] had in fact attended".

Saracens accepted this was an "oversight" and apologised for the non-disclosure. However, the club's position was these payments were "arm's length commercial transactions" and should not be deemed salary.

The panel rejected Saracens' challenge that the three payments should not be included in the salary cap.

Co-owned £1.35m property to be lived in by player

This section of the report concerns a sum of £319,600.76 relating to a 20% stake in a £1.35m property lived in by a player.

It states Wray and fellow Saracens director Silvester each provided 10% of the purchase price, equating to £135,000. They also contributed £234,223 for refurbishment work on the property.

In May 2019, Saracens disclosed to PRL a "Declaration of Trust in respect of the property".

Rogers made the case that there had been "a payment of salary of £319,600" in the 2017-18 salary cap year, because it was a benefit in kind. In outlining this position, he said the sum deferred was a loan, that it was "doubtful" the player would have been able to secure such a loan elsewhere, and he had immediate use of the property.

Saracens disputed this, saying that this was an "entirely arm's length commercial bargain".

The panel sided with Rogers.

Saracens' challenge of salary cap

A considerable portion of the Saracens judgement concerns the club's challenge "that the salary cap provided for by the regulations is illegal on the grounds that it is contrary to competition law".

This challenge failed.

How did the panel reach the penalty decision?

In reaching its decision on what the penalty for the breaches should be, the panel heard evidence from salary cap manager Rogers and Saracens.

Rogers said he disagreed with the suggestion Saracens had been "open and transparent" and said the club had been "reckless in its approach to the salary cap".

In this section, the panel notes Saracens' breaches were "not deliberate, but in our view they were reckless", that Saracens had not admitted any of the breaches, that they were charged with a failure to co-operate in 2015 (leading to a settlement and sanctions) and that they had not fully cooperated with Rogers.

It uses the analogy that Saracens were issued with a "yellow card" in 2015, and therefore "the repeated failure to disclose breaches, which it has admitted, make the position all the more stark".

Saracens argued that to deduct points for "technical" breaches was "unfair punishment and is contrary to the spirit and underlying purpose of the regulations".

The panel disagreed with this view.

Despite viewing the breaches as "very serious", the panel ultimately decided that imposing a 70-point deduction would be "disproportionate" and that a 35-point deduction would be "sufficient to mark the seriousness of the breaches" over the three seasons covered by the report.

Saracens were subsequently handed automatic relegation for next season as they would not have not been in compliance with the salary cap this season as well. There was no panel decision for this, as it was a Premiership Rugby decision which Saracens agreed to.

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Mr Popodopolous

Mr Popodopolous

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54 minutes ago, westred1 said:

Take note?

Changing laws midway through a season to justify actions already taken?

PRL are a bunch of clowns. Not the governing body EFL should be looking to adhere to!

I dunno, I like their firm action.

The point is that it expresses the will of the clubs. If the clubs desire something, it can happen- if there was a 3/4 majority vote in the Championship, that's the rule change threshold.

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MichaelRobartes

MichaelRobartes

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PRL should absolutely have been policing the cap properly so that it never got to this stage. It's not at all clear to me that Sarries have been the only club to break the cap in this period either but we'll probably never know now.

That said, in a sense Sarries only have themselves to blame. That the question about co-investments wasn't asked of the salary cap compliance mob is quite telling. Particularly after they'd effectively been given a warning in 2015.

Wray isn't a stupid man. I'm quite sure he knew that it'd likely be a no go. Never ask a question when you don't want to know the answer.

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Kid in the Riot

Kid in the Riot

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On 30/01/2020 at 10:20, MichaelRobartes said:

PRL should absolutely have been policing the cap properly so that it never got to this stage. It's not at all clear to me that Sarries have been the only club to break the cap in this period either but we'll probably never know now.

That said, in a sense Sarries only have themselves to blame. That the question about co-investments wasn't asked of the salary cap compliance mob is quite telling. Particularly after they'd effectively been given a warning in 2015.

Wray isn't a stupid man. I'm quite sure he knew that it'd likely be a no go. Never ask a question when you don't want to know the answer.

Is it true that they didn't allow players to have agents as well? If so, that's very telling.

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phantom

phantom

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@Kid in the Riot @MichaelRobartes This was a statement Nigel Wray issued confirming there were agents:

 

CLUB STATEMENT FROM NIGEL WRAY

I am really sorry for the heartache that I have caused you due to my ill-considered approach to matters relating to salary cap compliance. My intention with co-investments was always to support players beyond their playing careers.

I recognise that the actions of the Club were described by the panel as ‘reckless’ primarily due to my failure to consult with PRL’s salary cap manager prior to entering into any agreements and then disclosing the transactions to him. I take full responsibility for this. We should have been far better. 

Equally important is the Panel’s determination that neither the Club nor myself deliberately attempted to breach the cap. 

As the matter is complex (the 103 page panel’s report of determination is available on PRL’s website), I thought I would take this opportunity to explain these one-off transactions that the Panel considered to be undeclared salary.

  • Property co-investments entered into between myself and certain players.
  • A payment by an ex-player to myselfand another Saracens director.
  • The purchase of a 30% share in a player’s image rights company by two other Saracens directors and myself.
  • Agent fees across the three years.
  • Appearances at MBN Events.

It is not my intention to rerun our defence but simply to summarise the main points of the Disciplinary Panel’s findings. 

  1. 2016/2017 the cap was breached by £1,134,968.60 due to property joint ventures entered into between myself and certain players

In 2017, I entered into property joint ventures with four players. All these transactions are long-term investments that run far beyond the length of a player’s contract and to date no personal financial value has been transferred.

The structure is as follows:

  1. The relevant players and I became shareholders of a joint venture company.
  2. The company purchased one or more buy-to-let properties.
  3. The parties contributed to the purchase price of a property pro-rata to their shareholding in the company. My contribution was by way of capital investment to the company and the player’s contribution was by way of personally guaranteeing a mortgage taken by the company equivalent to the remainder of the purchase price.
  4. In some cases, I invested further funds in order to renovate the property. (These loans were provided at standard commercial rates of interest).
  5. The mortgage and all other ongoing costs are paid from the rental income.
  6. When a property is sold in the future, the proceeds are to be distributed in the following priority: (i) first to redeem the mortgage; (ii) second to repay my loans to the company and any interest; and (iii) the remainder to be distributed to the shareholders in accordance with their respective shareholdings.

The Disciplinary Panel concluded that under the regulations my investments into the joint venture companies amounted to ‘loans’ by a connected party of Saracens (i.e. me) to a connected party of the relevant players (i.e. the joint venture companies) and as they were not repaid within a salary cap year, the full amounts are considered salary within that time period.

I should have declared these transactions to the salary cap manager prior to signing off the agreements.  I mistakenly assumed that as I had entered into personal property agreements with players previously that had been signed off by the Salary Cap Manager, a precedent had already been set.  Equally with many years’ experience in the property sector, I considered these investments to be equity investments as they bear equity style risks.  However, because I made my investments into the joint venture companies through directors’ loans (pursuant to accountancy advice) the entire amount has been deemed salary in the salary cap year in which they were made.

  1. 2017/2018 the salary cap was breached by £98,249.80 for payment from an ex player to myselfand another Saracens Director. 

When playing for the Club, the player in question jointly purchased a residential property with myself and another Saracens director. The player lived in the house with his wife. He owned 80% of the property, with myself and the other director owning a 10% share each. Each party contributed equity for the purchase equal to their shares in the property (PRL had previously confirmed that equity investments of this nature are outside of salary for the purposes of the Regulations).

Having joined another club, the former player wished to purchase the directors’ stakes in the property through equal monthly instalments over an 18-month period. After initially complying with the payment plan, he was unable to meet the instalments due to personal circumstances. We wanted to help him and his family so agreed to a short delay in the repayments. Eight months later the former player moved to a new club where the owner of that club paid off the full outstanding amount to us directly.

The Disciplinary Panel concluded that the eight-month grace period (which straddled two seasons) amounted to a loan from connected parties of Saracens to the former player and, therefore, was a benefit in kind to a former player in accordance with the Schedule 1, paragraph 1(s) of the Regulations.

Consequently, the full amount of the purchase price paid by the ex-player to both Saracens directors was deemed to be undeclared salary for the 2017-18 season. The Disciplinary Panel noted that this “may seem unrealistic and even unfair”, but accepted that under the regulations the salary cap manager is charged with the task of determining salary within a particular salary cap year without reference to future events (i.e. the fact that we were paid in full by the ex-player eight months later).

  1. The salary cap was breached by £906,505.57 due to the purchase of a 30% share in a player’s image rights company by myself and two other Saracens’ directors.

The purpose of this transaction was to leverage the collective experience of the investors to help grow the player’s off-field commercial activities and generate income.

An indicative valuation was produced by leading firm PwC which the investors used to negotiate the purchase price. The valuation was also based on a 12-year term regardless of whether the player stayed at Saracens or not.

Based on an alternative valuation, PRL argued that the true market value of the shareholding was less than that paid by the investors.

The Disciplinary Panel stated that it accepted “without reservation” the investors’ evidence regarding how they arrived at the agreed purchase price.  However, the Disciplinary Panel found that it was not required to conclude whether the price paid by the investors was correct, but whether the valuation relied upon by the Salary Cap Manager was reasonable.

The Disciplinary Panel concluded that the valuation relied upon by the Salary Cap Manager was reasonable and that, therefore, the difference between that valuation and the purchase price paid amounted to undeclared salary for the 2018-19 season.

For the avoidance of doubt, the Disciplinary Panel stated that it did not find that the market value of the shareholding was, in fact, the value asserted by PRL.  The Disciplinary Panel accepted that the investment was legitimate; they simply asserted that the salary cap manager acted reasonably when relying on his own accountant’s valuation (which was lower).

The Panel also found that payments made to various third parties for scouting services over the three- year period constituted salary. This was because those third parties also operated as player agents and under the regulations any such payment is treated as salary.

MBN Events, a company owned by my daughter Lucy, arranges corporate hospitality events featuring high profile guest speakers from across the sporting spectrum. MBN entered into a commercial agreement with one Saracens player whereby it paid him a yearly lump sum of £30,000 to make a number of appearances at its events over the three-year period. The Club’s position was that this was a genuine commercial arrangement between MBN and the player, not disguised salary. The player appeared at several MBN events during this period. However, the Disciplinary Panel found that because Lucy is a connected party, the appearance payments made to the player were undisclosed salary totalling £95,000.

I appreciate there is a lot to digest but felt you were owed a full explanation. Again, I am sorry that this has caused so much upset to you and our sport.

As you know, the Club has already started to implement new processes to ensure nothing like this happens again.

Despite recent events Saracens is a family which has always brought me and my family so much joy. The team’s incredible form and the Club’s togetherness in recent weeks shows me the culture we have built is strong. Our vision, represented by a united group of players, coaches, staff, families and fans who care deeply for one another, endures.

Thank you all for continuing to unite behind the Club.

Best Wishes

Nigel

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phantom

phantom

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It really is going from bad to worse!

Being report in The Telegraph that Allianz want to end their sponsorship deal early with Sarries

It was due to end in 2021, but the shirt and ground sponsorship looks set to end 

"The German insurance group has been Sarries' chief sponsor since 2012 and it's current contract was due to expire in 2021.

However, they have decided to cut ties a year early following Saracens' salary cap scandal - something the Financial Times claim was made officially known last week.

Allianz currently pay Saracens more than £2million-a-year in a deal that covers naming rights to the ground and shirt sponsorship. Saracens' stadium has been known as Allianz Park since it opened in 2013.

Allianz's sponsorship of the north London outfit is by far the most lucrative deal in the Premiership. The next best shirt sponsorship packages bring Premiership clubs around £600,000, with some worth as little as £150,000"

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Bristol Rob

Bristol Rob

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1 hour ago, TomF said:

And this!

https://www.bbc.co.uk/sport/rugby-union/51473029

With the funding cut, they appear to be effectively removing any chance of competitive promotion.

Will this completely kill Saracens?

Sure there is/was a rule in place that before a club can be considered for promotion they have to show wage cap compliance for 2 or 3 years. 

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phantom

phantom

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The bad news is never ending for Sarries at the moment.....

 

Barnet Council "considered" terminating its £22.9m loan to redevelop Saracens' stadium after the club's relegation but instead have frozen further payments.

Saracens will be relegated from the Premiership in June for persistently breaching salary cap rules.

The council put a "temporary stop" on the loan - to fund a new West Stand at Allianz Park - last month.

It will now demand to see a "robust revised business plan" if Saracens are to access any more of the loan.

Stadium owners Saracens Copthall LLP (SCLLP) have already accessed £3.2m of the loan.

Building work has not yet begun on the West Stand and the report said Premiership champions Saracens and SCLLP are "taking stock" of their plans, which is expected to take until the end of this month.

Council papers show that although terminating the loan was an option, it was not recommended because there was concern that any "conflict with the club" could make it difficult to recover the money already borrowed if required.

A report from Barnet council said: "The agreement allows the council to terminate the loan if 'any event occurs (or circumstances exist) which, in the opinion of the Lender, has or is likely to have a Material Adverse Effect'.

"However, terminating the loan before the club have had a chance to take stock of the current position could put the council in conflict with the club, which is likely to make it harder to recover the £3.2m already drawn down.

"Putting the council in conflict with the club may also jeopardise any community benefits brought by the development of the West Stand."

An update for the Financial Performance and Contracts Committee shows that the temporary suspension on drawdowns came immediately after media speculation began about Saracens' relegation.

The freeze came into force before the relegation was confirmed by Premiership Rugby on 18 January.

The report added: "No further drawdowns will be approved until a way forward has been agreed between the council, SCLLP and the club. Interest will continue to accrue on the £3.2m already drawn down.

"Should SCLLP wish to pursue the development of the West Stand, the council will require a robust revised business plan, subject to independent due diligence, before any further loan drawdowns are made."

Minutes from the meeting show that a local resident accused the council of entering into a "reckless" agreement and asked if there would be an "independent inquiry" into the loan.

The council said there will not be an inquiry.

Saracens declined to comment when contacted by BBC Sport on Monday.

TAKEN FROM: https://www.bbc.co.uk/sport/rugby-union/51538187

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phantom

phantom

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2 hours ago, Mr Popodopolous said:

Saracens are in a tight spot!

https://www.telegraph.co.uk/rugby-union/2020/09/22/saracens-left-limbo-championship-clubs-questioning-feasibility/

Could provide an opportunity to push ring-fencing or temporary ring-fencing- but if not...

Are you able to copy and paste the story please? 

It's asking me to subscribe 

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