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Re: EVERYTHING SALARYCAP RELATED
BlackheathSaracen 30 December, 2019 22:32
Duncan96 I am far from certain but like EXDJ I have heard several reports that his wage was around the £300K mark, some lower which would tie into him coming here for slightly less than what he may have been worth to go to a club where all he was after was money. I certainly don't think a salary of double that would be right.

Also there's a fair point to be made that that money could conceivably have been spent in a number of ways. One Marquee type player or quite a lot of junior ones. I am not sure we'll ever get clarity there either. My point was only really to say whilst I appreciate some of the point Baxter made I think the assumption that if we hadn't spent over we wouldn't have been competing is a touch flawed.

Re: EVERYTHING SALARYCAP RELATED
Duncan96 31 December, 2019 09:49
Ok both I’m happy to stand corrected. It looks like the effect of the salary cap breach is 2 players.

It is striking how cheaply players will come to Saracens though.

And look, it’s a shame the loans were made, they were clearly against the rules and we can’t complain about the punishment but my fundamental point, that the knee jerk bleatings of Care, Dallaglio, etc and now Baxter need a little more thought and analysis behind them in terms of sounding off about what the effect of the breach was.

Re: EVERYTHING SALARYCAP RELATED
Sarriebone 31 December, 2019 11:18
Quote:
EXDJ
Williams is currently earning £600k (ie double what seems to be the accepted figure) then he is taking a whopping pay-cut to go back to Wales on £400k.

Surely not, we've repeatedly been told that no-one moves club for less money! (Sm161)

Re: EVERYTHING SALARYCAP RELATED
Marlow Nick 31 December, 2019 12:13
Quote:
Duncan96
Ok both I’m happy to stand corrected. It looks like the effect of the salary cap breach is 2 players..

Duncan,

That's not how most of us are doing the maths. I don't believe Saracens have an unusually large squad £600k wis unlikely to have paid for one or two extra players but rather upgrading quality within fixed squad quantity. If one assumes an international costs £100k per player more than a premiership player then £600k buys you much more strength in depth which is what we see in Saracens squad.

Re: EVERYTHING SALARYCAP RELATED
Roger G 31 December, 2019 15:04
Quote:
Marlow Nick
... If one assumes....

Here we go again. Never mind the lack of firm public detail about what the breach actually was, let's just assume stuff to make one particular narrative work. I'd be called an apologist or a denyer (I'm not - I'm deeply @#$%& off by what our management have done), if I were to counter-assume that, since the offending investments (not salary) were apparently mostly made to world class internationals who are generally thought to be on a fair whack anyway (see another thread which estimates Faz and Maro to be on ~£750k+), then there probably was no extra £600k spent on other players anyway, and the squad would have been exactly the same size and quality. This is probably equally as incorrect as your assumptions. Neither of us know really.

Re: EVERYTHING SALARYCAP RELATED
Sarriebone 31 December, 2019 15:31
Your assumption that our squad was illegally assembled is as presumptious as any of our assumptions that the payments made no difference to our squad. But it's amazing that our assumptions are deluded where yours are purely factual.

Re: EVERYTHING SALARYCAP RELATED
Marlow Nick 31 December, 2019 15:44
I find it fascinating how a handful of Saracens` supporters are still in denial.

Somehow Duncan seems to have convinced himself that any overpayment went on one or two players who shouldn't really be counted because they were injured for some of the matches
But Roger G goes further. These extra payments weren't for extra players or to recruit or retain better players. No these were for players that were already well paid and didn't want any more but Nigel felt he should give them additional funds because he's a nice chap concerned about their retirement planning.

Neither of you seem to understand that there is a single budget. You cannot conveniently ascribe the overspend to one player or one arrangement. Nigel was caught overspending the total allowed for an entire squad by almost 10% (who knows how much more wasn't found)

The sad thing is that with your fantastic academy and brilliant coaching Saracens would most likely have won many trophies without cheating but Nigel just had to push the rules that little bit further and before Duncan and Roger claim it was a mistake... No Nigel has acknowledged that he was reckless in pushing the rules too far. The intent was to gain an advantage. The mistake was in getting caught.

My sincere best wishes to all Saracens fans who accept that what happened was unacceptable. My thanks to Duncan, Roger and the other people in denial for making me laugh



Edited 1 time(s). Last edit at 31/12/2019 15:51 by Marlow Nick.

Re: EVERYTHING SALARYCAP RELATED
Sarriebone 31 December, 2019 15:59
I don't think anyone is in denial, I think we've all acknowleged that we broke the rules. And that is as much as we know.
Anything beyond that is assumption on your part as well as on ours.

Would the player recieving those investments have stayed without them? We'll likely never know, even if those players come out and say they made no difference it wouldn't be believed.

Assuming Faz is one of our marquee players then what's the point of the investment to increase his income as it doesn't matter what we pay him anyway?

Liam Williams is reported to be moving back to Wales on a £400k contract, so presumably we were paying him less than that as no one moves for less money as has been pointed out numerous times...

Lifted from Wasps forum:
Let's assume that Vincent Koch and Owen Farrell are the 2 marquee players, and that Itoje is on the rumoured £750k.

Their highest paid players are presumably therefore:

Itoje - £750k
Billy V - £500k
Mako V - £500k
Liam Williams - £500k*
Jamie George - £400k
George Kruis - £400k
Elliott Daly - £400k

(*see above)
Those 7 listed above come to £3.45m

I would also assume that Brad Barritt, Richard Wigglesworth and Will Skelton are well paid too.
Adding these 3 in as well, that's probably half their cap gone in 10 players + 2 marquees.
Their squad is 41 players, so the remaining 29 players are sharing ~£4m between them, which is about £140k each


On the reckless behaviour, there are many interpretations of that.
*Caution the following contains speculation*
Let's say Billy and Mako go to Nigel and say: "We're thinking of buying some property, you've done quite a bit of that any chance of some help?"
Nigel: "Sure what were you thinking of?"
B&M: "We've found a property we think would be good, but we can't borrow enough"
Nigel: "Ok, I'll put in some money as a loan but I'll take a share of the profits in return"
B&M: "What about the SC regs?"
Nigel: "It's fine, there have been investments with players before and it's never been a problem, I've even had my lawyers check it out"

Now that would be well intentioned but reckless on NW's behalf.

And yes I'll be called deluded/in denial/away with the fairies for the above, but we don't have any proof to deny that's not what happened, purely people seeing what they want to see on both sides of the argument.



Edited 2 time(s). Last edit at 31/12/2019 16:07 by Sarriebone.

Re: EVERYTHING SALARYCAP RELATED
Roger G 31 December, 2019 17:15
Quote:
Marlow Nick
I find it fascinating how a handful of Saracens` supporters are still in denial.

Nick, I wish you a very happy New Year. I also hope you make a resolution to read what is posted, take it at face value, and not try to put your own spin on everything. I am not in denial, neither do I know whether the assumptions I posted are any closer to the truth than yours. I said in my post that I was severely peed off with the management....if only you'd read that bit. The only thing I deny is that anybody, outside of the very few club directors who have had access to the full report, can have the slightest clue about the details of the offence, and what difference it might have made to our squad.

Re: EVERYTHING SALARYCAP RELATED
Duncan96 31 December, 2019 20:24
Quote:
Roger G
Quote:
Marlow Nick
I find it fascinating how a handful of Saracens` supporters are still in denial.

Nick, I wish you a very happy New Year. I also hope you make a resolution to read what is posted, take it at face value, and not try to put your own spin on everything. I am not in denial, neither do I know whether the assumptions I posted are any closer to the truth than yours. I said in my post that I was severely peed off with the management....if only you'd read that bit. The only thing I deny is that anybody, outside of the very few club directors who have had access to the full report, can have the slightest clue about the details of the offence, and what difference it might have made to our squad.

I also don't understand what is in denial about saying "we broke the rules and shouldn't have done therefore deserve the punishment" which I've said.

And for the life of me I can't understand your point about the salary cap Nick. It's just simple maths. You add up your salaries, you take off those for excluded players, England allowances etc and if you are over the cap you've broken the rules. If you knock off the salaries of one or two players and you are not over the cap, you wouldn't have broken the rules if you hadn't signed them. It's not denial and it is the way it works.

I think there's a little bit of denial going on the other way about the effect of the loans which caused us to be in breach because the Dallaglio disciples want it to be worse than it is.

But hey, It's New Years Eve, I'm cracking open a drink, you won't agree with me and thats fine smiling smiley Have a great New Year.

Re: EVERYTHING SALARYCAP RELATED
TonyTaff 31 December, 2019 22:45
PRL have ordained that the nature of the breach will not be disclosed.

Fans of many clubs, and of none, are disappointed at that.

Fairy nuff.

I fail to understand why speculation continues about individual salaries and their impact upon the cap.

Also, speculation that the business partnerships were the cause of the breach, is just that 'speculation'.



£721.05 (*) donated to the Saracens Foundation due to visits to the Sarries frontpage [www.rugbynetwork.net]

Please read and submit articles for publication.


(*) As at October 31, 2018.

Re: EVERYTHING SALARYCAP RELATED
JL904 31 December, 2019 23:39
Quote:
Marlow Nick
Quote:
Duncan96
Ok both I’m happy to stand corrected. It looks like the effect of the salary cap breach is 2 players..

Duncan,

That's not how most of us are doing the maths. I don't believe Saracens have an unusually large squad £600k wis unlikely to have paid for one or two extra players but rather upgrading quality within fixed squad quantity. If one assumes an international costs £100k per player more than a premiership player then £600k buys you much more strength in depth which is what we see in Saracens squad.

The bold quote is true enough Nick - we may not have spent on an extra player or two but ...

... releasing two players on £350K each and promoting two outstanding academy 20-year-olds to £50K contracts gets rid of the assumed £600K overspend at a stroke (whilst still paying the remaining internationals your assumed £100K extra over the prem players).

Yes, the overall squad is obviously weaker, but do you think it would be disastrous? As an exercise, name any two (or even three) players who you'd expect to be on £350K - so not including Faz, Maro or Mako & Billy V who all probably earn more - and then make a convincing case for us not making the top 4 in the prem, or QF's in Europe.

I don't think you can make such a case, so I'll say up front that I'm as upset and annoyed as anyone else that Mr Wray and the club ever partook in such financial chicanery. P'raps we wouldn't have won so much silverware - who knows? We'd certainly have been there or thereabouts without it, and so the whole mess was entirely avoidable IMHO.



Wars begin when you will, but they do not end when you please - Niccolo Machiavelli

Re: EVERYTHING SALARYCAP RELATED
Duncan96 01 January, 2020 09:31
Quote:
TonyTaff
Also, speculation that the business partnerships were the cause of the breach, is just that 'speculation'.[/quote



I don’t think it’s speculation Tony. The in season audits prior to the recent inquiry of how much was paid to players by the club found no breach of the salary cap. It was the inquiry into business loans made by NW following the Daily Mail articles which concluded there was a breach of about £600k pa. Cleverer people than me worked this amount out from the size of the fine and managed to reconcile It with the loans as openly disclosed in the accounts of E.g. Wiggy Ltd at companies house

Re: EVERYTHING SALARYCAP RELATED
myleftboot 01 January, 2020 09:47
But Duncan, all that is still speculaton

Re: EVERYTHING SALARYCAP RELATED
Duncan96 01 January, 2020 09:59
Quote:
Marlow Nick
Quote:
Duncan96
Ok both I’m happy to stand corrected. It looks like the effect of the salary cap breach is 2 players..

Duncan,

That's not how most of us are doing the maths. I don't believe Saracens have an unusually large squad £600k wis unlikely to have paid for one or two extra players but rather upgrading quality within fixed squad quantity. If one assumes an international costs £100k per player more than a premiership player then £600k buys you much more strength in depth which is what we see in Saracens squad.

I don’t think that stacks up Nick. Let me please stick to my Liam Williams example. We’ve had Max Malins, Matt Gallagher, Rotimi Segun, Ali Crossdale etc around for a few seasons now. If we hadn’t bought LW they would have had more game time. We had Nathan Earl for much of the period in question but he left because his game time was restricted.

So, the addition of LW was a net addition to our salary bill.

If we go through the list of all the players we acquired, which isn’t that many because the academy is so strong, there’s a similar argument.

Eg this season and last we’ve had 2 Kpokus whose game time is restricted by Will Skelton. (Injuries apart in the case of Jon).

The logic of your argument is that if the business loans had not been made we would have had to replace much of the squad with players 10% cheaper in a host of positions?

Surely the only practical solution would rather have been that, as the superstar contracts came up for renewal which prompted the business loans, either certain players would have had to accept their new salary without the addition of the investment companies and/or we would have had to buy in fewer players?

Re: EVERYTHING SALARYCAP RELATED
EXDJ 01 January, 2020 10:54
Quote:
Duncan96

Surely the only practical solution would rather have been that, as the superstar contracts came up for renewal which prompted the business loans, either certain players would have had to accept their new salary without the addition of the investment companies and/or we would have had to buy in fewer players?

And/or decide that, because the club wants to both retain the superstar players and also buy in one or more players (eg to fill identified gaps), it has to let some promising youngsters go elsewhere when they come off their cheap academy contracts, because it doesn’t have the headroom in the cap to keep them?

ie all the messy compromises that come with trying to assemble and maintain a squad within the constraints of the salary cap rules.

Re: EVERYTHING SALARYCAP RELATED
Duncan96 01 January, 2020 12:27
Quote:
myleftboot
But Duncan, all that is still speculaton

Mmm. Interesting. I guess it depends on your definition of speculation. A conclusion drawn from known facts when there doesn’t seem to be any other conclusion to be drawn is still speculation I suppose? (A little provocative i know and I’m teasing).

I guess this seasons mid season audit by the salary cap people will be helpful as an indication as to whether we were over the cap without the business loans

Re: EVERYTHING SALARYCAP RELATED
Duncan96 01 January, 2020 12:44
Quote:
EXDJ
Quote:
Duncan96

Surely the only practical solution would rather have been that, as the superstar contracts came up for renewal which prompted the business loans, either certain players would have had to accept their new salary without the addition of the investment companies and/or we would have had to buy in fewer players?

And/or decide that, because the club wants to both retain the superstar players and also buy in one or more players (eg to fill identified gaps), it has to let some promising youngsters go elsewhere when they come off their cheap academy contracts, because it doesn’t have the headroom in the cap to keep them?

ie all the messy compromises that come with trying to assemble and maintain a squad within the constraints of the salary cap rules.

I can't disagree with your logic. My personal speculation on this point is that, to make up for a £600,000 overspend you'd need to offload most of the promising players (Malins, Kpokus, Earl, Segun ..... etc) We let Nathan Earl go so there must be some truth in what you say. I think overall we would have kept the majority of the up and coming players though because that is the core of what Saracens player development has been about.

Re: EVERYTHING SALARYCAP RELATED
Steve_M 01 January, 2020 12:45
Quote:
Duncan96
I guess this seasons mid season audit by the salary cap people will be helpful as an indication as to whether we were over the cap without the business loans

Seems like a waste of time to me to pander to the media. Not sure that a mid-season review will prove / disprove anything as the regulations are set out to review salary expenditure across the course of a full season. Sarries may well be under/over the cap at the present time and reverse that by that the end of the season - either way.

Of course, as people like hard evidence, I have none, but really cant see the point of the exercise.



Edited 1 time(s). Last edit at 01/01/2020 12:46 by Steve_M.

Re: EVERYTHING SALARYCAP RELATED
EXDJ 01 January, 2020 13:22
Quote:
Duncan96
I think overall we would have kept the majority of the up and coming players though because that is the core of what Saracens player development has been about.

Yep completely agree that I’d expect Sarries to prioritise retaining the academy grads where possible. But then of course the complaints from other clubs are driven (in part) by the belief that Sarries have not had to make these difficult choices in the same way that other clubs might.

And in not making these difficult choices, they can point to Sarries being able to put out a team last Sunday with 14 players who had featured in the recent World Cup, vs 4 in the Exeter 23. Crude example when both teams have injuries (eg Figallo and Williams vs Slade and Francis) but serves as a snapshot of the gulf between Sarries and the rest.

Re: EVERYTHING SALARYCAP RELATED
Duncan96 02 January, 2020 09:43
Quote:
EXDJ
Quote:
Duncan96
I think overall we would have kept the majority of the up and coming players though because that is the core of what Saracens player development has been about.

Yep completely agree that I’d expect Sarries to prioritise retaining the academy grads where possible. But then of course the complaints from other clubs are driven (in part) by the belief that Sarries have not had to make these difficult choices in the same way that other clubs might.

And in not making these difficult choices, they can point to Sarries being able to put out a team last Sunday with 14 players who had featured in the recent World Cup, vs 4 in the Exeter 23. Crude example when both teams have injuries (eg Figallo and Williams vs Slade and Francis) but serves as a snapshot of the gulf between Sarries and the rest.

Exactly. Couldn’t agree more. It’s that kind of gut feel, non analysis that I’m trying to bring some balance to. Forlornly it looks like winking smiley

Re: EVERYTHING SALARYCAP RELATED
Statesman 02 January, 2020 17:04
Duncan96, implicit within your analysis is that the loans would have an imputed salary equivalent value to the player equal to the size of the loan (as assumed by the SCR's) - what that means in English is that the loans were in fact gifts - they were never intended to be repaid - is that what you believe?

FWIW, my take on this is that the loans are more likely to be 'normal' in that they are repayable and attract market rates of interest. So whilst the SCR's might value £1 of loan as £1 of salary the players almost certainly will not. Indeed to the extent that the loan is freely available in the market it would have zero value to the player. Clearly the fact that Wray had to make the loan probably means the Company was not viable without it and therefore the loan would have intrinsic value to the player - but how much? No more than maybe 10p-20p in the £ max.

Suggests to me that the breach that Sarries have been sanctioned for was indeed accidental - a very poor oversight by Wray but nevertheless an oversight - if Sarries are cheating this is not how they are doing it.

Re: EVERYTHING SALARYCAP RELATED
derbyshire fan 02 January, 2020 19:42
Statesman - exactly what I have been saying; and why we need to see the findings (at least directionally) to know what the real problem was

Re: EVERYTHING SALARYCAP RELATED
JO'G 03 January, 2020 09:59
I found some further information on the co-investments in a legal investigation covering their legal status. The link is around, I can't find it this morning.

1. There is documentation somewhere which shows the co-investments were made at a different time line to the contract renegotiation. I understand this is in the public domain comparing the company accounts to the players contract dates

2. The legal argument was made that it's impossible to say that it's not a salary when the player benefits because the company makes more money in the long run because the total investment is higher. Whilst this is true, the amounts reported imply Wrays money in total was deemed as salary. What I find difficult to understand is that it seems to be the co-investments were in the cap officers knowledge pool at the end of 2106/17, but he still passed that years cap review. Only 2 years later it suddenly wasn't ok.

The implication at the end of it all was that the overspend was limited to the co-investments only. They were one offs, no further money has been sunk into them in the last 6 months so this season should be 100% fine


Does make me realise two things:

That both Saracens and Quins are not on a level playing field with regard to the cap. You might get a player to sign 1 contract at the same money as other clubs, but renewing is a different proposition. You might be able to put to a player and his partner that their 3 bedroom semi in St Albans will be worth more than the 5 bedroom detached house in 3 acres on the edge of the Chilterns in 3 years time. Living in the 3 bed semi for the next 3 years though is a different proposition.

If unrelated rich supporters were to co-invest with a player in a property company to allow them to live in that nice house, then the Cap officer can't do a thing about it

Re: EVERYTHING SALARYCAP RELATED
LutonS 03 January, 2020 11:04
Quote:
JO'G
If unrelated rich supporters were to co-invest with a player in a property company to allow them to live in that nice house, then the Cap officer can't do a thing about it

Whilst not wanting to be accused of being in denial or showing a lack of humility on this mater, this goes to the heart of what rankles with me when the word cheating is used.

If NW had set out to cheat the system, there are plenty of ways to do so that would be untraceable, and certainly would not be in the public domain via the Companies House website.

Re: EVERYTHING SALARYCAP RELATED
Duncan96 03 January, 2020 11:04
Quote:
Statesman
Duncan96, implicit within your analysis is that the loans would have an imputed salary equivalent value to the player equal to the size of the loan (as assumed by the SCR's) - what that means in English is that the loans were in fact gifts - they were never intended to be repaid - is that what you believe?
FWIW, my take on this is that the loans are more likely to be 'normal' in that they are repayable and attract market rates of interest. So whilst the SCR's might value £1 of loan as £1 of salary the players almost certainly will not. Indeed to the extent that the loan is freely available in the market it would have zero value to the player. Clearly the fact that Wray had to make the loan probably means the Company was not viable without it and therefore the loan would have intrinsic value to the player - but how much? No more than maybe 10p-20p in the £ max.

Suggests to me that the breach that Sarries have been sanctioned for was indeed accidental - a very poor oversight by Wray but nevertheless an oversight - if
Sarries are cheating this is not how they are doing it.

No, I absolutely don’t believe the loans were gifts. In fact I think they will almost certainly (but not guaranteed) be repaid given NW’s property expertise.

But any loan made by someone connected with the club (I.e. NW) to anyone connected with a player (I.e. the investment companies) is deemed to be salary if not repayable during the season. You can find this in Schedule 1 clause 1d of the regulations.

It’s the most puzzling aspect of the whole episode. The loans were so clearly going to be caught by the salary cap regs that any lawyer would have seen it. Yet the loans were made in full view of everyone. If NW wanted to dishonestly get round the rules he could have loaned a mate the money to make the loans.

So why were they made this way. Cock up? A belief the rules didn’t apply to Saracens? Loans had previously been made to, say, Wolfpack and approved by the salary cap manager?

I suspect we’ll never know.

Re: EVERYTHING SALARYCAP RELATED
EXDJ 03 January, 2020 11:34
You could speculate as follows:
- there is precedent for the salary cap officer having approved co-investments in the past (hard to see how you’d get lawyers to sign off on this otherwise, given the way the cap rules are worded as you point out above)
- Wray takes the view that this means any co-investments are fine and goes ahead without checking first (slightly bullish but he has legal back-up)
- the salary cap officer reviews and makes a distinction between the new co-investments (players not putting any money at risk) and the previous co-investments (possibly made on a more basis)

This fits with the “reckless” judgment ie:
“having recognised that there is some risk or possibility, nonetheless deliberately taking a risk of breaching the Regulations;”

Re: EVERYTHING SALARYCAP RELATED
Statesman 03 January, 2020 11:37
Duncan96, you have missed my point and I'm trying to help you - so I'll make it again.

Implicit within all of your analysis above is that £1 of loan is worth £1 of salary. You have made this assumption because that is what the SCR's assume.

BUT £1 of loan will NOT be worth £1 of salary to the player - it will be worth virtually nothing.

So the loans have close to zero impact on Sarries ability to attract and retain a better squad of players.

Re: EVERYTHING SALARYCAP RELATED
Statesman 03 January, 2020 11:52
Quote:
EXDJ
You could speculate as follows:
- there is precedent for the salary cap officer having approved co-investments in the past (hard to see how you’d get lawyers to sign off on this otherwise, given the way the cap rules are worded as you point out above)
- Wray takes the view that this means any co-investments are fine and goes ahead without checking first (slightly bullish but he has legal back-up)
- the salary cap officer reviews and makes a distinction between the new co-investments (players not putting any money at risk) and the previous co-investments (possibly made on a more basis)

This fits with the “reckless” judgment ie:
“having recognised that there is some risk or possibility, nonetheless deliberately taking a risk of breaching the Regulations;”

I think it's much simpler than this.

The SCM was informed of the co-investments and approved them. Equity investment is not captured by the SC and in any event there doesn't appear to have any significant equity invested. Profit is captured but there was little or no profit in any of the JV's in question. There was nothing to report further to the SCM.

The new feature was the NW loans to the JV's. These are captured by the SC but they were overlooked (a poor error).

The subsequent investigation discovered the loans and therefore the breach.

Re: EVERYTHING SALARYCAP RELATED
EXDJ 03 January, 2020 11:55
Quote:
Statesman
BUT £1 of loan will NOT be worth £1 of salary to the player - it will be worth virtually nothing.
So the loans have close to zero impact on Sarries ability to attract and retain a better squad of players.

Not sure about that.

Taking Vunprop as an example, Billy and Mako have acquired 1/3 each of a property portfolio worth £1.54m, having invested £1 each. Now provided that portfolio washes its face and the income is sufficient to pay down debt (both Nigel (repayment terms unknown) and mortgage), they are taking 1/3 each of any upside (whether rental income or gains from future sale). And if it doesn’t wash its face (eg London property market craters dramatically) they can walk away and haven’t lost anything.

If my employer offered that sort of zero sum bet, I’d be on it like a shot...

Re: EVERYTHING SALARYCAP RELATED
Poking With Sticks 03 January, 2020 12:04
That's assuming the loans were ever intended to be paid back. The reason a loan retains its value on a 1:1 basis in year under the salary cap is to avoid any shenanigans where a loan made in 2015, say, to be repaid some years down the track, never gets repaid.

I suppose the obvious question would be - how much of the loans has been paid back to date?

Re: EVERYTHING SALARYCAP RELATED
Duncan96 03 January, 2020 12:20
Quote:
Statesman
Duncan96, you have missed my point and I'm trying to help you - so I'll make it again.
Implicit within all of your analysis above is that £1 of loan is worth £1 of salary. You have made this assumption because that is what the SCR's assume.

BUT £1 of loan will NOT be worth £1 of salary to the player - it will be worth virtually nothing.

So the loans have close to zero impact on Sarries ability to attract and retain a better squad of players.

Sorry, I did get your point and agree with everything you say except possibly the last statement.

Because the players put no money into the investment companies the loans would only be at arms length if they accrued 100% of the profit.

Almost 100% of property companies require some risk equity in addition to senior loans and mezzanine loans.

In these cases it appears the mezzanine loan (i.e. NW's loan) is taking all the equity risk and so should take all the equity return to be arms length. But if the players aren't getting anything out of it why would they bother?

Another, less technical way of putting it, is that the players are receiving the possibility of a share in future profits from the properties. There isn't guaranteed to be any profit as it will be after deducting interest and management charges but the players have nevertheless received something for nothing, i.e. the chance of a share in profits.

It's been said elsewhere that the property companies were set up "out of cycle" with contract renegotiations. So, would (i) Richard Wrigglesworth, say, ask for just as much salary as he would have done anyway when his contract was up? Or possibly (ii) would he have taken all of the working conditions into account at Saracens including the fact that NW had set him up in a property business and, out of goodwill, accepted a slightly lower salary than he could get elsewhere?

Some, like Stephen Jones in The Times, would argue it was (i) above and, in any case (ii) was acceptable and should be allowed.

On the other hand, many contributors here, and no doubt Exeter Chairmen, would argue that it isn't acceptable to "bribe" players with these property companies so that they accept lower salaries than they would otherwise have asked for, with the effect that Saracens could afford either an extra couple of players, or a slightly higher grade of player across the board depending what way you look at it.

I suspect the way you look at it strongly depends on whether you are a Saracens supporter or not!

Re: EVERYTHING SALARYCAP RELATED
Duncan96 03 January, 2020 12:26
Quote:
Poking With Sticks
That's assuming the loans were ever intended to be paid back. The reason a loan retains its value on a 1:1 basis in year under the salary cap is to avoid any shenanigans where a loan made in 2015, say, to be repaid some years down the track, never gets repaid.
I suppose the obvious question would be - how much of the loans has been paid back to date?

Technically your point can't be argued against. There could be an agreement that the loans will be written off. It would have been a lot simpler to make a payment offshore to an offshore bank account though if the intention was just to put cash in the players pockets in an underhand way.

Whether the loans have ben repaid yet probably isn't an indication of anything. Property companies usually try to have loan facilities for as long as possible so that they can go on and buy further properties once a bit of profit has been made.



Edited 1 time(s). Last edit at 03/01/2020 12:27 by Duncan96.

Re: EVERYTHING SALARYCAP RELATED
Poking With Sticks 03 January, 2020 13:10
If the loans haven't been paid into, that's not necessarily indicative that they won't be. But if they have been repaid in part, that's at least indicative that they will be.

Re: EVERYTHING SALARYCAP RELATED
EXDJ 03 January, 2020 13:25
Quote:
Poking With Sticks
If the loans haven't been paid into, that's not necessarily indicative that they won't be. But if they have been repaid in part, that's at least indicative that they will be.

MN Property Solutions (Itoje’s company) shows the £280k short term loan being rolled over in full.

Vunprop has only filed one set of accounts (£530k short term loan)

Wiggy9 wasn’t funded with a loan but instead NW put in £189k equity (paying £6512 per share for 29 shares +1) while Wigglesworth put in £70 (paying £1 per share for 70 shares). This one is perhaps hardest to defend...

Re: EVERYTHING SALARYCAP RELATED
Duncan96 03 January, 2020 14:20
Quote:
EXDJ
Quote:
Poking With Sticks
If the loans haven't been paid into, that's not necessarily indicative that they won't be. But if they have been repaid in part, that's at least indicative that they will be.

MN Property Solutions (Itoje’s company) shows the £280k short term loan being rolled over in full.

Vunprop has only filed one set of accounts (£530k short term loan)

Wiggy9 wasn’t funded with a loan but instead NW put in £189k equity (paying £6512 per share for 29 shares +1) while Wigglesworth put in £70 (paying £1 per share for 70 shares). This one is perhaps hardest to defend...

Now that is interesting. I'm asuming the Wiggy9 equity from NW is preference shares. If that's right then it's no easier or harder to defend than a loan.

Here's the interesting bit: I've had a quick skim of the regs and I can't see where such preference shares would be caught (unless Schedule 1 p is so wide that it's intended to capture anything the salary cap manager wants to, and that might be hard to defend in court).

Can anyone enlighten me?

If I'm right and preference shares aren't caught then, had all the companies been structured with preference shares, we wouldn't have been over the cap meaning no fine or points deduction. More grist to the cock up mill.

Re: EVERYTHING SALARYCAP RELATED
Statesman 03 January, 2020 14:40
Quote:
Duncan96
Quote:
EXDJ
Quote:
Poking With Sticks
If the loans haven't been paid into, that's not necessarily indicative that they won't be. But if they have been repaid in part, that's at least indicative that they will be.

MN Property Solutions (Itoje’s company) shows the £280k short term loan being rolled over in full.

Vunprop has only filed one set of accounts (£530k short term loan)

Wiggy9 wasn’t funded with a loan but instead NW put in £189k equity (paying £6512 per share for 29 shares +1) while Wigglesworth put in £70 (paying £1 per share for 70 shares). This one is perhaps hardest to defend...

Now that is interesting. I'm asuming the Wiggy9 equity from NW is preference shares. If that's right then it's no easier or harder to defend than a loan.

Here's the interesting bit: I've had a quick skim of the regs and I can't see where such preference shares would be caught (unless Schedule 1 p is so wide that it's intended to capture anything the salary cap manager wants to, and that might be hard to defend in court).

Can anyone enlighten me?

If I'm right and preference shares aren't caught then, had all the companies been structured with preference shares, we wouldn't have been over the cap meaning no fine or points deduction. More grist to the cock up mill.

Yep, Prefs are legally equity but economically behave more like loans. My interpretation of the SCR's would be that Prefs would not be counted as salary. Which takes me back to a point I have made many times before which is that Connected Party JV's should not be allowed - in the context of a SC they are just too difficult to police. Equity, Loans and Prefs are the very simplest form of Capital Structures and we're struggling to deal with them!

Re: EVERYTHING SALARYCAP RELATED
EXDJ 03 January, 2020 14:50
Quote:
Duncan96

Now that is interesting. I'm asuming the Wiggy9 equity from NW is preference shares. If that's right then it's no easier or harder to defend than a loan.

Here's the interesting bit: I've had a quick skim of the regs and I can't see where such preference shares would be caught (unless Schedule 1 p is so wide that it's intended to capture anything the salary cap manager wants to, and that might be hard to defend in court).

Can anyone enlighten me?

If I'm right and preference shares aren't caught then, had all the companies been structured with preference shares, we wouldn't have been over the cap meaning no fine or points deduction. More grist to the cock up mill.

I’m afraid you assume wrong...

The statement of capital (filed 3 December 2018) lists (in section 3) both sets of shares (ie Wray’s 29 and Wigglesworth’s 70 - Wray already owned 1) as being ordinary shares. No difference between them, other than a vastly different price per share...

Re: EVERYTHING SALARYCAP RELATED
Duncan96 03 January, 2020 15:58
Yep, Prefs are legally equity but economically behave more like loans. My interpretation of the SCR's would be that Prefs would not be counted as salary. Which takes me back to a point I have made many times before which is that Connected Party JV's should not be allowed - in the context of a SC they are just too difficult to police. Equity, Loans and Prefs are the very simplest form of Capital Structures and we're struggling to deal with them![/quote]

Difficult to police? We are struggling? Can't agree with you there I'm afraid.

E.g. one suggestion is that wherever there's a JV it could be cleared by an appointed expert as to whether the loan and equity terms are arms length. That's not difficult. Almost any firm of accountants could do that and it would have caught the property companies up front but not, I suspect, thoroughly comendable and to be encouraged ventures like Wolfpack.

Then each year a report could be required on whether shares have been transferred and/or loans waived etc in a way which represents a transfer of value to the player, again signed off by accountants/auditors.

If there is a transfer of value its treated as salary in the year that the shares/loans were issued but if that takes the club over the cap in that prior year the fine and points deduction are applied in the current year. There would be a real incentive to make sure everything is properly cleared that way. After all, the accounts are filed at Companies house as Saracens know only too well!

Re: EVERYTHING SALARYCAP RELATED
Duncan96 03 January, 2020 16:20
Quote:
EXDJ
Quote:
Duncan96

Now that is interesting. I'm asuming the Wiggy9 equity from NW is preference shares. If that's right then it's no easier or harder to defend than a loan.

Here's the interesting bit: I've had a quick skim of the regs and I can't see where such preference shares would be caught (unless Schedule 1 p is so wide that it's intended to capture anything the salary cap manager wants to, and that might be hard to defend in court).

Can anyone enlighten me?

If I'm right and preference shares aren't caught then, had all the companies been structured with preference shares, we wouldn't have been over the cap meaning no fine or points deduction. More grist to the cock up mill.

I’m afraid you assume wrong...

The statement of capital (filed 3 December 2018) lists (in section 3) both sets of shares (ie Wray’s 29 and Wigglesworth’s 70 - Wray already owned 1) as being ordinary shares. No difference between them, other than a vastly different price per share...

So it looks like this one definitely didn't cause a salary cap breach then. There could still be something in the articles or a seperate shareholders agreement btw to allow NW's shares or his premium (is there a share premium account?) to be redeemed first from profits.

I'm a whole hearted supporter of JVs like Wolfpack, Tiki Tonga, fourfive etc as there are so many benefits of helping players set up in business. Leaving aside the moral arguments in their favour I believe they help curb wage inflation.

The property companies, though, I believe are a little too clever (though Stephen Jones would disagree with me). But purely as a Saracens supporter, what a shame they weren't set up in a very slightly different way which wouldn't have fallen foul of the rules (though I would still like to have seen the rules refined to catch them even if they were set up with preference shares and not loans).

Having said that, it's an exciting season battling for survival and away from the tedium of winning everything again, and we get to see our great team in league games at this time of year and not just in European and knock out matches. (Just like Leinster in fact). Every cloud has a silver lining (Sm151)

Re: EVERYTHING SALARYCAP RELATED
EXDJ 03 January, 2020 16:58
Quote:
Duncan96
So it looks like this one definitely didn't cause a salary cap breach then.

I think that’s quite a favourable interpretation of sch.1 of the salary cap regs.

The lead-in reads: “all amounts referred to in this paragraph 1, whether they are paid...directly or indirectly...by or on behalf of a Club or any Connected Party of the Club, to or in respect of a Player or any Connected Party of the Player” And of course Wray is a Connected Party of the Club and Wiggy9 is a Connected Party of the Player.

Then para (a) refers to “or any other sum”, (m) refers to ”any other financial remuneration (of a form not described above)” and also (p) as you identify above. Putting £189k in Wiggy9’s bank account would seem to be caught by any of these three paras. I wouldn’t want to try to argue in front of an ex-judge that the catch-all wording should never apply to a payment where you’re purchasing equity in a company majority-owned by a player.

I’d expect any revamp of the salary cap regs coming out of the Myners review to clarify exactly the circumstances where JVs are and aren’t permitted, as (provided it is an equal co-investment) I cant imagine PRL want to outlaw these.

Re: EVERYTHING SALARYCAP RELATED
Timfi 03 January, 2020 17:31
Can anyone confirm the statement made by Jim Hamilton that he took a 50% Decrease in wages when he left Montpellier to play for Saracens! if this is true is it not possible that a number of players are not on the megger bucks they just want to play for a team that is winning silverware



Do Androids dream of electric sheep?

Re: EVERYTHING SALARYCAP RELATED
tpr's headmistress 03 January, 2020 18:50
Quote:
Timfi
Can anyone confirm the statement made by Jim Hamilton that he took a 50% Decrease in wages when he left Montpellier to play for Saracens! if this is true is it not possible that a number of players are not on the megger bucks they just want to play for a team that is winning silverware

How could anyone 'confirm' something that only the person who made the statement would know. I may be imagining it but I seem to recall a rumour that he wanted to come back because someone in his family was sick. That could be a reason to take a more modest pay packet than he was receiving in France. But, as I say, that could be a figment of my imagination.

Re: EVERYTHING SALARYCAP RELATED
Duncan96 03 January, 2020 18:58
Quote:
EXDJ
Quote:
Duncan96
So it looks like this one definitely didn't cause a salary cap breach then.

I think that’s quite a favourable interpretation of sch.1 of the salary cap regs.

The lead-in reads: “all amounts referred to in this paragraph 1, whether they are paid...directly or indirectly...by or on behalf of a Club or any Connected Party of the Club, to or in respect of a Player or any Connected Party of the Player” And of course Wray is a Connected Party of the Club and Wiggy9 is a Connected Party of the Player.

Then para (a) refers to “or any other sum”, (m) refers to ”any other financial remuneration (of a form not described above)” and also (p) as you identify above. Putting £189k in Wiggy9’s bank account would seem to be caught by any of these three paras. I wouldn’t want to try to argue in front of an ex-judge that the catch-all wording should never apply to a payment where you’re purchasing equity in a company majority-owned by a player.

I’d expect any revamp of the salary cap regs coming out of the Myners review to clarify exactly the circumstances where JVs are and aren’t permitted, as (provided it is an equal co-investment) I cant imagine PRL want to outlaw these.

Thanks very much for that. Very helpful.

I hope you are right in your last para.

I also hope the paras you refer to in the regs don't outlaw the taking of minority stakes in player companies when the price paid is arms length. I think there would have to be an element of non arms length price (for an equity stake, loans being caught whether they are arms length or not) and therefore transfer of value to fall foul but I've been wrong before!

Re: EVERYTHING SALARYCAP RELATED
Marlow Nick 03 January, 2020 19:21
The agreed principle of the salary cap is to create an affordable level playing field therefore anyone looking for legal loopholes to spend more money is in breach of the cap principles.

Re: EVERYTHING SALARYCAP RELATED
Steve_M 04 January, 2020 03:15
Quote:
Timfi
Can anyone confirm the statement made by Jim Hamilton that he took a 50% Decrease in wages when he left Montpellier to play for Saracens! if this is true is it not possible that a number of players are not on the megger bucks they just want to play for a team that is winning silverware

Perhaps he took his remuneration in a different manner ?

I agree that being in a happy and successful work environment is great and is certainly an incentive BUT, for a club that is so big on player welfare and preparing them for a future outside of rugby, are you really suggesting that the likes of Farrell might be happy to stay at Saracens for 450,000pa rather than his market value of 700,000pa just so that he can win a few trophies ? [Figures are obviously made up but just an example].

I find it hard to believe that so many people are still discussing whether or not the investments should have been included within the salary cap. We will never know for sure what the judgement was unless the report is revealed and that seems unlikely at best. It is believed that they have been included, nuff said, move on ...

The suggestions that there are many other ways that the players could have been paid more to keep their 'salaries' lower is just another way of circumventing the cap. In principle this might fall outside the regulations and therefore be allowed but by its very nature goes against the purpose of the cap in the first place. It may also fall under the general catch-all;

2.3 Operation of the Regulations; (a) To ensure the proper observance and enforcement of the Regulations, each Club
agrees during the operation of the Regulations to notify in writing to the Salary Cap Manager details of: (i) any potential or actual loopholes, lacunae or errors in the Regulations;

Re: EVERYTHING SALARYCAP RELATED
Duncan96 04 January, 2020 14:10
Quote:
Marlow Nick
The agreed principle of the salary cap is to create an affordable level playing field therefore anyone looking for legal loopholes to spend more money is in breach of the cap principles.

I 100% agree with that. It doesn't need to conflict with helping players set up in business though which we've been through in detail and disagreed on (Sm151)



Edited 1 time(s). Last edit at 04/01/2020 14:11 by Duncan96.

Re: EVERYTHING SALARYCAP RELATED
TonyTaff 04 January, 2020 14:36
Somewhere above in the thread, someone opined that an interpretation 'wouldn't stand up in court'.

That may be the case; PRL have explicitly sought to prevent a member club going to court. I suspect this is because they suspect they would be driven to insolvency defending in court their incompetent auditor and rules, when facing Lansdown, Craig, Wray etc.

For the same reason, the reasons for the decision are going to remain secret!



£721.05 (*) donated to the Saracens Foundation due to visits to the Sarries frontpage [www.rugbynetwork.net]

Please read and submit articles for publication.


(*) As at October 31, 2018.

Re: EVERYTHING SALARYCAP RELATED
tpr's headmistress 04 January, 2020 15:37
Exactly my thoughts TT - one of theirs stuffed up and they don't want to admit it. That doesn't exonerate any of ours of doing wrong but potentially answers how it took too long to be ruled as wrong.

Re: EVERYTHING SALARYCAP RELATED
Marlow Nick 04 January, 2020 16:48
Quote:
TonyTaff
Somewhere above in the thread, someone opined that an interpretation 'wouldn't stand up in court'.
That may be the case; PRL have explicitly sought to prevent a member club going to court. I suspect this is because they suspect they would be driven to insolvency defending in court their incompetent auditor and rules, when facing Lansdown, Craig, Wray etc.

For the same reason, the reasons for the decision are going to remain secret!

I'm not sure I follow your logic. How has this been blocked from court?
Of course PRL don't want to be bankrupted by expensive legal proceedings (rumour has it that's why they gave in when Nigel was caught bending the rules 5 years ago) but what makes you think Nigel was "blocked" as opposed to him realising that in this civil case he didn't have a leg to stand on when measured by the rules he signed up to follow?
My understanding is that there was a review process which Nigel chose not to follow plus of course the courts are open for a civil lawsuit which again Nigel chose not to follow. If Nigel was so sure that Saracens were the innocent victims of PRL incompetence then why didn't he take it to court?

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