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Ashton - the smoking gun?
Discussion started by TAD1971 , 24 January, 2020 02:14
Ashton - the smoking gun?
TAD1971 24 January, 2020 02:14
Apologies for the new thread but I feel this is worthy of a separate discussion (sorry if this sounds arrogant!). Iím not a first time poster, I used to post here as sarriecen but quit the message board and made my account unrecoverable when the board was at its most toxic.

The merits of the Itoje MBN and image rights punishments have been discussed to death on other threads and people can draw their own conclusions but what hasnít been discussed as much is the Ashton one, and in particular how it relates to the other four property ventures.

Correct me if I am wrong, but the other four property transactions were set up in exactly the same way as Ashtonís, and the only difference between them is Ashton lived in his and the other four were buy to let, but that does not have an effect on the material nature of the transaction.

Where this confuses me is that the Salary cap manager fully knew about the Ashton transaction and agreed that the only salary cap impact was 3% annual interest on the interest free director loan. This raises two important questions:

1. Why did the interpretation of the loan suddenly change so that it was considered salary once he left the club and couldnít repay it? Surely itís either salary at the beginning when it was first made or not at all? Why did the interpretation suddenly change and only change in 17/18?

However, this is not so big a deal as it only led to a £98k or so overspend in 17/18 as we were a decent amount under the cap that year without it, so the below is the more significant one.

2. Why was the treatment of the other four investment property treated differently from Ashtonís? If it is the case that the only salary cap impact is 3% of the £1m or so overspend, just like it was with Ashton before he left? I can fully see why Nigel Wray said that he thought they were fine given the exact same thing had previously been approved by the SCM. Iím unsure if the £30k (3%) was included in the cap but letís be honest itís immaterial.

All the information from this is from the very good Guardian article that breaks down each of the individual infringements.

I am also happy to stand corrected if more comes out and we committed further sins as of course none of this explains our second punishment of relegation and what has happened this season

Edit: removed the Itoje bit, I had no intention of discussing that here as it is discussed to death elsewhere



Edited 1 time(s). Last edit at 24/01/2020 07:33 by TAD1971.

Re: Ashton - the smoking gun?
Nick4219 24 January, 2020 07:21
Quote:
TAD1971
Apologies for the new thread but I feel this is worthy of a separate discussion (sorry if this sounds arrogant!). Iím not a first time poster, I used to post here as sarriecen but quit the message board and made my account unrecoverable when the board was at its most toxic.
The merits of the Itoje MBN and image rights punishments have been discussed to death on other threads and people can draw their own conclusions but what hasnít been discussed as much is the Ashton one, and in particular how it relates to the other four property ventures.


Correct me if I am wrong, but the other four property transactions were set up in exactly the same way as Ashtonís, and the only difference between them is Ashton lived in his and the other four were buy to let, but that does not have an effect on the material nature of the transaction.

Where this confuses me is that the Salary cap manager fully knew about the Ashton transaction and agreed that the only salary cap impact was 3% annual interest on the interest free director loan. This raises two important questions:

1. Why did the interpretation of the loan suddenly change so that it was considered salary once he left the club and couldnít repay it? Surely itís either salary at the beginning when it was first made or not at all? Why did the interpretation suddenly change and only change in 17/18?

However, this is not so big a deal as it only led to a £98k or so overspend in 17/18 as we were a decent amount under the cap that year without it, so the below is the more significant one.

2. Why was the treatment of the other four investment property treated differently from Ashtonís? If it is the case that the only salary cap impact is 3% of the £1m or so overspend, just like it was with Ashton before he left? I can fully see why Nigel Wray said that he thought they were fine given the exact same thing had previously been approved by the SCM. Iím unsure if the £30k (3%) was included in the cap but letís be honest itís immaterial.

I was previously of the opinion that we have done wrong and accept our punishment but my feelings have now changed. The Itoje MBN one is utterly farcical as even basic investigation would show he has attended many events for MBN and many other sportsmen, sarries and not, have been paid by MBN for the same thing. The Itoje image rights one is one for lawyers and accountants, I donít feel qualified enough to know what to think on that. And the property ones are a joke, unless I am missing something.

All the information from this is from the very good Guardian article that breaks down each of the individual infringements.

I am also happy to stand corrected if more comes out and we committed further sins as of course none of this explains our second punishment of relegation and what has happened this season

Well if you read the full report you will see how the SCM and the Panel came to the conclusion that the MBN payments to Itoje were salary.

There was no written agreement with MBN and Itoje in regards to the payments as to if and how many times he has to attend an event. Saracens failed to provide any documentary evidence to prove this was an arms length commercial deal. MBN and Saracens are connected parties due to MBN being owned by NW daughter who was also a Saracens Director.

The conclusion being that Itoje only received these payments due to being a Saracens player. The 16 factors to consider and to weight the argument to whether it was salary or not weighed heavily towards that it was salary.

Where Saracens have undone themselves is by NW having known his obligations from the 2015 yellow card has deliberately failed to communicate or disclose relevant information to the SCM and seems they he was more than happy to breach the cap and try and hide it behind claims of ďoversightĒ.

Again, read the full report and you will see what lengths NW has gone to to try and frustrate the SCM and therefore cheat the cap.

Re: Ashton - the smoking gun?
Nick4219 24 January, 2020 07:25
And RE the Ashton property finding, the SCM and the Panel concluded that NW only provided the interest free loans for the players to purchase the property because of the fact at the time of purchase they were Saracens players. Had they not been Saracens players then he would not have given them the loans, therefore, a direct benefit to them of playing for Saracens was these loans which under the regulation counted as salary.

Re: Ashton - the smoking gun?
TAD1971 24 January, 2020 07:27
I didnít write this post about Itoje though. Itís about the property deals.

Tbh I shouldnít have mentioned anything else, my mistake

Re: Ashton - the smoking gun?
Speedy-New 24 January, 2020 07:27
Itoje comes out worse of all players (rumoured) to be involved

The image rights thing whilst if done correctly is fine with me however it does seem that it was in his case used as a way of reducing his basic salary then bringing total earnings back to a level a player of his ability should be being paid.

This is therefore a benefit and should, according to the rules, be included within the salary cap.

Re: Ashton - the smoking gun?
TAD1971 24 January, 2020 07:29
Quote:
Nick4219
And RE the Ashton property finding, the SCM and the Panel concluded that NW only provided the interest free loans for the players to purchase the property because of the fact at the time of purchase they were Saracens players. Had they not been Saracens players then he would not have given them the loans, therefore, a direct benefit to them of playing for Saracens was these loans which under the regulation counted as salary.

Still doesnít explain why the SCM was happy with the treatment of the Ashton loan as long as 3% market rate interest was within the cap but the same treatment could not be applied to the other loans



Edited 1 time(s). Last edit at 24/01/2020 07:31 by TAD1971.

Re: Ashton - the smoking gun?
Speedy-New 24 January, 2020 07:36
I suspect because at the time that home was Ashton's family home whereas the others were Buy to lets and therefore investments

Re: Ashton - the smoking gun?
Nick4219 24 January, 2020 07:36
Quote:
TAD1971
I didnít write this post about Itoje though. Itís about the property deals.
Tbh I shouldnít have mentioned anything else, my mistake

You brought up the MBN payments as being farcical.

Re: Ashton - the smoking gun?
TAD1971 24 January, 2020 07:37
Quote:
Nick4219
Quote:
TAD1971
I didnít write this post about Itoje though. Itís about the property deals.
Tbh I shouldnít have mentioned anything else, my mistake

You brought up the MBN payments as being farcical.

I know, so have edited it now to remove it. My mistake, apologies

Re: Ashton - the smoking gun?
TAD1971 24 January, 2020 07:38
Quote:
Speedy-New
I suspect because at the time that home was Ashton's family home whereas the others were Buy to lets and therefore investments

I cannot see any mention in the report (admittedly I have just searched for key words) that this is the reason and I see no reason why this should differentiate them when the effect is the same

Re: Ashton - the smoking gun?
Nick4219 24 January, 2020 07:39
Quote:
TAD1971
Quote:
Nick4219
And RE the Ashton property finding, the SCM and the Panel concluded that NW only provided the interest free loans for the players to purchase the property because of the fact at the time of purchase they were Saracens players. Had they not been Saracens players then he would not have given them the loans, therefore, a direct benefit to them of playing for Saracens was these loans which under the regulation counted as salary.

Still doesnít explain why the SCM was happy with the treatment of the Ashton loan as long as 3% market rate interest was within the cap but the same treatment could not be applied to the other loans

What Speedy New said

Re: Ashton - the smoking gun?
Nick4219 24 January, 2020 07:43
Quote:
TAD1971
Quote:
Speedy-New
I suspect because at the time that home was Ashton's family home whereas the others were Buy to lets and therefore investments

I cannot see any mention in the report (admittedly I have just searched for key words) that this is the reason and I see no reason why this should differentiate them when the effect is the same

The SCM disagreed and all of the points were argued by him and Saracens to the independent panel.

The panel found in favour of the SCM that it was a breach of the cap.

There is no conspiracy here, NW has done you all bad. Nobody else to blame but him.

Re: Ashton - the smoking gun?
InbetweenWasp 24 January, 2020 08:48
The fundamental difference between the Ashton property and the others was that for Ashton, it was a the property he was living in whereas the others were all investment properties brought to subsequently let.

Ashtonís was flagged more on a technicality and that was that the loan he took from NW spanned two seasons. According to the report, this wasnít planned but during the initial repayment period apparently the player asked to freeze repayments due to personal circumstances, which NW agreed to and it subsequently meant repayment of the loan spanned two seasons and thus was seen as Salary, as opposed to a loan (had it of been repaid in the same season, it is implied that would have been fine). In the end, it was the owner of the players new club who repaid the loan on behalf of the player. Ashton isnít named in the report, because itís redacted of course but putting two and two together from various press leaks it points towards it being Ashton.

The other properties were a gimme - they went something like this:

were structured was something like this:

- A Joint Venture shell company is setup between NW or an associated connected person to Saracens and the player, or players
- A buy-to-let property is purchased by the company and funded thus:
- Nigel Wray (or The associated Saracens person) injects cash (20-30%) to cover the deposit required to purchase the property. In some cases, a further 6-figure some was injected for renovations
- The player (or players) then obtained a buy-to-let mortgage for the remaining 70-80% of the purchase price. The player, wasnít required to put a penny in. Just to guarantee the mortgage repayments - The payments themselves would be covered by the rental income
- Over time, the mortgage gets paid off effectively by the tenants
- Equity is structured so that upon sale, Wray (or the other person stumping up the cash) gets their renovation funds back first, then the rest is split equally between the directors (i.e. 20-30% goes back to Wray and 70-80% goes to the player)
- The player effectively gets a 70-80% lump sum value of a house that they havenít had to pay a penny for
- The panel concluded that Wray assumed all the risk - The players only risks Ďlosingí value (vs their equity) should house prices fall be over 20-30% so it wasnít a normal commercial type deal/agreement.

Itís clear that this wasnít a help-to-buy scheme to help these players pay for a house they would otherwise afford in other parts of the country where property isnít so expensive (except for maybe Ashton. Itís also clear that this isnít about teaching them the property business for life after rugby, at least not on an event investment/risk basis. It was a freebie - Perhaps theyíd have the odd month or two where tenants werenít in place that they might have had to cover the mortgage payments for, or the initial months where they were renovating. But fundamentally, the player required a tiny amount of capital and risk in order to realise a 6-figure investment pot in a traditionally very stable asset.

I havenít read through all of the report, only the sub-sections that discuss the transactions that caused the breach. That the panel claimed there wasnít any intent (I havenít read the exact wording) sounds increasingly like there was no way to prove intent (i.e. no E-Mails, Texts, Phone Calls/Witnesses claiming or showing that a discussion had been had whereby it was known this would be outside the cap).

Re: Ashton - the smoking gun?
EXDJ 24 January, 2020 09:00
Quote:
TAD1971
Quote:
Speedy-New
I suspect because at the time that home was Ashton's family home whereas the others were Buy to lets and therefore investments

I cannot see any mention in the report (admittedly I have just searched for key words) that this is the reason and I see no reason why this should differentiate them when the effect is the same

The report treats them differently. The loan to the Connected Party company is dealt with under para 1(d) (Sarries agree - see para 160 of the report) which counts any loan which is not repayable during the year as Salary. The loan to Ashton is dealt with under para 1(g) (see para 229 of the report) which treats any accommodation cost as Salary. The Salary Cap Manager has decided to amortise it over a certain period and thus assign a nominal amount to go into the cap calculation. Just as presumably if Wray bought a house and let a player live in it rent -free, you would be looking to calculate the annual value of that benefit. I suspect that there is precedent for how accommodation costs should be treated, even if not spelled out in the cap regs.

The SCM could in theory have chosen to deal with the Ashton loan under para 1(d) and count the full amount towards the cap. Producing a harsher result. He did not have the option of treating the investment properties as accommodation, because they werenít.

Does that help?

Re: Ashton - the smoking gun?
TAD1971 24 January, 2020 09:07
Quote:
EXDJ
Quote:
TAD1971
Quote:
Speedy-New
I suspect because at the time that home was Ashton's family home whereas the others were Buy to lets and therefore investments

I cannot see any mention in the report (admittedly I have just searched for key words) that this is the reason and I see no reason why this should differentiate them when the effect is the same

The report treats them differently. The loan to the Connected Party company is dealt with under para 1(d) (Sarries agree - see para 160 of the report) which counts any loan which is not repayable during the year as Salary. The loan to Ashton is dealt with under para 1(g) (see para 229 of the report) which treats any accommodation cost as Salary. The Salary Cap Manager has decided to amortise it over a certain period and thus assign a nominal amount to go into the cap calculation. Just as presumably if Wray bought a house and let a player live in it rent -free, you would be looking to calculate the annual value of that benefit. I suspect that there is precedent for how accommodation costs should be treated, even if not spelled out in the cap regs.

The SCM could in theory have chosen to deal with the Ashton loan under para 1(d) and count the full amount towards the cap. Producing a harsher result. He did not have the option of treating the investment properties as accommodation, because they werenít.

Does that help?

It does actually 😂, thank you very much! I now get it

Re: Ashton - the smoking gun?
Primavesi2 24 January, 2020 09:12
As a general point, treating the full notional of a loan as salary is clearly absurd as that is obviously not the size of the economic benefit. The economic benefit is the difference between the rate he would have had to pay on the high street and the rate he actually paid.

Re: Ashton - the smoking gun?
Statesman 24 January, 2020 09:22
Quote:
Primavesi2
As a general point, treating the full notional of a loan as salary is clearly absurd as that is obviously not the size of the economic benefit. The economic benefit is the difference between the rate he would have had to pay on the high street and the rate he actually paid.

Correct but if you read the report it is very clear explained why the SCRís are structured that way.

Re: Ashton - the smoking gun?
TAD1971 24 January, 2020 09:23
I agree but we agreed to the rules which includes that absurdity

Iím guessing Wray made the same mistake as I did when thinking the two cases were the same

Re: Ashton - the smoking gun?
InbetweenWasp 24 January, 2020 09:28
Quote:
TAD1971
Iím guessing Wray made the same mistake as I did when thinking the two cases were the same

But if you read the report, youíll see that Wray clearly couldnít have honestly thought that the two cases were the same.

Case 1 - Player is lent money to buy a home to live in with their family with a repayment schedule over the season within they are lent those monies (although in the end repayment spanned two seasons)

Case 2 - Players co-invest in a buy-to-let property with no clear repayment schedule and no meaningful financial input required from the player to realise a six-figure investment as an end output directly benefitting the player. The only person putting capital into the co-investment was Wray, or another connected person who stood to profit at a nominal rate of return compared to the players.

They are totally different.

Re: Ashton - the smoking gun?
EXDJ 24 January, 2020 09:28
Quote:
Primavesi2
As a general point, treating the full notional of a loan as salary is clearly absurd as that is obviously not the size of the economic benefit. The economic benefit is the difference between the rate he would have had to pay on the high street and the rate he actually paid.

But the salary cap rules arenít designed to capture ďeconomic benefitĒ. They are drawn up to prevent abuses (and ensure accurate reporting). If the salary cap regs were written as you suggest then this creates a gaping loophole to set up a loan which is reported (and counts towards the cap) at a very low rate, and then subsequently written off at a much later point

There is wording in the salary cap regs which allows for armsí length commercial transactions:
ďif the arrangement is on terms typical of commercial contracts of that type, it will be less likely to be considered Salary;Ē

The SCM and the panel agreed that these property loans were not arms length commercial transactions.

Re: Ashton - the smoking gun?
Gray_Lensman 24 January, 2020 11:43
The other problem with an unnamed player's house is that he didn't own all the property, two other individuals had a stake in it. Yet he had the sole 'use' of it despite only owning 80% of it and paid not rent for the bit he didn't own. That's in addition to the fact he effectively received property of nearly £320K which he otherwise wouldn't have obtained. The SCM said that was a benefit in kind and the panel agreed.

Re: Ashton - the smoking gun?
Sarriebone 24 January, 2020 15:08
One thing I haven't really seen mentioned is the fact that remaining money owed to Wray+ other investor was paid off by his new club, presumably that would be Sale?

Re: Ashton - the smoking gun?
Chris1850 24 January, 2020 15:15
Quote:
Sarriebone
One thing I haven't really seen mentioned is the fact that remaining money owed to Wray+ other investor was paid off by his new club, presumably that would be Sale?

Yes. I spotted that as well. I assume that Ashton is one of Sales marquee players though so any payment made would be outside the SC?

Re: Ashton - the smoking gun?
Statesman 24 January, 2020 15:23
Quote:
Chris1850
Quote:
Sarriebone
One thing I haven't really seen mentioned is the fact that remaining money owed to Wray+ other investor was paid off by his new club, presumably that would be Sale?

Yes. I spotted that as well. I assume that Ashton is one of Sales marquee players though so any payment made would be outside the SC?

I assumed Toulon?

Re: Ashton - the smoking gun?
Sarriebone 24 January, 2020 15:25
Quote:
Statesman
Quote:
Chris1850
Quote:
Sarriebone
One thing I haven't really seen mentioned is the fact that remaining money owed to Wray+ other investor was paid off by his new club, presumably that would be Sale?

Yes. I spotted that as well. I assume that Ashton is one of Sales marquee players though so any payment made would be outside the SC?

I assumed Toulon?
I know it's from Wray's statement so may hold no value but:

Having joined another club, the former player wished to purchase the directorsí 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.

Re: Ashton - the smoking gun?
Statesman 24 January, 2020 15:34
Quote:
Sarriebone
Quote:
Statesman
Quote:
Chris1850
Quote:
Sarriebone
One thing I haven't really seen mentioned is the fact that remaining money owed to Wray+ other investor was paid off by his new club, presumably that would be Sale?

Yes. I spotted that as well. I assume that Ashton is one of Sales marquee players though so any payment made would be outside the SC?

I assumed Toulon?
I know it's from Wray's statement so may hold no value but:

Having joined another club, the former player wished to purchase the directorsí 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.

Sorry - you're right - the dates don't tie in with Toulon - must be Sale - let's hope he's their 2nd Excluded Player!

Re: Ashton - the smoking gun?
Marlow Nick 24 January, 2020 15:47
Quote:
Statesman
Quote:
Sarriebone
Quote:
Statesman
Quote:
Chris1850
Quote:
Sarriebone
One thing I haven't really seen mentioned is the fact that remaining money owed to Wray+ other investor was paid off by his new club, presumably that would be Sale?

Yes. I spotted that as well. I assume that Ashton is one of Sales marquee players though so any payment made would be outside the SC?

I assumed Toulon?
I know it's from Wray's statement so may hold no value but:

Having joined another club, the former player wished to purchase the directorsí 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.

Sorry - you're right - the dates don't tie in with Toulon - must be Sale - let's hope he's their 2nd Excluded Player!

or ( and I realise the concept may be a bit too radical for some) but maybe just maybe Sale declared the payment to the SCM and it was counted in their salary total.

Re: Ashton - the smoking gun?
Sarriebone 24 January, 2020 15:54
Quote:
Marlow Nick
Quote:
Statesman
Quote:
Sarriebone
Quote:
Statesman
Quote:
Chris1850
Quote:
Sarriebone
One thing I haven't really seen mentioned is the fact that remaining money owed to Wray+ other investor was paid off by his new club, presumably that would be Sale?

Yes. I spotted that as well. I assume that Ashton is one of Sales marquee players though so any payment made would be outside the SC?

I assumed Toulon?
I know it's from Wray's statement so may hold no value but:

Having joined another club, the former player wished to purchase the directorsí 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.

Sorry - you're right - the dates don't tie in with Toulon - must be Sale - let's hope he's their 2nd Excluded Player!
or ( and I realise the concept may be a bit too radical for some) but maybe just maybe Sale declared the payment to the SCM and it was counted in their salary total.

It's entirely possible. If it has been declared and included in the cap does that mean that amounts was counted as salary twice? Once in the Sarries cap and once in the Sale cap?

Re: Ashton - the smoking gun?
Darraghgirl 24 January, 2020 15:56
This thread is now closed. Please post all issues re salary cap/report etc on sticky thread above


This Thread has been closed
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