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Re: Salary cap breaches revealed
Posted by: #wolfpack
Date: 23/01/2020 12:49
Provided that NW paid the full valuation provided to him by PWC for Itoje's image rights, I cannot see how this could possibly count towards the salary cap. I assume the 103 page document provides some justification.

Relevant section for this bit is paragraph 250 onwards. This is important because the alleged overspend is 800,000 out of 906,505.57 overspend for year 2018/19.

Unless someone tells me otherwise, the SCM got a report from Saffrey Champness who provided a different valuation to PWC. The SCM was then entitled to use his discretion (which included him thinking that PWC had not used correct criteria) and the valuation he obtained to decide the value of Itoje's image rights - and then put the balance into "salary". In order for this to then NOT count as salary (as Saracens were arguing), Saracens have to argue that it was unreasonable for the SCM to rely on his valuation.

Quote paragraph 236: "In our view, Saracens have to say that the only valuation that Mr Rogers could reasonably have decided to be the true market value was the [REDACTED] that the investors agreed to pay. Contract to what Saracens says at para 139 of its closing written submissions, PRL does not have to say (and does not say) that the valuation provided by Mr Patel for Saffery Champness is the only correct valuation. The question is not what the "correct" valuation is, but whether the conclusion reached by Mr Rogers on the valuation issue was reasonable".

Quote paragraph 270: "...we are satisfied that, relying on the Saffery Champness report, 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. We emphasise that we are not saying that we find that the market value of the shares was in fact [REDACTED]. We are saying that it was reasonably open to Mr Rogers to come to that conclusion in all the circumstances"

The panel itself acknowledges that "valuation is not a science" (paragraph 262).

So - unless someone corrects me here - this aspect of breach is essentially down an inability to prove the SCM was 'unreasonable' to rely on a different valuation to the one we relied on. i.e. they're not saying that PWC or NW was wrong at all; they're saying we could not prove the salary cap manager's decision was wrong.

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