There is nothing like a salary-cap crisis for holding the mirror up to each and every one of us. In a not-dissimilar effect to that of Brexit, our opinions on the matter, trenchant and polarised, reveal more about what we want to be true than what we know. Because what any of us knows is next to nothing.
It feels as if the demographic on this might not be quite so neatly split down the middle as over Brexit, there being fewer defenders of little old Saracens than there are of the biggest trading bloc in the world conceived as a response to the horrors of two World Wars. But if a passionate Saracens-Remainer were to be pitched into a cell with a passionate Saracens-Exiter (sounds like a Premiership final) there might be blood on the sound-proof walls.
Even after the release of the much-yearned-for report from the original investigation, not a lot has changed. If one is looking for evidence of Saracens chicanery, there is plenty in it; if evidence of a stitch-up against the serial champions of everything is more one’s bag, there is plenty of that too.
At every turn, Saracens have been engaging in transactions that are self-evidently sailing close to the wind, that are even in clear breach of the regulations as they stand, however much a multimillionaire investor used to being his own boss may disagree with them. If a loan is not repaid in the same salary-cap year it counts as salary. That is less because they are a means of circumventing the cap, more because keeping track of open-ended loans would become an accountancy nightmare for a salary-cap manager, or SCM, an impossibility even.
But is the ascription of the lump sum of such loans as salary a fair reflection of any “advantage” secured? Obviously not. Nigel Wray did not, say, simply give the Vunipola brothers £450,000. He was paying into a joint venture, procuring for himself a correspondent shareholding.
The structure of the deal, however, was favourable to the Vunipolas and a result of their relationship with Wray, hence of their status as Saracens players. But its value to them was more in line with the amount of interest they might have been expected to pay had they sought the financing elsewhere.
When Chris Ashton lived in the house Wray and Dominic Silvester paid £270,000 (20%) towards, the SCM (with whom this particular transaction was cleared) accounted it as worth an extra £8,100 (3% of £270,000) to Ashton’s salary. So this principle is recognised by the SCM. By that reckoning the £1.3m lumped on to Saracens’ 2016-17 salary-cap year might more representatively be accounted as £39,000 worth of extra salary. That would not have come with a multi-million-pound fine, nor a 35-point reduction. The beautiful irony is that Wray has had other ventures like this cleared in the past but, according to his recent statement, he changed the structure of that year’s ventures on tax advice. In so doing, his investment fell foul of the regulations, precipitating something of an uplift in his tax – to the tune of millions of pounds.
The accountants’ role did not stop there. The £800,000 disparity between the valuation Wray sought for a 30% share in Maro Itoje’s image rights and the one the SCM procured when he found out about it accounts for most of the £900,000 overspend attributed to the 2018-19 salary-cap year. The panel’s verdict was that they had no opinion on which was the fairer valuation – the £1.6m Wray’s consortium paid for the shareholding, or the £800,000 the SCM later valued it at – but they could not find the SCM’s figure unreasonable. Thus the entirety of the £800,000 difference must stand as salary for that year.
But even if one felt the SCM’s to be the only appropriate valuation (and the report tells us Itoje’s accountant valued the shareholding at £3m), this is not simply salary. Itoje must now pay Wray’s consortium 30% of all revenue from his image rights for the rest of his life. Some think the £1.6m they paid for that shareholding will prove a snip.
That Wray never sought to clear these transactions before he made them is incredible – and his greatest failing. (That said, of Saracens’ £5.4m fine, the sum total for failing to register transactions is £12,600.) This gets to the heart of the ongoing farce that is the Premiership’s structure. The same chairmen who compete with each other are also governing themselves. It is reasonable to assume that none of them trusts any others. That the SCM reports to Premier Rugby’s executive committee, made up of three other chairmen of Premiership clubs, even as he tries to monitor the dealings of all of them, is patently absurd, as damning an example as any of such dysfunctional governance.
There is much more to unwind in this sorry saga. The report already feels like old news, dealing with transactions in the past. The more knowledge we assume, the more we are in the dark. Why have Saracens taken relegation now? Presumably, there be more dragons hiding within their computers. Are they all close-to-the-wind arrangements similar to those in the report, or will we start to get into brown-envelope territory?
There is also the matter of the leak of the report before it had been redacted. One of the key reasons for its confidentiality, however hotly contested, was to protect the identity of the players. Why did somebody choose to ignore that, just as an agreement had been reached to publish an anonymised version? The legal repercussions of the leak could prove significant and will ultimately rest at PRL’s door. English rugby sinks further into a mire of its own making. It feels all too familiar to anyone resident on this troubled isle. But, as with that other torturous saga, there comes a point when one just wishes it could all be over.