Statement from Charlie Beall, CEO of Saracens

WE BELIEVE IT IS IMPORTANT THAT OUR SUPPORTERS ARE MADE FULLY AWARE OF AN EXCLUSIVE ARTICLE PUBLISHED BY The Telegraph ENTITLED: “SARACENS SALARY CAP PUNISHMENT UNDER SCRUTINY OVER NEW EVIDENCE”.

The original article is available to read in full here: Saracens salary cap punishment under scrutiny over new evidence.

To summarise, The Telegraph reports that: “Saracens’ punishment for the Premiership salary cap scandal is under scrutiny because of an alleged undeclared conflict of interest at the heart of the disciplinary hearing.”

It continues: “Saracens were relegated from the Premiership and fined £5.36m in 2019 – an unprecedented punishment in British sport – for salary-cap breaches relating to the three previous seasons.”

“However, new information involving the accountancy firm hired by Premiership Rugby to advise on Saracens’ case casts doubt on the disciplinary panel’s judgment.”

The Telegraph article then goes on to say:

“Telegraph Sport can reveal that: Saffery Champness was the auditor for Sale Sharks at the same time that it gave ‘impartial expert advice’ about Saracens; Saffery’s valuation of Maro Itoje’s image rights resulted in Saracens receiving the biggest individual fine of £2.4m; Saffery was working for Sale when the club signed Chris Ashton but then provided ‘independent’ advice to Premiership Rugby about his Saracens contracts; Sale received more than £350,000 as a share of the fines paid by Saracens.”

The Telegraph adds that: “…in the opinions provided by Saffery on seven of the nine charges against Saracens, the fact that one of its clients benefited from Saracens’ punishment raises serious questions about the disciplinary procedure.”

It recounts that in 2019 Saracens: “were charged with breaching the league’s salary cap for three seasons from 2016 to 2019, following a nine-month investigation. The breaches included Saracens owner Nigel Wray investing in joint ventures with Itoje, Ashton, Billy and Mako Vunipola and Owen Farrell. Wray argued that these were investments, which could go up or down, and were not linked to salary.”

The article then goes on to assert that: “A disciplinary panel chaired by Lord Dyson disagreed and Saracens were found to have breached the cap in each season, with an overspend of more than £1.1m in 2016-17, just over £98,000 in 2017-18 and £906,000 in 2018-19, leading to total fines of £5.36m and a 35-point deduction. They were later relegated after a second 70-point deduction. The remaining 12 Premiership stakeholding clubs, including Sale, each received £350,000 from the Saracens fines.”

In a section pertaining to Saffery’s valuation of Maro Itoje’s image rights The Telegraph reports that: “During the salary cap investigation, one of Saffery’s most significant pieces of advice concerned Saracens’ investment in Itoje. Three Saracens directors had paid £1.6m for a 30 per cent share in Itoje’s image rights, based on a valuation given to them by PwC. However, Saffery told Andrew Rogers, the PRL salary cap manager, that PwC’s valuation was double what it should have been.”

The article states: “Rogers’ use of Saffery’s ‘true market value’ meant that Saracens were deemed to have exceeded the salary cap by £800,000, which represented the vast majority (88 per cent) of the overspend for the 2018-19 season and led to a £2.4m fine. Itoje has gone on to become England and Lions captain, winning his 100th cap for his country last Saturday, and is now one of the most marketable figures in the world game. Based on a conservative projected value using current figures at Companies House, the 30 per cent share of Itoje’s image rights company, Oghene Limited, is now worth approximately £4.86m – six times the Saffery valuation.”

The article reports that: “That valuation represents 30 per cent each of dividends to date (£900,000), current company value (£1.02m) and projected income (£2.94m) for the remaining seven years of the investment. Annual income over the last three years has averaged £1.4m.

Rogers confirmed in his evidence that he had sought advice from Saffery and the disciplinary panel concluded: “It is clear that Mr Rogers reached his conclusion that the purchase price overvalued the shares on the basis of the Saffery Champness report.”

The article then goes on to state: “Stevie Loughrey, a partner at Onside Law, who acted as Saracens’ solicitor during the hearing, said that he had not been made aware at any point of the potential conflict of interest, either by PRL or Saffery.”

And quoted later in the article: “Loughrey added: ‘If PRL had not relied on Saffery’s view and instead accepted PwC’s view on the value of the shares, Saracens’ breach of the salary cap regulations for the year 2018-19 would have been negligible’.”

The Telegraph also reports on the case involving Chris Ashton, stating: “Ashton played for Saracens from 2012 until 2017. Two years into his time at the club, he entered a co-investment deal with Wray, the Saracens owner at the time, and Dominic Silvester…”

“In their defence against the salary cap charges, Saracens argued that the co-investment was a loan that would be repaid, and was not regarded as salary by either party.

Saffery was working for Sale when the club signed Ashton from Toulon in 2018 (before the salary cap scandal). As part of that transfer, Sale paid Saracens £319,601 to cover the investment Saracens had previously made into Ashton’s house.

Just five months later, Saffery was appointed by Premiership Rugby to advise on Saracens’ investments into Ashton – the same £319,601 that Sale had paid – which led to a further fine.”

The Telegraph notes: “As a member of the Institute of Chartered Accountants in England and Wales, Saffery is bound by regulations to declare any conflict of interest, or the appearance of any conflict. Under the Civil Procedure Rules, expert witnesses ‘must disclose fully any interests or relationships capable of affecting that independence’.”

In a section entitled 'What happens next?' The Telegraph reports: “Premiership Rugby will be under pressure to investigate the process by which Saracens were punished and use an independent law firm to review the potential conflict of interest.”

It adds: “In a statement to Telegraph Sport, the club said they “will consider its position once those affected by this allegation have had an opportunity to respond”.

It further states: “Saffery declined to comment. Sale also declined to comment. A Prem Rugby spokesperson said: ‘Prem Rugby is unable to comment on matters of a confidential nature’.”

As previously communicated in our response to The Telegraph, Saracens accepted the substantial fines and relegation and has positively moved on in the following six years.

In light of the serious allegations reported by The Telegraph concerning potential conflicts of interest and disclosure, the club continues to evaluate its options and will update supporters as appropriate.

Charlie Beall, Chief Executive Officer, Saracens