Dyson report deal-by-deal: how Saracens breached the salary cap

We look at how the primary overspends were made following the publication of the keenly awaited report

The longed-for report into Saracens’ salary-cap misdemeanours is out. Premier Rugby Limited’s release has redacted all mention of any individuals but a leak on Wednesday night had already made those names from the Lord Dyson judgment public. No blame is attached to any of the players involved in the ventures deemed to be breaches of the cap by the report across three season up to 2018-19 and which led to Saracens’ £5.4m fine and initial 35-point deduction.

Here, the Guardian unpacks the details from the report of how the principal overspends were made, why the panel came to its conclusions, and then analyses the arguments for and against Saracens based on the evidence submitted.

The judgment makes clear that the panel’s jurisdiction is limited to whether the salary cap manager’s findings were reasonable, not whether the panel would have arrived at the same themselves. To adopt Television Match Official parlance, they have been asked the second question: “Is there any reason why the salary cap manager’s decisions should not stand?” In every case, the answer was no.

Maro Itoje’s image rights

(Overspend £800,000 in salary cap year 2018-19)

On 2 November 2018, a consortium of Saracens directors, led by Nigel Wray, agreed to pay £1.6m for a 30% share in Oghene Holdings Limited, Itoje’s image rights company. Itoje’s accountant suggested £3m as the appropriate valuation.

The investors sought a valuation from PwC and paid the £1.6m accordingly. Andrew Rogers, the salary cap manager, sought a valuation from PRL’s accountants, Saffery Champness, who returned a valuation of £800,000. The difference between the two amounts was thus accounted as salary for the year.

The panel decided that Rogers’s valuation was not unreasonable and would not overturn the finding. “Valuation is not a science,” the report states. “We emphasise that we are not saying that we find that the market value of the shares was in fact £800,000. We are saying that it was reasonably open to Mr Rogers to come to that conclusion.”

For Saracens: The sum of £1.6m for a 30% share of Itoje’s image rights (for the rest of his life) will prove to be a very good deal if he goes on to enjoy the career most expect for him. It is in no way an overpayment if that is so (but his playing career could also end at any time).

Against Saracens: Saracens did not register the transaction or clear it at the time and valuations are notoriously fluid. PRL submitted in its evidence details of Itoje’s playing contract, which was signed in January 2019, just a couple of months later. It argued Saracens knew they were overpaying for his image rights because they underpaid him through his salary. The panel decided not to rule on this point. However, multiple sources have suggested to the Guardian that his regular salary is notably low. Itoje’s representatives have been approached for comment.

Capital payments and expenditure

(Overspend £924,000 and £363,000 across four ventures, 2016-17)

The report lists payments of more than £900,000 that Wray made into joint venture companies (JVCs), one with the Vunipola brothers and one each with Richard Wigglesworth and Itoje. It deals with the details of the Vunipola transactions only. These amount to £450,000 in the purchase of two properties, in which neither player lived. A further £360,000 was invested by Wray for improvements to the properties.

The Vunipolas arranged a mortgage to pay for 66.6% of the value of the properties. Wray paid for the rest in the shape of an interest-free loan to the JVC. The Vunipolas and Wray took shareholdings in each according to their investments. On sale, the Vunipola mortgage is discharged first, followed by Wray’s capital investment and his subsequent investment in the properties’ improvement. Any further proceeds are shared according to each investor’s shareholding. As the Vunipolas’ mortgage is repaid first, Wray takes on most of the risk of the venture.

The panel found reasonable Rogers’s contention that Wray’s investments constituted open-ended loans, not repayable in the same salary cap year, and must thus be accounted salary.

For Saracens: Wray’s investment was into the JVC, for which he took an appropriate shareholding. At the most, only the interest the Vunipolas might have been expected to pay should count as salary, not the entirety of Wray’s investment.

Against Saracens: The Vunipolas would not find terms as agreeable under normal circumstances, benefiting from an interest-free loan and bearing virtually none of the risk of their venture. Thus they are benefiting from their association with Saracens and Wray. Thus, the entire investment should be treated as salary for the year in which it was made.

Chris Ashton’s loan

(Overspend £320,000, 2017-18)

In October 2015, Wray and Dominic Silvester bought a property with Ashton for £1.3m plus incidentals. Ashton lived in the house with his partner. Ashton provided for 80% of the value of the house through cash and a mortgage and was registered as the proprietor. Wray and Silvester provided 10% each. The arrangement was disclosed to Rogers in 2015. He accounted it as an extra £8,100 to Ashton’s salary for that year, calculated as 3% of Wray and Silvester’s 20% investment.

In January 2018, Ashton, who had by then joined Toulon, bought out Wray and Silvester’s 20% share in the property, now valued at £1.6m, and a two-year monthly schedule for payment was agreed, at the end of which Ashton would become sole owner of the property. Ashton met the first instalment but ran into trouble with his salary in Toulon and requested a deferment of his payments until he returned to England. This was agreed, and Ashton bought out Wray and Silvester’s shareholding in one payment in January 2019, a year ahead of the original schedule. But from April 2018, he had been collecting rent from the property in full.

The panel found Rogers’s assessment reasonable that the entirety of the £320,000 payment that was deferred until the following year should count as salary for the 2017-18 season. As Saracens’ certified player wage bill that year was £280,000 below the cap, most of this alleged overpayment was fitted beneath the salary ceiling.

For Saracens: Self-evidently, no advantage was gained on the field from this transaction, as Ashton had already left the club. Saracens were doing the decent thing when asked by Ashton for some leeway in the repayment of this “loan”. To lump all of the £320,000 on as salary is inappropriate, as Ashton’s only benefit was to collect Wray and Silvester’s 20% share of the rent from April 2018 to January 2019.

Against Saracens: The fact that they did not even think to consider the salary-cap connotations of this transaction, still less register them, highlights the level of their disregard. The regulations clearly stipulate that any loan not repaid within the same salary cap year counts as salary.

MBN events appearances

(Overspend £95,000 across all three years)

Maro Itoje received payments of £30,000 or £35,000 in each of the salary cap years under consideration from MBN Promotions, a hospitality company owned by Wray’s daughter, Lucy, and her husband, the former Saracens prop Tom Mercey. Since 2018, MBN has assumed responsibility for all of Saracens’ “commercial aspects”. The payments to Itoje, which began in 2016, were for services at corporate events. Saracens did not register the arrangement, an oversight for which Wray apologised.

For Saracens: MBN has entered “arm’s length promotional agreements” with hundreds of other sportsmen, including other Saracens players, but Rogers singles out this arrangement with Itoje as worthy of inclusion as salary. He is not receiving payment in return for playing for Saracens.

Against Saracens: The exceptional closeness between MBN and Saracens makes this arrangement eminently worthy of registration with Rogers, but Saracens never disclosed it.


Michael Aylwin

The GuardianTramp

Related Content

Article image
Premiership Rugby urges Saracens to come clean over salary-cap report
Premiership Rugby wants to see the initial report into the Saracens affair made public and is adamant the rest of the Premiership are complying with the cap

Robert Kitson

21, Jan, 2020 @10:00 PM

Article image
Saracens facing further investigation for potential breach of salary cap
Saracens will be further investigated by Premiership Rugby for a potential breach of salary cap regulations relating to the club’s co-investment arrangements with a number of their high-profile players.

Gerard Meagher

10, Apr, 2019 @10:03 PM

Article image
Saracens fear salary cap rules could cost them homegrown stars like Maro Itoje
Saracens director of rugby Mark McCall has called for changes to the rules on the Premiership salary cap, fearing clubs are at risk of losing homegrown stars

Gerard Meagher

23, Aug, 2017 @11:01 PM

Article image
Latest twist in Saracens salary cap scandal threatens a descent into pure farce | Robert Kitson
The Saracens salary cap scandal has already deeply damaged the domestic league - but it now appears the worst is yet to come for the club, its players, and the game as a whole

Robert Kitson

17, Jan, 2020 @4:43 PM

Article image
Saracens salary-cap breach stamps an asterisk on a great club and the game | Robert Kitson
Saracens, English rugby’s dominant club, have blazed a trail across Europe and nurtured countless internationals but was it all above board?

Robert Kitson

05, Nov, 2019 @7:22 PM

Article image
Saracens deny breaking Premiership salary cap regulations
Saracens have strongly denied breaking any salary cap regulations in the rugby Premiership

Robert Kitson

28, Apr, 2010 @11:10 PM

Article image
Saracens’ attempt to end Premiership salary cap looks set to fail
Saracens’ call to end the 15-year-old Premiership salary cap at a shareholders’ meeting in February looks set to fail

Paul Rees

19, Dec, 2014 @7:21 PM

Article image
Marcus Smith and Alex Dombrandt inspire Harlequins’ thrashing of Saracens
Harlequins took advantage of a depleted and dispirited Saracens side, winning 41-14 and moving up from ninth to sixth in the Premiership

Michael Aylwin at the Twickenham Stoop

26, Jan, 2020 @6:32 PM

Article image
Steve Borthwick hails Saracens’ ability before mouthwatering match
The Leicester Tigers coach talks up his side’s Premiership rivals, who will be desperate to avenge October’s narrow defeat

Daniel Gallan

04, Mar, 2022 @1:59 PM

Article image
Saracens’ intense focus on completing double delights Chris Ashton
Saracens can join the elite who have won a domestic league and European Cup double, and Chris Ashton, scorer of a brace in the 44-17 win over Leicester, was naturally pleased

Michael Aylwin at Allianz Park

22, May, 2016 @9:00 PM