Ashton - the smoking gun?
Posted by: TAD1971 (IP Logged)
Date: 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!). I’m 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 hasn’t 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 Ashton’s, 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 couldn’t repay it? Surely it’s 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 Ashton’s? 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. I’m unsure if the £30k (3%) was included in the cap but let’s be honest it’s 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.
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 hasn’t 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 Ashton’s, 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 couldn’t repay it? Surely it’s 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 Ashton’s? 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. I’m unsure if the £30k (3%) was included in the cap but let’s be honest it’s 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?
Posted by: Nick4219 (IP Logged)
Date: 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!). I’m 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 hasn’t 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 Ashton’s, 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 couldn’t repay it? Surely it’s 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 Ashton’s? 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. I’m unsure if the £30k (3%) was included in the cap but let’s be honest it’s 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 don’t 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 “oversight”.
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?
Posted by: Nick4219 (IP Logged)
Date: 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?
Posted by: TAD1971 (IP Logged)
Date: 24 January, 2020 07:27
I didn’t write this post about Itoje though. It’s about the property deals.
Tbh I shouldn’t have mentioned anything else, my mistake
Tbh I shouldn’t have mentioned anything else, my mistake
Re: Ashton - the smoking gun?
Posted by: Speedy-New (IP Logged)
Date: 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.
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?
Posted by: TAD1971 (IP Logged)
Date: 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 doesn’t 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?
Posted by: Speedy-New (IP Logged)
Date: 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?
Posted by: Nick4219 (IP Logged)
Date: 24 January, 2020 07:36
Quote:TAD1971
I didn’t write this post about Itoje though. It’s about the property deals.
Tbh I shouldn’t have mentioned anything else, my mistake
You brought up the MBN payments as being farcical.
Re: Ashton - the smoking gun?
Posted by: TAD1971 (IP Logged)
Date: 24 January, 2020 07:37
Quote:Nick4219Quote:TAD1971
I didn’t write this post about Itoje though. It’s about the property deals.
Tbh I shouldn’t 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?
Posted by: TAD1971 (IP Logged)
Date: 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?
Posted by: Nick4219 (IP Logged)
Date: 24 January, 2020 07:39
Quote:TAD1971Quote: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 doesn’t 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?
Posted by: Nick4219 (IP Logged)
Date: 24 January, 2020 07:43
Quote:TAD1971Quote: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?
Posted by: InbetweenWasp (IP Logged)
Date: 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.
Ashton’s was flagged more on a technicality and that was that the loan he took from NW spanned two seasons. According to the report, this wasn’t 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 isn’t named in the report, because it’s 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, wasn’t 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 haven’t had to pay a penny for
- The panel concluded that Wray assumed all the risk - The players only risks ‘losing’ value (vs their equity) should house prices fall be over 20-30% so it wasn’t a normal commercial type deal/agreement.
It’s clear that this wasn’t 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 isn’t so expensive (except for maybe Ashton. It’s also clear that this isn’t about teaching them the property business for life after rugby, at least not on an event investment/risk basis. It was a freebie - Perhaps they’d have the odd month or two where tenants weren’t 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 haven’t read through all of the report, only the sub-sections that discuss the transactions that caused the breach. That the panel claimed there wasn’t any intent (I haven’t 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).
Ashton’s was flagged more on a technicality and that was that the loan he took from NW spanned two seasons. According to the report, this wasn’t 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 isn’t named in the report, because it’s 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, wasn’t 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 haven’t had to pay a penny for
- The panel concluded that Wray assumed all the risk - The players only risks ‘losing’ value (vs their equity) should house prices fall be over 20-30% so it wasn’t a normal commercial type deal/agreement.
It’s clear that this wasn’t 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 isn’t so expensive (except for maybe Ashton. It’s also clear that this isn’t about teaching them the property business for life after rugby, at least not on an event investment/risk basis. It was a freebie - Perhaps they’d have the odd month or two where tenants weren’t 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 haven’t read through all of the report, only the sub-sections that discuss the transactions that caused the breach. That the panel claimed there wasn’t any intent (I haven’t 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?
Posted by: EXDJ (IP Logged)
Date: 24 January, 2020 09:00
Quote:TAD1971Quote: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 weren’t.
Does that help?
Re: Ashton - the smoking gun?
Posted by: TAD1971 (IP Logged)
Date: 24 January, 2020 09:07
Quote:EXDJQuote:TAD1971Quote: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 weren’t.
Does that help?
It does actually 😂, thank you very much! I now get it
Re: Ashton - the smoking gun?
Posted by: Primavesi2 (IP Logged)
Date: 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?
Posted by: Statesman (IP Logged)
Date: 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 SCR’s are structured that way.
Re: Ashton - the smoking gun?
Posted by: TAD1971 (IP Logged)
Date: 24 January, 2020 09:23
I agree but we agreed to the rules which includes that absurdity
I’m guessing Wray made the same mistake as I did when thinking the two cases were the same
I’m guessing Wray made the same mistake as I did when thinking the two cases were the same
Re: Ashton - the smoking gun?
Posted by: InbetweenWasp (IP Logged)
Date: 24 January, 2020 09:28
Quote:TAD1971
I’m guessing Wray made the same mistake as I did when thinking the two cases were the same
But if you read the report, you’ll see that Wray clearly couldn’t 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?
Posted by: EXDJ (IP Logged)
Date: 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 aren’t designed to capture “economic benefit”. 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 arms’ length commercial transactions:
“if the arrangement is on terms typical of commercial contracts of that type, it will be less likely to be considered Salary;”
The SCM and the panel agreed that these property loans were not arms length commercial transactions.
This Thread has been closed