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Revealed: How Saracens broke rugby's salary cap rules

Sky News reveals the exact details of salary cap breaches which led to an unprecedented punishment in British sport for Saracens.

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The full detail of the salary cap breaches which resulted in Saracens being relegated from the Premiership are laid bare in a 103-page report obtained by Sky News.

Saracens, the club that has won rugby union's Premiership in four of the last five seasons, had already been docked 35 points and fined £5.3m last November for breaking Premiership Rugby's £7m salary cap.

But the news this week that they are to be relegated to the Championship at the end of this season has sent English rugby spinning on its axis, with the future of some of their biggest stars, including England captain Owen Farrell, shrouded in uncertainty.

LONDON, ENGLAND - JUNE 01: Brad Barritt and Owen Farrell of Saracens lift the trophy after winning the the Gallagher Premiership Rugby Final between Exeter Chiefs and Saracens at Twickenham Stadium on June 01, 2019 in London, United Kingdom. (Photo by Dan Mullan/Getty Images)
Image: Saracens players celebrating being crowned 2019 Premiership Rugby champions

Now, we can reveal the exact details of the breaches which led to an unprecedented punishment in British sport, with the most significant breaking of the rules concerning joint property ventures involving England stars Maro Itoje, Billy and Mako Vunipola and former England player Chris Ashton.

The disciplinary panel, led by Lord Dyson, accepted that Saracens' breaches of the regulations were "not deliberate" and had advised against their relegation, believing it would be a disproportionate punishment.

Saracens were relegated regardless. They could not prove they were able to comply with the salary cap this year, and chose to be move down a division rather than open past financial records for a full forensic audit.

But they did find that the club had broken the rules on several occasions with the charges ranging in value from £511.92 to £800,000.

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There is no suggestion or evidence that any player was complicit in any of the club's actions.

Saracens were found to have breached the salary cap in three consecutive seasons.

In 2016-17 the overspend was more than £1.1m, in 2017-18 it was just over £98,000 and in 2018-19 it was £906,000.

Property investments

Saracens owner Nigel Wray, who resigned as club chairman earlier this month, was found to have made payments totalling £1.3m by entering into property joint ventures with players.

He made a £450,000 investment in a company majority-owned by brothers Billy and Mako Vunipola, who were both part of the England squad at the World Cup in Japan last year.

Richard Wigglesworth, who has played for Saracens since 2010, and Wray made a co-investment of £220,000 in his company, while the investment in Itoje's company was £250,000.

In the case of the Vunipolas, a house was bought by a company known as Vunprop, funded 66% by the Vunipolas and 33% by an interest free loan by Wray.

Renovation costs were also loaned, interest free, by the chairman.

It is understood that Saracens' defence was that Wray considered these payments to be equity investments and that profits, or indeed losses, would be shared equally between all parties.

In his witness statement, Wray said these payments were "bona fide commercial transactions with a number of players based on the merit of those investments, not, as PRL (Premiership Rugby Limited) suggests, in order to provide an additional reward to players for playing their rugby at the club."

Itoje hospitality contract

Another charge was that England and Saracens lock Itoje, one of the biggest stars in the game, was paid a lump sum for three years of £30,000, £30,000, £35,000 by a company based at Saracens which did all the hospitality at their Allianz Park ground and was run by the chairman's daughter, Lucy Wray.

The report noted that there was no evidence Itoje had attended any hospitality events and was not paid on a per-event basis, meaning it was a salary benefit and not a commercial arrangement.

Saracens would say, however, that this was a commercial arrangement by an independent company, similar to ones they have with lots of current and former players.

Buying a house with Ashton

Saracens were also found to have breached the salary cap by £319,600.76 with regard to a property bought by a former player Chris Ashton.

The report, compiled by Sport Resolutions, a specialist independent dispute service, noted that Ashton paid 80% towards a house worth £1.4m, while Wray and another director paid 20% towards the property.

The suggestion was that this was a benefit and equivalent to salary in kind.

Saracen's downfall came because of the repayments.

Ashton bought the property while he was still a player and asked to buy out Wray and the other director's stake over a period of 18 months, by which point he had already left Saracens.

By agreeing to this change in terms the panel determined that the investment had become a loan and as such it was counted as salary

Itoje image rights

The report also notes a salary cap breach with regards to what they said was an overspend of £871,000 by Wray and two other directors buying shares in Itoje's image rights company.

They paid £1.6m for a 30% stake in Itoje's image rights company, based on a valuation by PwC.

But Premiership Rugby said the shares were only worth £800,000 based on a valuation by a different accountancy firm.

COVENTRY, ENGLAND - APRIL 20: Maro Itoje of Saracens looks on during the Champions Cup Semi Final match between Saracens and Munster at the Ricoh Arena on April 20, 2019 in Coventry, United Kingdom. (Photo by David Rogers/Getty Images)
Image: Maro Itoje is one of the biggest stars in the game

Premiership Rugby said Saracens overpaid Itoje's image rights because he was being underpaid in normal salary so the club could come in under the salary cap.

It is understood that Saracens explored the option of appealing against the initial ruling in November, which led to a £5.3m fine and deduction of 35 points.

It is thought the club did not resist an investigative audit at the end of this season but they did resist a three-year retrospective audit on the grounds that it would be unfair - in the club's view - if the same scrutiny wasn't applied to every Premiership club.

The panel advised against the relegation of Saracens and noted in their decision.

It said: "We accept that the breaches were not deliberate, but in our view they were reckless. We consider that to impose a deduction of 70 points in one salary cap year is disproportionate and is not required to satisfy the underlying purpose of the relegations."

Saracens had called for the report to be made public after Premiership Rugby initially said that the club had requested it be kept under wraps.

"Premiership Rugby welcomes Saracens' decision to withdraw its previous objection to publication of Lord Dyson's decision," a spokesperson said.

"These objections were stated in the strongest terms and in writing on behalf of the club by its lawyers.

"We believe that publication of the decision in respect of Saracens' past breaches of the salary cap is an important step towards upholding trust in our enforcement of the regulations and the disciplinary process."