Probably not as simple as that. For example, Wray and a player set up a company and issue two shares of £1 each, and they each subscribe for one share. Next, Wray loans this company £500k at market rates of interest, which the company uses to purchase a property and do it up. The company then sells the property for £950k, repays the loan (say, £550k after interest) and declares a distrubutable profit of £400k, to be divided equally among the shareholders. All above board and the player has cleared an extra £200k.The Doc wrote:Because (according to them) they are currently within the salary cap. Possibly it could be down to one-off payments. PRL salary cap rules treat one-off payments as being evenly distributed across the length of the contract i.e. if you sign someone on £100k per annum with an initial sign on payment of £300k, Saracens may have accounted for that as £400k in year one and £100k for years 2 and 3 - maybe to try to time payments to stay within limits on various years. However the salary cap rules state that as £200k per annum. If the contract rolls over and say you re-signed the person for £150k per annum - you're annual salary has reduce £50kTwist wrote:I’m confused as to why they aren’t required to shed any of their overpaid players
But I’m really enjoying poor Stephen Jones’ rants against “the jealous and the defeated".
So could be a factor of contracts rolling over and the new arrangements coming under the cap
Co-investments could be part of the initial sign-on payment. Though co-investments are not a problem per se - it depends on valuation. So if the player and the owner both put in £100k for a 50:50 share in a company, there is zero impact on the salary cap. The problem occurs if the owner puts in £100k and the player puts in little or nothing but gets 50% ownership (or anywhere where the amount invested doesn't equate to the % ownership
However, the salary cap regulations, which I believe run to dozens of pages, include ALL payments to players including profitable partnerships. So the £200k is added to the wage bill when calculating this amount.
I imagine the actual set-up would be rather more complex, where each co-investment company is itself an investor in a larger fund, so the investments made aren't for £500k derelict properties but £50m office developments and shopping centres. Dividends accruing to shareholders can be rolled up (and tax free) and only distributed at a future date (i.e. after retirement) and they thought they would get away with it.
They didn't. They cheated. And it's certainly not over yet. This will drag on into future seasons as the salary cap calculations are made at the end of each season and Saracens are almost certainly still in breach for 2019/20.
