Salary Cap Regulations and Thoughts

After a good night out in Lympstone with Ollie, several pints and a flaming greyhound, I now feel suitably lubricated to share my thoughts with you all regarding the Salary Cap and Saracens participation in the GP .

1. Chiefs club, officials and management do not want the titles for 2017 & 2018 to be reassigned. Nor do the fans. It is neither here nor there from a chiefs point of view if PRL chooses to strip Saracens Rugby Club of the titles, as this will make no difference to Chiefs.
2. Chiefs fans (based upon a crude poll) do not want to see Sarries excluded from the GP nor, despite Tony’s blustering, do they want to see Sarries relegated.
3. Chiefs do feel aggrieved about the recent developments, as there has been a view over more than one season that it has not been a level playing field. As chiefs have had to let one exceptionally talented full back go (Cordero) to accommodate another (Hogg), Sarries seem to have just written out another cheque to recruit their third world class full back (Daly) to add to their existing less than cheap fullback alternatives (Goode & Williams).
4. All of the the Premiership teams signed up to the Salary Cap agreement and therefore it seems unfair and poor form for one club to be retrospectively challenging it, only when it has been alleged that that club has contravened the agreement.
5. With regard to the alleged infringements, it is important to understand the legal position regarding the salary cap. In this respect it would be helpful if people actually read the provisions and understood the agreement between the clubs, rather than relying on the pretty weak argument that ‘Saracens have a great academy and form the backbone of the England team therefore they should be forgiven’ as postulated by several on the forum.
6. In this respect it may be helpful to share the actual regulations (here https://d2cx26qpfwuhvu.cloudfront.net/premier/wp-content/uploads/2016/05/03161651/Salary-Cap-Regulations-2018-19.pdf) and commentary on them from one of the leading legal authorities on the matter, Christopher Stoner QC, (Here https://www.lawinsport.com/content/articles/item/a-guide-to-premiership-rugby-s-salary-cap-regulations-2018-19-the-principal-changes-for-the-new-season and here https://www.lawinsport.com/content/articles/item/a-guide-to-premiership-rugby-s-salary-cap-regulations-2018-19-what-happens-if-there-is-a-breach, both written before the current action against Saracens. I have read all of these documents several times.
7. It is worth noting that the 2018/19 provisions have a significant number of revisions from the earlier provisions, all made to accommodate concerns expressed by various PRL clubs. These include the introduction of; “Home Grown Senior Player Credits”, “Senior EPS Credits”, “Home Grown Academy Player provisions”, “Injury dispensation” and the introduction of an “overrun tax” to exempt unforeseen errors in the clubs calculations up to 5% of any overrun.
8. Clearly all clubs, including Saracens have had ample opportunity to feed into and propose amendments to the Salary Cap provisions.
9. All clubs agreed to the review and sanctions policy included in the agreement whereby a Disciplinary Panel is appointed by PRL to be selected by Sports Resolution Ltd.
10. The burden is on the Salary Cap Manager to prove any failure of compliance on the balance of probabilities, NOT beyond reasonable doubt.
11. Regulation 13 of the agreement provides that if a challenge is made to a decision of the Disciplinary Panel, it shall be made to Sports Resolutions for a final and binding arbitration in accordance with the Arbitration Act 1996 and Sports Resolution’s UK Arbitration Rules.
12. Regulation 13.2 provides that any challenge can only be permitted under English law on the grounds of ultra vires (including error of law), irrationality or procedural unfairness, with the Tribunal exercising supervisory jurisdiction only.”
13. This will make it extremely unlikely that Saracens will be able to overturn the ruling through the review process.
14. The fairness or otherwise of the ruling seems almost inevitably to hinge on whether the principle of “co investment” between the club (or any “connected parties”) and players is included under the provisions of the agreement.
15. In this respect it will be critical to establish on what terms any co-investment took place.
16. If such agreements were genuinely a 50/50 participation in a joint venture arrangement under which the players shared any risk and reward equally with the club or connected individual, there are clearly good ground for Saracens to challenge the ruling, as in this situation the players have evidently not received any benefit in kind.
17. If there is anything other than this arrangement then, in my opinion at least, the arrangements were obviously a benefit and this should have been declared by the club to the Salary Cap Manager (SCM)
18. All of the premiership clubs have an obligation to provide in June of each, a declaration to the SCM, in respect of the forthcoming Salary Cap Year a declaration, in a specified form, signed on behalf of the Club by its Chairman, CEO and Financial Director certifying what those individuals expect the Club to pay during the current Salary Cap Year by way of “Salary”.  Salary clearly is not just the wage that the players receive and is clarified further on in this piece.
19. It seems highly probable that the coinvestments in question were not included in the declaration in June 2019, as a result of which PRL’s investigation was instigated and this seems already to have been conceded by the club.
20. Given that the whole investigation seems to hinge on the validity or otherwise of these joint venture arrangements, it is an important point to note with regard to the current ruling against Saracens is that there is no likelihood of the Review being made public.
21. Section 16 of the salary Cap agreement provides that the result of any review is totally confidential and cannot be disclosed “The parties to any proceeding under these Regulations shall preserve and respect the confidentiality of the proceedings, including the issues in dispute, the evidence and arguments presented by the parties and any decision reached under these Regulations.”
22. Therefore any speculation regarding the nature of the joint venture arrangements can only be just that; – speculation.
23. It is, however, all but inconceivable that the independent review panel appointed by Sports resolutions did not look into these arrangements in detail.
24. It is also worth considering that the inability of PRL, Sports Resolution, or the independent panel to reveal the detail, potentially provides Saracens with considerable scope to argue its case (or indeed to spin it) without the actual facts being known.
25. This is opinion only, but I find it hard to believe that the panel would have ruled that an overpayment under the salary cap agreement took place, if no benefit to the players accrued from the JV arrangements. Unfortunately, without a leak, it is unlikely that any of us will be able to be certain in this regard.
26. For my own part, I find the presumption of innocence put forward by members of the forum without access to the relevant information, in direct contradiction to the panel’s findings quite preposterous.
27. It should also be noted that the panel comprised three highly experienced and qualified Judges. The Independent Panel – which conducted a hearing over five days in September and October 2019 – was chaired by the Rt. Hon. Lord Dyson, who was joined on the panel by Aidan Robertson QC and Jeremy Summers. Lord Dyson was Master of the Rolls (President of the Court of Appeal of England and Wales and Head of Civil Justice) for four years until he retired in October 2016. He was a Justice of the Supreme Court of the United Kingdom from April 2010 until October 2012.
28. There are a number of other points that emerge from a close reading of the regulations, which should be borne in mind:

a. Firstly, the regulations allow for any unforeseen or unpredictable overrun of the salary cap through the overrun tax which require clubs to pay 50% of any overrun up to a 5% maximum of the salary cap. Therefore, had Sarries exceeded the cap by £350,000 or less last year and the equivalent in previous years, there would have been no formal breach.
b. Secondly, any argument that the co investments do not fall within the provisions of the agreement, (provided, of course, that there was any benefit to the players from these arrangements), is absurd. The definition of “Salary” is very wide ranging. Schedule 1 (a) of the agreement states that salary includes “any salary, wage, fee, remuneration, compensation, match fee, per diem, royalty, gratuity, profit, perquisite, reward, emolument, earnings, incentive, retainer, loyalty payment, preferred payment or any other sum;” It then goes on to define these items in great detail and is caveated by Schedule1 (m) to include “any other financial remuneration (of a form not described above);” (And this is, of course, the killer point, which none of us will probably get to know for certain as the details will not be published. It is however beyond the realms of reasonable doubt that the panel did not investigate this). For me if there is any benefit that accrued to players from the arrangements, this is a slam dunk.  The only way that this cannot be the case is if the players contributed an equal amount of the investment and costs to Nigel Wray.
c. It has been argued on the forum that the players choosing to invest with Nigel Wray as an individual has nothing to do with Saracens. Not so. The agreement sets out in considerable detail the definition of a “connected” person. There can be no doubt that Nigel Wray is a connected person as defined by the agreement.
d. Even had there been any question mark as to whether the JV arrangements fell under the agreement, this is covered by the requirement for the club to immediately bring to the attention of the SCM “any potential loopholes, lacunae or errors in the Regulations” as well as any potential breaches they may become aware of.
e. The extent of the sanction is clearly set out in the agreement, which of course, Sarries had read, understood and subscribed to. There is however a provision in the agreement for a formal “plea-bargaining” policy in respect of any breach. If identified criteria are met it may be possible if a Club wishes to admit its guilt to plea bargain. Therefore, the option is open to Sarries to potentially significantly reduce the penalty and get on with the current season.

The Appeal Process

Sarries has clearly indicated that it does not accept the ruling.

Regulation 13 provides that if a challenge is made to a decision of the Disciplinary Panel, it shall be made to Sports Resolutions for a final and binding arbitration in accordance with the Arbitration Act 1996 and Sports Resolution’s UK Arbitration Rules.
Regulation 13.2 provides:
“Regulation 13.1 shall not operate as an appeal of a decision of the Disciplinary Panel or any other decision made pursuant to the Regulations and shall operate only as a forum and procedure for a challenge to the validity of such a decision under English law on the grounds of ultra vires (including error of law), irrationality or procedural unfairness, with the Tribunal exercising supervisory jurisdiction only.”
Therefore unless Wray’s lawyers can prove that the agreed procedures were not adhered to, or that the finding was irrational or was an error in law, the ruling stands.
The alternative is for the club to challenge the whole validity of the cap in the UK courts on anti competition grounds. I cannot possibly gauge the arguments here but the opinion of Christopher Stoner QC who is clearly an acknowledged expert in the field, provided long before the ruling against Saracens was announced, is as follows
“In my initial article I suggested, in answer to the rhetorical question of whether the Salary Cap was legal, perhaps somewhat glibly that until someone decides to the contrary the answer is yes.”
He then goes on at length to explain why he believes this to be the case. See https://www.lawinsport.com/content/articles/item/a-guide-to-premiership-rugby-s-salary-cap-regulations-2018-19-what-happens-if-there-is-a-breach

There is little doubt that Nigel Wray feels passionately about the club and his cause and he can no doubt employ some top dollar lawyers to argue his case.

If the co investments genuinely confer no benefit to the players, and if there is no other evidence of salary breaches, then good luck to him.

Without any knowledge of the details, but in the certain knowledge that these details will have been reviewed by the panel judges, I find that hard to believe.

If the review finding is upheld by Sports Resolution then he will have no option but to accept it or challenge the whole notion of the salary cap in the courts. This would be massively damaging for the league and the wider sport. As a much vaunted “true rugby enthusiast” I would hope that he will think hard before he does that. Win or lose it will be seismic for the sport and will have massive fallout for other clubs, for which he will never be thanked.

The alternative would be to admit a degree of guilt and plea bargain the sanction down to a sensible level. I have no desire to see Sarries relegated, humiliated nor to see previous titles stripped or reallocated. All sides in this have become entrenched and I expect most chiefs officials, coaches, supporters and players would cool down and accept this solution.

A sensible climb down from all sides would be the best solution and the initial furore should serve as a shot across the bows of any clubs which have also overstepped the mark or sailed too close to the wind.