One of the most controversial stories in English rugby history was revealed when, following a seven-month investigation, European and English rugby union champions Saracens received a 35-point deduction and a £5.36 million fine for breaching salary cap regulations over the course of three seasons.
It’s now 10 years since the infamous ‘Bloodgate’ scandal rocked the world of rugby to its core; but the sorry affair which continues to unfold at Saracens has all the ingredients necessary for it to overshadow ‘Bloodgate’, as the biggest-ever rugby scandal.
Despite England and Harlequins player, Danny Care describing the scandal as “the worst kept secret in rugby”, Saracens’ owner Nigel Wray insists no violations have been committed. Wray, who bought Saracens in 1995, and is estimated to be worth approximately £315 million, maintains the belief that investments don’t constitute salary. However, this notion was rejected by London-based Sports Resolutions, which was asked to rule on whether Saracens had breached Premiership rules. In depth findings found that Saracens failed to disclose payments to players in each of the past three seasons, as well as exceeding the £7 million ceiling for payments to senior players.
The argument surrounding rugby’s salary cap has become widely contested, with a small minority suggesting it should be scrapped, while many others want to ‘protect the game’ and avoid it becoming a case – similar to football and Formula One – whereby the clubs and teams with the deepest pockets are guaranteed success.
Though Saracens initially launched an appeal against the disciplinary panel’s findings, after describing the sanctions as “heavy handed”, it later accepted both the fine and points deduction. The revelations have created uproar across the English game, with rival clubs demanding greater punishment for alleged ‘financial doping’.
Saracens’ partnership with its main sponsor, Allianz was established in 2012, and represented a landmark for club rugby in England. In 2013, following a rejuvenation of Saracens’ stadium, Allianz was granted the naming rights to Allianz Park and, at the time, was the first professional rugby club to have a pitch with entirely artificial turf. Although it seems unlikely that Allianz and some of the club’s other partners, including Nike, Gatorade and SIMBA will sever ties with Saracens, there has been precedence for this to happen in other cases.
While no breaches of this scale have been seen before in the English Premiership, a similar case occurred in Australia’s National Rugby League when the Melbourne Storm was stripped of two Telstra Premierships and fined AU$1.6 million after it was uncovered that additional club payments, outside of the salary cap, amounted to AU$1.7 million. As a result, several sponsors withdrew their support from the club, including ME Bank and Skins, which raises questions whether Saracens sponsors will remain loyal.
Simon Dent, founder of sports agency Dark Horses, which promoted the Football Association’s Heads Up campaign with the Duke of Cambridge, said: “This is pretty much rugby’s first major scandal, so it wouldn’t surprise me if brands got spooked”. When you consider the increased financial pressures facing the English Premiership, with 12 clubs (and London Irish) accumulating losses of around £50million last year, the current structure seems unsustainable.
There are also potential ramifications for investors, none more so than CVC Capital Partners, which will feel as if its name has been somewhat sullied after paying £225 million for a 27 per cent stake in Premiership Rugby in December 2018. The British private equity group’s investment, which was advised by Oakwell Sports, was centred around the opportunity to gain international broadcasting and sponsorship rights. The Saracens’ revelation could impact CVC’s plans to secure a minority shareholding in the Guinness Pro14 league, which was estimated to be an investment of around £120 million.
‘The Saracens Way’
To best gauge the feelings of English rugby supporters, you only need to look at the hostile reception Saracens received at Kingsholm [home to Gloucester RFC] on Saturday 9 November to understand just how badly the news has been received by the rugby community.
It would be fair to say Saracens has never courted popularity; however, a case of tall poppy syndrome always seems to be alive when it comes to the North London-based club. Saracens managed to transform itself from a long-standing underachieving club, to triple European and five-time Premiership champions. It would, therefore, be unreasonable to suggest that its recent success has derived solely from breaking the salary cap, rather than because of the incredibly strong ethos that permeates the entire club.
Moreover, 57 per cent of Saracen’s current squad is comprised of academy graduates – the highest in the Premiership. The strong contingency of home-grown talent at Saracens entitles the club to £1.2 million in credits above the baseline salary cap set by Premiership Rugby and the RFU.
For years, Saracens has led the way with its innovative approach to player welfare by working closely with the Rugby Players Association (RPA) and setting up The Saracens Way programme to ensure players are prepared and supported for life beyond rugby. As an organisation, it has shown that if you put your players first, success and rewards will follow.
With the RPA’s policies in mind, it is important that players are not held accountable in this situation unless, of course, those involved in business partnerships with Nigel Wray knew that these payment schemes were against the rules and actively conspired to subvert the salary cap. However, it is hard to believe this would be the case and we must remember that, ultimately, they are just rugby players.
The consequences of the ruling are wide-ranging and although the impact this will have on the national team remains to be seen, it’s hard to see how England who played in the 2019 Rugby World Cup final, with a team that comprised eight Saracens players, won’t be shaken by this mess.
If there is one positive to take from this sorry affair, it’s that the findings will act as a much-needed wakeup call to the sport. There will now be more scrutiny than ever around club’s remuneration of their players, discouraging any clubs from breaching Premiership rules while ensuring a more level playing field is created.
One only needs to look as far as America’s NFL to see that strict penalties for financial and contractual breaching – which can include fines of up to US$5 million for one single breach – has resulted in violations becoming incredibly rare. It is therefore crucial that, at the end of all of this, it is made clear that the implications of breaches far outweigh any benefits.