The salient peice in all this is that its mostly around property deals. Player welfare or after rugby life has nothing to do with, they are not starting a business and need expetise, they are investing in something that will traditionally be a massive nest egg in years to come.
Start up an estate agents yes, don't buy property, its not a business, its a money deposit.
And this is exactly what the report points out. I had a bit of time on the train yesterday to look at a few sections of the report; namely the descriptions of the breaches for the seasons. The way the deals were structured was something like this:
- A Joint Venture shell company is setup
- A buy-to-let property is purchased by the company and funded thus:
Nigel Wray (or an associated Saracens person) injects cash (20-30%) to cover the cash 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 payments
- The payments themselves would be covered by the rental yield
- Over time, the mortgage gets paid off effectively by the tenants
- Equity is structured so that upon sale, Wray (or 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%
It’s clear that this wasn’t a help-to-buy scheme to help 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, supposedly, who had the owner of Toulon, supposedly, repay the loan back to Wray for the property he help Ashton purchase in the UK shortly before he went to France). It’s also clear that this isn’t about teaching them the property business for life after rugby. 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.