Saracens make history - The most indebted rugby club ever!

Noticed this article floating around. Apologies for the source but it's interesting to highlight how damaging Saracens own policy has been to the club. With their lack of success (2 Prem titles in 6 years) has it been worthwhile making the club so high in debt to get so little from it? On top of that they still can't fill their new stadium.


They're now £45m in debt(up from £41m last year)

Total wages last year came to £9m

All of this debt is covered by their holding company who can leave at any time

£££££££


NB isn't that picture of Jamie George the worst photo ever taken? What is wrong with him?!  

Wow they've got a good side out of it though. Although there were some, er, oddities in the performance yesterday, the combination of forward power and incisive attacking play was really impressive to behold. I do think they are potentially the best English club side of the professional era, and they may well do the double this season.

Fair enough, although compared to Man United's debt last year of £380m...

George Carlin wrote:Fair enough, although compared to Man United's debt last year of £380m...

Very true, although when the Glazers took over there were real concerns they could risk the entire future of the club by burdening them with so much debt. Those concerns have abated but its not impossible that could still happen one day.

Debt like this seems like having a loose wire somewhere in the house. Day by day it seems nothing is going to happen and everything is fine, and then one day you get an extremely nasty shock.

But look at United's turnover, Globally one of the biggest sports brands in the world club wise, matching Real Madrid and they have assets to match with the grounds and well some of their players.

Sarries have a much bigger debt burden than United proportionally to turnover, if they were my business, I would be worried about how I could pay it off.

The Saracens debt is held by their owners. A good proportion of that was inflicted during the years before the Barnet stadium and building the Barnet stadium. In that respect you'd have thought that it should be short term losses for long term gains but that doesn't really happen in rugby.

Saracens are in a position where if their owners pull out they are in liquidation. They are completely reliant on wealthy backers. Bath will be in a similar position though they don't owe their own stadium so it's not as bad.

How much is worth Saracens stadium alone? Surely they could write off their debt by selling it back to the council or someone else?

This is meaningless of course. The money is owed to the owners. If the owners leave they could demand the money back and sell the ground etc. However the same could be said for the owners of any club, they could decide at any time to wind the club up, sell the ground and distribute the profits.

formerly known as Sam wrote:The Saracens debt is held by their owners. A good proportion of that was inflicted during the years before the Barnet stadium and building the Barnet stadium. In that respect you'd have thought that it should be short term losses for long term gains but that doesn't really happen in rugby.

Saracens are in a position where if their owners pull out they are in liquidation. They are completely reliant on wealthy backers. Bath will be in a similar position though they don't owe their own stadium so it's not as bad.

I thought the premiership had rules in place to stop this type of model? The ideas being that all clubs should be profit making entities...

whocares wrote:How much is worth Saracens stadium alone? Surely they could write off their debt by selling it back to the council or someone else?

Can't see any local council buying a stadium given the budget cuts.

yappysnap wrote:NB isn't that picture of Jamie George the worst photo ever taken? What is wrong with him?!  

Not sure what you mean. He looks pretty normal here.

I think I read Saracens accounts for last year at Companies House (https://beta.companieshouse.gov.uk/company/03110665).

The auditors said that although the owners have provided a letter of intent to keep funding the club, it is not a gurantee. There is a severe risk of default in the event of them deciding that they no longer wished to fund the business.

The chairman said some rubbish about how the brand is an intangible asset worth money on its own. Probably true to a point.

As for the Man U argument, their turnover is £400m vs debt of £380m. They have forecast a turnover of £500m and think their EBITDA was £100m only a couple of years ago (I will look it up later, if it gets questioned, for the exact figure). Saracens are losing £4-5m on turnover of £13m with a debt of £45m. Think Saracens are a different kettle of fish.

Even I can't defend that level of debt.

I think I read somewhere that the amount of administrative staff Saracens have is excessive compared to other clubs.

Looking at the figures - turnover £15m approx, 19m costs against - 4m loss.

Salaries cost - £9.81m

Where does the rest of the £9m go?

Surely there must be ways to cut this down.

Some of those may be the hidden costs, for which there was a settlement to stop querying whether they're salary or not. Then supplementary stuff, travels costs (to games and team building stuff). Is there interest on their debt?

HammerofThunor wrote:Some of those may be the hidden costs, for which there was a settlement to stop querying whether they're salary or not. Then supplementary stuff, travels costs (to games and team building stuff).  Is there interest on their debt?

The simple answer is yes and no

Some of their debt is tax etc, creditors and other expenses which shouldn't have interest as long as they are paid on time but the majority is inter-company loans which should have interest which Im sure is structured in a way to negate tax liabilities elsewhere though Im no tax expert.

Reading some of the statements they seem to be hoping they can generate revenue through events though given their location, close to central London which has a saturation of venues, it may be highly speculative

Saracen's accounts give limited information on the expenses brakdown and bugger all on the income breakdown.

All we know is that:

£9.8m spent on salaries incl Pension and NI
£0.4m payment to a Director
£0.6m Depreciation
£0.7m leasing costs
Small amounts to auditors, and accounted as amortisation.

In total this still leaves over £7.5m in costs. This will include things like business rates, purchases for club shops/bars etc, stadium overheads (heating, water etc), travel costs. then as has been mentioned there is the likelihood of loan repayments or inter company transfers.

Lastly we also have to consider the possibility of "non-salaried" payments to staff.

Compared to Leicester:

Income - Sarries £15.3m; Leicester £20.2m (Rugby Income £5.8m, PRL income £4.3m, Commecial Income £10m)

Salaries - Sarries £9.8m (151 Playing, coaching and Admin staff); Leicester £10.4m (198 Playing, coaching and Admin staff)

Other Expenses - Sarries £9.5m; Leicester £9.3m (£7.3m Ground & Match Expenses, £1.3m admin expenses, £0.7m depreciation).

The higher average salaries paid by Sarries can probably be accounted for by "london weighting".

One interesting thing is Saracens had a turnover of about £15M (reading on here). So did Gloucester (all I can find is that they increased turnover by 21.3% [link 1] and the year before they got £12M [link 2] which is £14.5M. And they made a profit. From their signings recently I would expect Gloucester are around the cap if not right on it (Afoa is supposed to be one of the best paid players in the premiership). So where is the extra £5M going? (as Beshocked said).

Link 1 [http://www.sportindustry.biz/news/gloucester-rugby-announces-fifth-year-profit]

Link 2 [http://www.gloucesterrugby.co.uk/news/10651.php#.Vqdu0JqLRaR]

Without any kind of breakdown in what the Income is, and only limited info on expenditure it is hard to tell.

TBH the accounts reek to high heaven.

They are poor, but they are held by a small group of businessman who are happy with the accounts and the auditor seems to think they are acceptable. Admittedly Arthur Anderson were a highly reputable firm who felt Enron had solid accounts that were fair and accurate representation of the company.

Saracens for me are quite the conundrum, they are spending a fortune on wages, yet they do not really have any world wide superstars. It's not as if they are like the french sides who are getting players like Dan Carter playing for them, and what they are doing seems to be getting the results on the pitch, so what are they doing with all that money ? 

Lets look at their squad:-

Schalk Brits Jamie George Jared Saunders Scott Spurling Richard Barrington Petrus du Plessis Juan Figallo Rhys Gill Kieran Longbottom Mako Vunipola Jim Hamilton Alistair Hargreaves Maro Itoje George Kruis Kieran Low Hayden Smith Kelly Brown Will Fraser Jacques Burger Will Fraser Matt Hankin Michael Rhodes Jackson Wray Billy Vunipola Samuela Vunisa Neil de Kock Ben Spencer Richard Wigglesworth Owen Farrell Charlie Hodgson Nils Mordt Brad Barritt Marcelo Bosch Tim Streather Duncan Taylor Nick Tompkins Chris Ashton Nathan Earle Mike Ellery Catalin Fercu Chris Wyles Alex Goode Baden Kerr Ben Ransom

There are no superstars in that squad, but they must be paying each player a fortune. Is it the fact that they just have a large squad, so that makes them more successful, yet they do not generate enough money to sustain such a large squad ?

Hazel Sapling wrote:They are poor, but they are held by a small group of businessman who are happy with the accounts and the auditor seems to think they are acceptable. Admittedly Arthur Anderson were a highly reputable firm who felt Enron had solid accounts that were fair and accurate representation of the company.

Enron hid all their debts through a maze of carefully constructed shell companies exploiting a loophole in US law. Arthur Anderson chose to ask very little questions because Enron paid them an eye watering amount of money to do various accounting but non-audit work which implied threats stated they'd move elsewhere should the audit side of the business ask too many questions. Audit practice has changed substantially since.

If Saracens are windows dressing (technical term for hiding losses and making things look better than they are) they are doing an appalling job of it. The company is not even a going concern and requires written statements from their shareholders stating that the source of the club's credit won't be withdrawn. They look as poor an investment as you could imagine. From that point of view the accounts seem fair.

The amount if information you have to provide to Companies House is not in any way extensive so it's not a surprise there's not much to go on in terms of breakdown in expenses etc.

Sarries are not hiding losses in their public accounts - just (and within their rights as a private limited company) obscuring the details of the causes of half their expenditure and the sources of their income.

LondonTiger wrote:Sarries are not hiding losses in their public accounts - just (and within their rights as a private limited company) obscuring the details of the causes of half their expenditure and the sources of their income.

Indeed their losses are huge, but are they accurate? These are just the public accounts, right? What do they really pay in salaries to their players? 40 mil is a big number for owners/stakeholders to absorb. What is the annual loss? Maybe I don't quite get the accounting, but something seems amiss to me. As just one example, why build a stadium guaranteed to perpetuate losses?

The annual loss is around £4 million a year. I reckon £7-8 million is unaccounted for and if Leicester are spending that much on matchday and ground expenses, it seems reasonable enough. Admittedly bigger stadium, but if Saracens are trying to host events, host a game at Wembley (or wherever it was) and have to pay London premiums for simple things it can add up.

As for Enron, I am more thinking of auditors not doing their job to be honest though you are right. Why list losses in that scenario? The club is not sustainable from the accounts published unless they significantly grow revenues or cut the playing budget.

doctor_grey wrote:

LondonTiger wrote:Sarries are not hiding losses in their public accounts - just (and within their rights as a private limited company) obscuring the details of the causes of half their expenditure and the sources of their income.

Indeed their losses are huge, but are they accurate?  These are just the public accounts, right? What do they really pay in salaries to their players?  40 mil is a big number for owners/stakeholders to absorb.  What is the annual loss?  Maybe I don't quite get the accounting, but something seems amiss to me.  As just one example, why build a stadium guaranteed to perpetuate losses?  

Losses have reduced since they moved grounds. The forty million has been invested over several years (since the new owners came in) it includes the cost of the new stadium etc.

Hazel, I'm not sure Tigers is a like for like comparison. Tigers stadium is the twice the size of Sarries. Parts of it at older and require more maintenance, it's located in the centre of a city which brings additional police costs etc and there's also substantial pitch costs all worked into getting the game to happen. A comparison to Falcons stadium costs would be much closer.

London is inherently more expensive (for almost everything) and they explicitly set out they are trying to bring events in for an additional business for events. Along with the odd game in Wembley, I imagine the expenses are closer to Leicester than Newcastle.

The AJ Bell stadium is a new build in Salford with roughly the same capacity, but they have other paying tenants (not disrespecting Shaftesbury & Barnet Harriers). Maybe Exeter x 1.1 (to account for London expenses) would be the happy medium.

I was thinking Falcons because of capacity and the plastic pitch. Similar in ground setup. True that the old London "tax" will have an effect on Sarries cost.

And now it seems that Sarries were used as a bargaining tool by Keith Earls to squeeze a 3-year contract out of the IRFU. Thrilled he's staying in Ireland

Lorddowlais

Saracens have been surprisingly good at getting good bargains and improving players. Look at the academy too.

Chris Wyles is not a household name but yet he's been a mainstay utility back for years for Saracens. Mr reliable. Plus he's available basically all season.

Taylor developed by Bedford, now looking to start for Scotland in the 6 nations.

Many of the SA signings have contributed well, the newest of them being Rhodes.

Even a high profile name like Bosch was picked up from Biarritz when they were struggling in the top 14, also was suffering from injuries.

Sarries know that rugby is about the overall squad.

brennomac It's only a bad thing to manipulate if it's the English doing the manipulating? No?

Earls would have been a nice luxury addition but he's not essential.

Need a replacement LH for Gill, should be straightforward to improve on him.


I have said this many a time. It is a hole in one's finances if you don't own your own stadium.

I haven't looked at the finances but let's say that Saracens have been losing money from 95 - since Nigel Wray took over - that's 41m in 20 years. I'll concede I don't know if that is correct but now that Saracens have an asset like a stadium they can start turning this round.

Having one's own stadium is crucial for numerous reasons - you can use it for conferences,weddings for additional revenue, it gives you a place to have your own shop where you can sell merchandise. Storage - useful for numerous things. It's good for branding and access.

I don't know the financial figures of renting out Vicarage Road but I am sure Saracens didn't play there for free, I am sure they didn't keep all the revenue for food/drink/merchandise sold.

I am sure there are areas where Saracens need to tighten up their spending too.

beshocked wrote:Saracens have been surprisingly good at getting good bargains and improving players. Look at the academy too.

Chris Wyles is not a household name but yet he's been a mainstay utility back for years for Saracens. Mr reliable. Plus he's available basically all season.

Taylor developed by Bedford, now looking to start for Scotland in the 6 nations.

Many of the SA signings have contributed well, the newest of them being Rhodes. 

Even a high profile name like Bosch was picked up from Biarritz when they were struggling in the top 14, also was suffering from injuries.

Sarries know that rugby is about the overall squad.

Yes I understand all the beshocked, but what I am trying to say is, they are not paying players 500K+ contracts like the French are, or to a lesser extent Bath. So is it just a case of having too many players than they can afford ? Or is the money going elsewhere ?