Saracens owner Wray in talks to cut stake after salary cap scandal

14 January 2021, 12:29 | Updated: 14 January 2021, 16:58

The long-standing owner of Saracens is in talks to reduce his controlling stake in the rugby union club as it seeks to rebuild in the wake of the salary cap scandal which triggered its relegation last year.

Sky News has learnt that Nigel Wray, the property tycoon who took full ownership of Saracens in 2018 but has had a 25-year association with the former domestic and European club champions, is in talks to dilute his shareholding.

Mr Wray is understood to be in discussions with a number of executives at MSD Capital, the private investment firm set up by computing tycoon Michael Dell.

These are thought to include John Phelan, MSD's co-founder and chief investment officer.

It is not thought that MSD itself is talking to Mr Wray about buying a stake in Saracens.

People close to the club cautioned on Thursday that there remained a strong chance that a deal would not go ahead, but that even if it did, Mr Wray and his family would remain significant long-term investors in it.

"The family is not looking to sell out - this is about a partnership which involves funding for the stadium's expansion, future coaching and player investment," said one Saracens insider.

Any deal would involve up to £40m of new investment in the club.

The talks with the MSD executives represent only one of a number of investment routes being considered, they added.

The current owner is also thought to be exploring an alternative plan which could involve selling a stake in Saracens to a syndicate of high net-worth supporters.

Mr Wray's daughter, Lucy, continues to run the club.

Saracens declined to comment.

Mr Wray first invested in the club in 1995, and his money helped to transform it into a European rugby powerhouse, boasting players such as the England captain Owen Farrell and international team-mate Maro Itoje.

The property tycoon regained full ownership in April 2018 after buying back a 50% stake which had been sold to Remgro, a South African company.

Mr Wray's ownership became mired in scandal in 2019, however, when it emerged the club had repeatedly breached Premiership Rugby's salary cap rules, infuriating disadvantaged rivals.

The side was relegated to the Championship after being fined £5m and deducted 35 Premiership points.

Its finances have been further depleted by the coronavirus pandemic's impact on elite sport, with Saracens' league season not due to get under way until March.

In a sign of returning corporate confidence in Saracens' efforts to rebuild its reputation, it confirmed last weekend that it had signed up the American owner of City Index to a record-breaking sponsorship deal.

Allianz, the German insurer, terminated its long-running association with the club after the emergence of the salary cap scandal.

Saracens has remained a shareholder in Premiership Rugby Limited despite its relegation.

Prior to the crisis, it had been one of the most successful sides in European club rugby, having won the European Champions Cup three times in the past five years and the Premiership five times in the last decade.

Like other elite leagues and sport governing bodies, Premiership Rugby, which is backed by the private equity firm CVC Capital Partners, has seen its financial assumptions hit by the pandemic.

There remains chronic uncertainty about the timing and status of myriad international sporting events this year, despite the widening distribution of several coronavirus vaccines around the world.

That uncertainty is driving an investment frenzy into elite sport, including in rugby.

Earlier this week, Sky News revealed that Silver Lake, the US-based buyout firm, was in advanced talks to take a stake in the New Zealand All Blacks' commercial rights arm.

A £365m deal for CVC Capital Partners to buy a stake in the Six Nations Championship is also close to being finalised.