Interview: Saracens FD Mitesh Velani

THERE was a time Saracens players had to go through the inauspicious, humbling and rather embarrassing process of removing plastic bags, crisp packets and dog mess from their home pitch in Enfield before matches. Despite boasting world-class stars, including South Africa’s World Cup-winning captain François Pienaar, Sarries were, for all intents and purposes, playing on a recreation ground.

Pienaar, just months before, had been part of that cathartic, unifying moment with the great Nelson Mandela as the pair lifted the Webb Ellis Cup at Ellis Park before 60,000 fans and 43 million South Africans. Litter-picking duty in Enfield presumably proved a sobering follow-up. That was 20 years ago.

It is remarkable, then, that today the newly-crowned Premiership champions owns its own stadium in North London, having purchased and rescued the old Barnet Copthall athletics ground. The £40m project, backed by private, wealthy investors, saw an entirely new stand constructed, existing stands purchased, and parking areas developed. For three years, the club’s COO, acting CEO and former FD Stefan Crouse tells Financial Director, Saracens was in the investment phase – no mean feat for a club with a turnover of £13m.

There was no need for any hard selling of the move to Barnet given the scarcity of viable stadium space in the capital, Crouse says, and so the board was keen to make the most of the opportunity.

“We invested in something great and we can take the club forward, and then you’ve got to start to take revenue from the investment,” he says. “That’s where we are now. We’ve settled in nicely.”

Understandably, in a sport yet to fully embrace the moneybags culture one sees regularly in Premier League football, this caused something of a stir, and led to more than a few tabloid headlines sounding the alarm over the club’s debt position. As it turns out, that £40m debt is internal to the club’s shareholders and so the panic implied in the tabloids’ tone is misplaced.

“The way it’s structured is that our shareholders put money into our holding company, and there’ll be rights issues to raise the equity,” Saracens’ newly appointed FD Mitesh Velani and Financial Director 35 under 35 entry explains. “We’re backed by private individuals and they put in a lot of money to get this asset up and running.”

The club, he says, is now at a “turning point” where it can write “a very good business plan” and move into a profit-making position. The fulcrum of that plan is harnessing match-day revenues through increased ticket sales – this year up 18% – food, beverages and non-matchday events which, happily for the club, continue through the off-season.

“I can only hope that we’ll get as much coverage when that happens as in the past for the losses we’ve made,” he says wryly.

The undertaking was, Velani says, very new for everyone at the club, none of whom had any stadium-related experience.

“It was a vey steep learning curve. No one was from a stadium background or had run a stadium before. It was about trying to understand the most efficient way of running a stadium, getting the best out of it, making sure you give a great match-day experience to your fans. It took us a year to understand how we should operate utilities, the cleaning. That was the toughest thing financially,” he explains.

Indeed, Velani says, it was balancing the playing side with establishing and maturing the newly opened-up traditional business side that made up the bulk of that first year.

New home

Allianz Park – as it is now called – boasts a 10,000 capacity with retractable seating at both ends to allow for athletics events, a state-of-the-art artificial pitch and corporate facilities. While geographically nearby, it is a world away from the old rec at Enfield, or the 18-year tenancy at Watford FC’s Vicarage Road, where the football club took precedence. And while Vicarage Road came to be thought of as a home of sorts for the club over that rather extended stint, the 2014 move back to London and Allianz Park has opened up many and varied revenue streams to which the club has hitherto never had access.

“When you look at the other clubs that are successful both financially and on the pitch, they all have their own home grounds,” says Velani. “Not only is it a fortress on match day, but it also opens up revenue streams that come out of your own asset. You’ve got banqueting, conferencing, weddings and bat mitzvahs. All this helps to fund the playing side of the business and balance the books, so it’s crucial to have your own ground.”

The impact has been substantial, nearly doubling the club’s turnover from £7.6m two years ago to around £13m today. As a tenant at Vicarage Road, Saracens lacked access to many of those sources of revenue, and while the club was relatively successful on the pitch and managed to attract a high standard of players, Velani and Crouse are convinced the move was key for the club’s financial health.

“You’re always a guest in someone else’s stadium,” notes Crouse. “You don’t have control over your own suppliers, and at Allianz Park we are and we can do good commercial agreements with them. We create a home for ourselves. In the hospitality areas, we control catering and quality. If we have a complaint from a guest, we can do something about it. Previously, we couldn’t.”

It’s proven attractive to world-class players, with no fewer than 25 current internationals from nine different national teams on the club’s books at the time of writing. England stars Owen Farrell, Billy and Mako Vunipola are all first-team regulars, while winger Chris Ashton’s form will surely have put him in the frame for a recall in time for the World Cup.

Salary cap

That’s no mean feat given the salary cap British clubs work under and the riches that lie across the channel in the rather opulent French league. The cap – which sees the very best players earning circa £350,000 per year – has introduced a more level playing field to the domestic competition, Velani says, despite the struggles of promoted teams such as London Welsh which astonishingly ended the season rock-bottom with a solitary point to its name.

“If you look at other sports – such as football – where there is no cap, things can get out of control quite quickly. It also has the effect of redistributing wealth and pushing it down to grass-roots rugby,” Velani explains. “The cons are that when you’re not playing in a level market Europe-wide and worldwide, you come into this issue where you can’t compete with France and other clubs in Europe.”

The issue, says Velani, is how ambitious you are. If you don’t have the backing of good shareholders, he notes, a club won’t be able to compete in Europe and will have to be content with focusing on domestic honours only. The only way for English clubs to harbour any realistic ambitions of claiming the European crown on a regular basis is for the cap to move upwards, he says. Indeed, the cap has proved to be an area of controversy given the talent available to Sarries, but both Crouse and Velani point out compliance with the cap is regularly audited, both by Premiership Rugby (PRL) and an independent body – currently by PwC, and previously by Saffery Champness.

There is an annual salary cap report to the PRL, with the club’s certification for the current year and the projected state of affairs for the following year detailed.

World class

Given the club’s emphasis on competing for top honours, harbouring a squad of world-class talent clearly has its benefits, but – with the Six Nations and World Cup fast approaching – it can, and does, become a double-edged sword as domestic fixtures continue while players are away with their national teams.

“We have six members of the English elite playing squad, and we’ll lose them for the autumn internationals and the Six Nations,” explains Velani. “The RFU will compensate us for that at about £190,000 per player. With the way the league works, our central distributions will be reduced if we have an over-average (ie, more than other Premiership sides) amount of players in the squad. The idea is you’re trying to take money away from the guys with more elite players and give it to those with fewer. It’s almost a kind of equaliser.”

As much as that softens the blow of losing key English players when international matches take place, no similar arrangement is in place with other national federations, meaning that when Schalk Brits and Neil de Kock are called up by South Africa, for example, Sarries simply have to make do.

“They obviously have to be insured,” Crouse says. “Squad depth is one of those things you have to plan in your recruitment, because it’s the same thing every year. A strong academy is very important, so you have the talent there when your senior guys are away. We’re lucky enough to have Charlie Hodgson who has been fantastic for us and for England, but is probably at a stage in his career where he won’t play for England again and can play for us week in, week out.”

Despite having the likes of Hodgson and potentially Ashton available to them, the World Cup will herald no small amount of disruption to the season, Velani admits.

“We’re still engaging with our fans and selling a 16-game season ticket incorporating a couple of friendlies into that, which we expect will work as normal,” he says. “The Rugby World Cup is a big one because we don’t really know how it will affect crowds. The idea will be that it might dampen crowds while it’s on, but you’re expecting a lot of interest in rugby in this country coming out of the World Cup.”

IN BLACK & WHITE

2015 – present Finance director – Saracens
2010 – 2015 Group financial controller – Saracens
2008 – 2010 Director – Moonlight Foods
2004 – 2007 Associate – Deloitte