What Manchester City is accused of
Since the appointment of Josep Guardiola, Manchester City have dominated English football. The team has won six championships in the last seven years, losing the title only once to Liverpool. The team has been able to win thanks not only to the genius of the Spanish coach, but also to the work of the owners.
In 2008, the club was acquired by City Football Group, a company owned by Arab billionaire Sheikh Mansour. The owners help Guardiola by spending serious money to strengthen the team: since 2016, the “citizens” spent €1.51 billion on players. Only Chelsea can compete with City in modern football in terms of spending, which after its sale to a consortium led by American investor Todd Boehly in 2022 paid for newcomers more than €1 billion.
However, huge spending may be one of the reasons not only for the club’s success, but also for sanctions against it. In February 2023, the EPL presented Manchester City have been formally charged with breaching the league’s financial rules. The document contains 115 charges in total. However, the investigation had been opened long before that.
City’s finances were at the centre of controversy in 2018 after the publication of a joint investigations German publication Der Spiegel and the Football Leaks project. The journalists published hundreds of documents, among which were many details of the financial life of the Manchester club. The “leak” also included private correspondence between football functionaries, which revealed unpleasant details about the club’s work.
In the EPL started investigation after comparing City’s financial statements, which the club sends to the league each year, with published documents. The process took five long years, but that work translated into 115 charges. The claims against the team are as follows:
- From 2009 to 2018, City provided the league with inaccurate information about its sponsorship and operating income;
- From 2010 to 2016, the club provided false information about the salaries of the coaching staff and players;
- From 2013 to 2015 and in 2018, the club breached the Premier League’s financial licensing rules;
- From 2015 to 2018, Manchester City violated the Premier League’s financial sustainability and development rules.
In simple terms, the “citizens” were accused of fraud with their financial statements. First of all, this is connected with sponsorship contracts. According to data Football Leaks, the club came up with a scheme to inflate the cost of sponsorship deals. For example, in 2015, City received €67.5 million from Etihad Airways. However, the actual amount of the advertising contract was almost 10 times less. According to the investigation, shortly after the payment, the airline received €59.5 million from one of Sheikh Mansour’s companies, thereby compensating for the inflated contract.
Such deals were made regularly until 2018 and each time were linked to companies and firms that Mansour “compensated” for advertising costs. This allowed the club to fit into the financial framework of the Premier League and the Union of European Football Associations (UEFA) on paper, which allowed it to spend large sums on newcomers.
It was also found that City had defrauded the league by under-reporting the actual wages of players and coaches, and paying some of the money indirectly. The combination of these breaches led the Premier League to conclude that the club failed to meet its “sustainability” rule, which states that Premier League teams cannot show losses of more than £105 million over a three-year period.
Separately, in its statement, the Premier League notedthat Manchester City refused to cooperate and failed to provide the league with the documents requested during the investigation.
The team responded by filing a lawsuit against the Premier League
The Citizens have chosen an aggressive approach to the allegations. Not only did the club fail to cooperate with the league during the investigation, but they also went on the offensive themselves. In early June 2024, the team submitted sued the league over rules that prohibit deals with companies linked to football club owners without additional approval.
In England, this rule was changed in 2021 amid the acquisition of Newcastle by new owners from Saudi Arabia. At that time, the league changed the financial regulations, obliging clubs to send for additional verification every sponsorship contract with companies that have a direct or indirect connection with the immediate owners of the team. If the league considers that the contract amount does not correspond to market realities, then it is prohibited from being taken into account when observing financial fair play.
British press reportsthat the rule had affected four City deals, resulting in lower sums being written into the contracts. The Citizens have sent the league a 165-page document outlining the flaws in the rule, saying that sponsors should be able to decide for themselves how much they are willing to pay football clubs in advertising deals.
Manchester City claimsthat the restrictions have led to expenses arising from delays in sponsorship deals and even a number of companies refusing to accept advertising contracts. According to the club, this has forced them to raise ticket prices and cut spending on academy development in order to meet financial regulations.
“If the rule continues, we will see the consequences of this decision within a year. You will no longer see the level of the English Premier League that you are used to. It will be harder for teams to fit into the framework and sign quality players. The English league has managed to get to the top due to its maneuverability. Previously, clubs were allowed to do everything they could, and now their wings are clipped,” explained Manchester City chairman Khaldoon Al Mubarak.
City’s demands go beyond just a rule overhaul. The club is also seeking compensation for the damages it has suffered since 2021 due to the league’s new requirements.
City has experience of winning in court
Decision on club’s lawsuit against league over sponsorship contract rule expected in early September. Once it is announced, the next trial will begin – an independent commission will consider all 115 points of the Premier League’s accusation against City over the course of 10 weeks. In this case, a verdict should be handed down in early 2025. Both cases should be considered together, since none of the experts interviewed on the topic believes that the league will win in one case and the football club in the other.
These cases will not be the first for Manchester City in recent years. The investigation by Der Spiegel and Football Leaks attracted the attention of UEFA, which opened its own investigation. In February 2020, the Union made its decision and removed The English club was banned from participating in European competitions for two years for violating financial fair play rules, and was also fined €30 million. The Citizens did not agree and went to challenge the punishment in the Court of Arbitration for Sport (CAS). And here is where the fun begins.
The club managed to achieve a significant reduction in punishment. CAS cancelled a two-year ban and reduced the fine to €10 million. The court found that most of Manchester City’s alleged breaches had not been proven and that the statute of limitations had expired for some of them.
However, a similar scenario cannot be repeated in England. The English Premier League has no such time limit, so it will not be possible to mitigate the sentence due to the expiration of the statute of limitations. The case of 115 violations will be considered by an independent commission of three people, each of whom will have no connection with any of the 20 clubs in the league or the management of the Premier League. The names of the commission members have not yet been published, but in September everything will be known.
The difference between the club’s dealings with UEFA and the Premier League is also in the information that can be used to reach a verdict. Football economics expert Kieran Maguire tells Sky Sports toldthat the Union cannot use data obtained from illegal sources, which is what the documents and correspondence published by Football Leaks are. However, the rules of the Premier League allow relying on any information, and the source of its appearance does not matter.
The Financial Times published a large report in August material on City’s lawsuit against the Premier League over sponsorship deals. The article cites predictions from three sports lawyers, all of whom agree that the verdict will be in the league’s favour and that the rules for assessing sponsorship deals will not be revised.
This forecast may reassure the owners of other English clubs. The article quotes one of the owners of an EPL club from the second ten of the table. The functionary shares fearsthat the theoretical abolition of the rule would lead to “clubs like Manchester City and Newcastle, which are sponsored by entire governments, inflating their sponsorship contracts and throwing money around in the transfer market.” According to the owner, this would lead to a sharp rise in player prices, which would have the effect of widening the gap between rich and poor clubs.
The League is out for blood
The subsequent case between the Manchester club and the league over 115 violations has many more possible outcomes. The Premier League regulations do not contain clear penalties for the violations City are accused of. However, the rules do set out possible measures if the club is found guilty. There are three possible penalties: a fine, a points deduction and expulsion from the English Premier League. The sanctions can overlap. For example, a points deduction could be accompanied by a fine.
Sources of the British portal The Athletic predict two possible scenarios for City if an independent commission finds them guilty.
“The collective opinion that I have heard from several Premier League team managers is that Manchester City will most likely be docked around 70-80 points. This will inevitably lead to their relegation to the Championship. I have also heard information that the punishment could be spread out over several years – there have already been such examples in British rugby. Then, over the course of several years, the club will be docked 20-30 points. This will not allow them to be relegated, but will deprive them of the opportunity to play in the Champions League. None of my colleagues believe in a peace agreement, City have already burned all bridges for this with their counterclaim,” the owner of the Premier League club, who also wished to remain anonymous, told The Athletic.
Former Everton CEO Keith Wyness also shared forecast for the City case. According to him, the Citizens have no chance of counting on a positive outcome. The functionary can tell more than others about the violations of the league’s financial rules, since Liverpool’s fellow countrymen also suffered from similar violations.
The Premier League has already deducted points from clubs due to financial irregularities
Last season the league took off points from two clubs at once for breaching the rules of financial stability and development. After all the appeals and protests, Everton were docked 8 points, and Nottingham Forest 4 points. The former exceeded the loss limit by £19.5 million over a three-year period, the latter by £35 million. In both cases, the Premier League brought several charges against the clubs, but all of them were related to breaching the rules of financial stability.
Manchester City have many more charges against them, which could lead to a much harsher punishment.
“The club is in grave danger. City could face punishment, including expulsion from the Premier League, if even a small part of these 115 charges are proven. The situation is made worse by the fact that the club has not cooperated and provided evidence of its innocence,” considers former City financial analyst Stefan Borson.
A sports lawyer who advised Everton and Nottingham during their Premier League cases is of a similar opinion. In an interview with The Athletic, the specialist claimsthat the punishments of these clubs provide a clear guideline for how City’s case will develop.
“In the case of the Citizens, there are no mitigating factors that could help the club. In the most favorable outcome, Manchester City will be issued an unprecedented fine in the history of football. But I would expect a deduction of points in the region of 30 points,” the lawyer assessed the situation.
The matter will not end with the independent commission’s verdict in early 2025. Lawyers commenting on the City case are confident that the club will appeal the punishment. Moreover, the verdict could lead to a whole chain of subsequent proceedings. The Times sources they reportthat England’s top clubs are considering suing the Manchester club if they are found guilty. Other big clubs in the league will be seeking compensation for not winning titles and losing European revenue during City’s dominance of the Premier League.
2024-08-21 07:18:42