Manchester City Receives a Red Card for Financial Breaches

Photo credit to Wikipedia.

On Feb. 6, the Premier League announced that it has charged Manchester City with over 100 counts of financial wrongdoing and breaches of the league’s rules. These charges date back to 2008 when Sheikh Mansour bin Zayed Al Nahyan of Abu Dhabi’s royal family bought the club. Since his time as owner, Manchester City has won six Premier League titles, two FA Cups, six English League Cups, and has spent an estimated $1.8 billion on players.

To sum up the charges, the football club is accused of providing inaccurate financial information that concealed the true view of their financial position, in particular with respect to their revenue and operating costs from 2009-2018. This includes providing inaccurate information and details of manager remuneration while Roberto Mancini managed the team from 2009-2013. 

Through stolen and hacked documents released in the German magazine Der Spiegel in 2018, it was revealed that Mancini had been making an extra $1.75 million a year through the act of consulting an Abu Dhabi football club. The Abu Dhabi United Group, the holding company that controls Manchester City, would circulate the money to the Abu Dhabi football club which would then be paid to Mancini through an offshore company. 

Other leaked documents showed that the club inflated the value of sponsorship deals with firms tied to the team’s owners in Abu Dhabi. One of these many documents showed that $63 million of the club’s $73 million sponsorship deal with Etihad Airways was coming directly from the owners’ pockets, leaving only $10 million coming from the airline company. This allowed City to get around UEFA’s, and later the Premier League’s, financial fair play (FFP) regulations, which entail that respective clubs cannot spend more money than they earn. 

Associate Professor of accounting Carl Hammond provided insight as to why the FFP regulations were established in the first place. 

“The golden rule of football is that whoever has more money has the advantage,” he said. “People with lots of money started to invest in football clubs because they saw the benefits that came from it.” 

Hammond referred to Roman Abromovich, a Russian oligarch, who purchased Chelsea in 2003 and transformed the team into a 21st century powerhouse. Under his ownership, Chelsea won five Premier League titles, five FA cups and two Champions League titles. 

“Abromovich completely changed the way businessmen saw football,” Hammond said. “When people started to see the success, they wanted in too.” 

Many invested in small and historically underperforming clubs because of the affordable price tag attached to them, Manchester City being one of them. 

UEFA established the FFP rules following the 2008 global financial crisis because it feared the clubs could go out of business due to rising player wages. Critics, on the other hand, believed that these regulations were used to halt emerging clubs from accelerating and taking advantage of their owners’ deep pockets. 

With these clubs now forced to only spend as much as they earned through sponsorships, they could not achieve the hardware as quickly as Abromvich’s Chelsea team was able to. This resulted in many clubs finding ways to get around the FFP rules to achieve glory, which Manchester City is now being accused of by the Premier League.

The rest of the charges consist of failures to comply with UEFA regulations from 2013-2018, the Premier League’s profitability and sustainability rules from 2015-2018 and not cooperating with the league in its investigations from 2018 to the present day.

James Wicks, a film studies professor and avid Arsenal supporter, was surprised to see these charges come to light again. 

“I thought the previous investigation of Manchester City, and then their subsequent successful appeal to the Court of Arbitration over their Champions League ban, had concluded all investigations into alleged wrongdoing,” said Wicks. 

Hammond was also surprised to see these charges reemerge. 

“It’s interesting that the Premier League is charging them over these issues that UEFA wasn’t able to follow through with,” said Hammond. “UEFA has some of the best lawyers in Europe and they weren’t able to convict Manchester City of any wrongdoing. It’s surprising that the Premier League is trying to do the same thing without the strength that UEFA had.”

 Manchester City was originally banned from the Champions League in 2020 by UEFA for breaching spending rules and not cooperating with UEFA investigators, but the decision was overturned in an appeal deal with the Court of Arbitration of Sport (CAS) due to excluded evidence because of time-barrage and some unproven UEFA evidence. 

The Premier League is now investigating this issue, as it is the third count in the list of charges, and the Premier League is able to fully dive into the evidence because its court system does not have a time-barrage. 

The penalties of these charges are severe if Manchester City is found guilty. The options include large fines, point reductions and even expulsion from the Premier League. Wicks hopes to see that these charges are followed through. 

“I think they should be relegated,” said Wicks. “I would not have a problem with City being dropped to 20th place and prevented from playing all of their following matches this season.” 

According to SkySports, when asked by reporters what he would do if City was found guilty, manager Pep Guardiola said, “The day after, I will not be here.” 

The future of the club hangs in the balance of an independent commission who will decide the verdict in private. Once a decision is made, an appeal by City can be made to a separate appeals body within the League. Nonetheless, this is the most significant financial scandal in the history of the Premier League and could potentially create a snowball effect in which other clubs could face the same charges and consequences if Manchester City is found guilty. 

Written By: Christopher Broze