If last Friday’s announcement that Manchester City had been found guilty of violating financial rules was a bombshell, then events of this week have gone fully nuclear.
“Sham” Sponsorships
The independent commission charged with investigating City published a 40 page report outlining the extent of the club’s breaches. And it’s not pretty. The report states that from 2009 through June of 2018, Manchester City overstated its sponsorship revenue by a grand total of around $1.08 billion-with-a-B (£830.69m to be exact).
This was no mere accounting error. The investigation commission summarized: “Each of the Abu Dhabi sponsorship agreements was a sham.” The word “sham” appears multiple times within the document, and it is precisely the size and persistence of these “shams” that make the verdict so damning.
“Disguised Funding”
In the commission’s own words, City crafted a “Disguised Funding Scheme” (DFS) to circumvent Premier League financial regulations. The commission wrote: “The club would enter into sponsorship agreements with Abu Dhabi sponsors which contained substantial [fees] at well above fair market value. However, the sponsor would not be liable to pay the recorded sponsorship fee, and would not do so.”
So who paid the difference between the agreed price and the actual price? An entity called the Abu Dhabi United Group (ADUG). Or more plainly, the club’s owners. This matters because in 2009 and through the present day, owners have been prohibited from pumping money into their own clubs. The entire DFS was constructed to “conceal from third parties the true extent of the equity contributions in fact being made into the club by ADUG.”
Below is a graphic that shows just how massive this scheme was. For clarity “base sum” and “tagged sums” are words from the commission.
In Short: Manchester City Cheated
The commission identified four separate rules violations.
- They inflated their revenue, enabling them to spend more money for player recruitment.
- They then lied to the Premier League about being within financial fair play guidelines.
- They also lied to UEFA about the same.
- Lastly, the club “made concerted efforts to stop and frustrate the Premier League investigation” into the violations above.
There’s also a fifth charge relating to improper payments to players and managers, but the sum in this charge (less than $20M) is peanuts compared to the total of the DFS.
Tainted Record
Let’s not forget that during this nine year stretch Manchester City won three Premier League titles, a FA Cup, three EFL Cups and two FA Community Shield trophies. They also qualified for the UEFA Champions League for seven consecutive seasons between 2011 and 2018. Critics will point out that success would not have been possible without the spending, and they have a point.
Complete Denial from the Club
Manchester City, for their part, deny any wrongdoing. City’s chief executive Ferran Soriano released a video which said: “Our lawyers will now file an appeal that sets out that the opinion contains clear material errors of law, principle and fact and it is unsafe.” They have until Friday to file that appeal.
Soriano continued: “Remember we have been here before. In 2020 we were also wrongly ruled against for many of the same issues. We appealed to an independent body in CAS (Court for Arbitration for Sport) and we won.” He’s not wrong, but those accusations came from UEFA. The commission charges are not subject to review by CAS. Any decision made here after an appeal will be final.
