Manchester City have been found guilty of “sham payments” and artificially inflating their revenue and reducing their costs by more than £900million ($1.19bn) in a damning verdict reached by an independent regulatory commission investigating more than 100 charges levied by the Premier League.
The Premier League confirmed on Tuesday that, as revealed by The Athletic on Friday, the club had been found guilty of almost all charges — including the most serious breaches of the league’s financial regulations — between 2009 and 2018.
After a regulatory process lasting almost two years, it is a devastating verdict, with the club’s hierarchy found guilty of “artificially inflating” its revenues in moves “clearly intended to circumvent” the Premier League’s financial regulations.
City were found to have overstated revenues by £855.2m and understated expenses by £66.2m by the commission.
The Manchester club, which has won eight Premier League titles since being bought by Sheikh Mansour bin Zayed bin Sultan Al Nahyan in 2008, has also been found guilty of multiple breaches of its “duties of cooperation and utmost good faith”.
It leaves the club facing severe sanctions, which are to be decided by at a further hearing of the commission, the Premier League said.
The league said City have the right to appeal the findings of the independent commission and has until Friday, October 2 to do so. City confirmed they would appeal in a statement published shortly after the Premier League’s announcement, “on the basis that the opinion contains clear material errors, of law, principle and fact, and is unsafe”.
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City said they were “disappointed and surprised by the opinion of the Premier League commission, that has been published today.
“The club is innocent of the accusations made by the Premier League and a comprehensive body of irrefutable evidence exists in support of all of its positions, relating to this case. The club will therefore be relentless, and where necessary proactive, in any and all appropriate regulatory and legal forums.”
Premier League chief executive Richard Masters claimed vindication of the decision to pursue a case against City for irregularities which were discovered by a Portuguese computer hacker and first revealed by German magazine Der Spiegel in 2018.
Masters added that “this case, and this decision, are the most significant in Premier League history. There are elements of the case that remain to be decided, including, importantly, what sanction must follow for these breaches.
“Now we have the commission’s decision, we are committed to moving swiftly through the remainder of the process, to provide certainty for the league, our clubs and fans.”
How City reacted
Analysis by Manchester City correspondent Sam Lee
Shortly after the Premier League and Manchester City released their statements relating to the independent commission’s findings, a video was sent to City staff aiming to reassure employees about the next steps.
It showed CEO Ferran Soriano insisting that the club had given ‘irrefutable evidence’ to the commission which proved that sponsorship income was paid entirely by the sponsors.
Soriano also vowed that the club would take all possible action to overturn the commission’s decision and appeared confident that they will be able to do so.
City were very strong in their statement and continue to stress that they have been wronged, though the details of the commission’s decision appear extremely damning and will surely bring the harshest of punishments.
City, clearly, will continue to fight this as far as possible and a messy saga looks set to continue.
‘Damning conclusions drawn about City hierarchy’
Analysis by senior football writer Oliver Kay
However damaging anyone imagined the commission’s verdict might be for City, the statement issued by the Premier League was so much more damning.
Not only has the club been found guilty of all but one among the more than 100 charges it faced, but the language used by the commission — “sham contracts”, “sham agreements”, “artificially inflate”, “misstated accounts”, “concealed”, “clearly intended to circumvent the Premier League rules”, “multiple breaches of its duties of cooperation and utmost good faith” — is devastating for the image of both the club and, significantly, its ownership in Abu Dhabi.
City are expected to appeal and sanctions will follow. Judging by the tone of the commission’s conclusions, it will recommend the severest penalties. Points deductions? Expulsion from the Premier League? Nothing will be off the table now.
So much of the public conversation since Friday, when The Athletic revealed the scale of City’s defeat at the hands of the commission, has focused on whether the club’s successes over the past 15 years might be expunged from the record books, whether some of those eight Premier League titles might be reallocated, and whether those clubs who have missed out might pursue compensation cases against City.
But the matter can now be seen to be more than just requiring a reappraisal of recent history.
The conclusions drawn about the City hierarchy are so damning not just in how, according to Masters, “the club systematically broke Premier League rules for nearly a decade” but also in how, in the words of the commission, the club committed “additional and perhaps more egregious acts of non-cooperation by making inaccurate, dishonest and/or misleading statements” during the arbitration process.
So much of this is pinned on “the club”. But the deceit and dishonesty are about individuals working for a club that is owned by Sheikh Mansour, the vice president and deputy prime minister of the United Arab Emirates, a powerful figure on the world stage. To be clear, there is no indication that Sheikh Mansour had any direct involvement in what City have been accused of, but whatever reflected glory this acquisition has brought to Abu Dhabi, the commission’s verdict has now brought the opposite for both the club and its ownership.
How does the appeal process work?
Analysis by managing editor Sian Harrison
City have until Friday to appeal against the decision, indicating the club was given the ruling on September 18, as Premier League rules allow 14 days to lodge a challenge.
According to the rules, either party may appeal to a fresh, three-member commission appointed by the league’s judicial panel. Any appeal hearing — which is a review of the original verdict and not a full rehearing — is limited to five days and must be completed within 12 weeks of the appeal being lodged, with a decision due no later than 30 days after the hearing’s conclusion.
After the appeal process has been exhausted, either party may also consider an arbitration challenge to a further panel, but these can only be made on limited grounds. Any further challenge could be brought in the commercial division of the High Court, but only against an arbitration decision.
What the findings tell us about City’s finances
Analysis by The Athletic’s Chris Weatherspoon
City’s total commercial revenues over the period in question, 2009-10 to 2017-18, were £1.335billion. Of that, per the independent commission’s report, £949.9m was attributable to Abu-Dhabi based sponsors, or 71 per cent.
Within that £949.9m, the commission found that just £119.3m was paid by those sponsors with the remaining £830.7m paid by City owners, ADUG.
Stripping out ADUG’s payments, but leaving the amounts actually paid by those sponsors, would have left City’s commercial revenues over the period at £398.7m. That figure would have been the sixth-most in England across that time: around £200m higher than seventh-best Aston Villa, but over £100m behind the next-lowest of the ‘Big Six’ clubs, Tottenham Hotspur.
City were adjudged to have overstated revenues in the period by £855.2m: £830.7m in disguised sponsorship payments from ADUG, and a further £24.5m from Fordham, a purported third party which the commission described as “little more than a front for ADUG”.
The size of that overstatement is staggering on its own and even more so in context. At £855.2m, City’s overstated revenues were more than the total revenues in the same period of every English football club bar eight: the other ‘Big Six’ teams, Everton, West Ham and Newcastle United.
Furthermore, City were found to have misstated finances by £921.4m over nine seasons, a mix of £855.2m in revenue overstatements and £66.2m in expenditure understatements, whereby ADUG covered costs that went unreported in City’s accounts.
City received £1.287bn in correctly reported funding from ADUG between the 2008 takeover and the end of the 2017-18 season but, at least in the club’s accounts, owner funding largely ceased after 2014-15.
The commission report makes clear that, in reality, huge sums kept flowing. Combined, across the previously reported equity and the disguised sponsorship and other payments detailed today, City received £2.209bn in owner funding during their first 10 years under Abu Dhabi ownership.