Following an eight-year saga expected to run for much longer, the commission found that, between 2009 and 2018, City:
Arranged “sham” contracts with a number of commercial partners and similar agreements with othersFiled misstated accounts and concealed the true state of their finances from auditors and football regulatorsWere significantly in breach of both the Premier League’s and Uefa’s spending limitsCommitted multiple breaches of their duties of co-operation and utmost good faith towards the leagueWitnesses called on behalf of the club gave evidence “that they knew to be untrue and so had been dishonest”
City, it was found, realised in 2009 that closing the kind of deals they needed to increase revenue was “more challenging” than expected and the only way forward was for their owners, ADUG, to “provide very significant funds by way of equity contribution”.
The club were fearful that their losses for 2009/10 would be a record-breaking £140m for one season alone. Breaking that record – set by Chelsea – was something the club were “adamant” they did not want to do.
In early 2010, the club devised a scheme whereby sponsors would pay a “base sum” and ADUG – City’s owners – would pay a “tagged sum”, despite the base sum being the only true revenue. The recorded sponsorship fee would be the total of them both.
The Premier League has published a redacted 40-page “core decision” in which the commission addressed the length of time it had taken to reach a verdict.
The three-strong panel, the names of which were not disclosed, wrote: “It has taken us much longer than we would have wished, and much longer than we had anticipated would be the case when the hearing concluded, to produce our decision. That is regrettable.
“However, we were fortunate to have available to us throughout the period in which our decision has been being prepared not only all of the documents that were used at the hearing but also (a) verbatim transcripts of the evidence given by each witness and expert at the hearing. Those transcripts ran to approximately 7,000 pages, and (b) extremely detailed written submissions from the parties (that they had supplemented orally over four days at the end of the hearing) on the evidence and each of the numerous issues that we were tasked with determining in the proceedings.”
Page 19 of the report says that an individual – name redacted – did not know about the disguised funding scheme operated by City. The identity of that individual, whose reputation is being protected without them being named, will be a source of some intrigue for years to come.
City’s lawyers claimed that the ‘tagged sums’ – the top-up commercial revenue from ADUG – was simply a loan by the Abu Dhabi government on liabilities on sponsorship fees. The commission rejected that argument.
‘Sham’ commercial deals
The Premier League added in a statement: “The independent commission found City arranged ‘sham’ commercial deals with a number of its sponsors during the period, which were part of a disguised funding scheme, whereby those companies were only required to pay a portion of the relevant sponsorship fees.
“The remainder was funded by Abu Dhabi United Group Investment & Development Ltd (ADUG), which owned the club.
“As part of the scheme, further ‘sham’ arrangements, funded by ADUG, were entered into to enable the club to record lower operating expenses than it actually incurred, as well as a ‘sham’ circular arrangement with Fordham, an entity that purchased the club’s players’ image rights, that was funded by ADUG.
“The purpose of these schemes was found to have been to artificially inflate the club’s revenues, and reduce its costs, by more than £900m during the affected period, to appear to comply with financial rules. The consequence of this, as the commission found, was that the club filed misstated accounts and concealed the true state of its finances from its auditors and football regulators. The commission concluded that ‘by its conduct the club clearly intended to circumvent the PL rules’.
“As a result, Manchester City failed to accurately report its income and expenditure for the purposes of the Premier League’s Profitability and Sustainability Rules and Uefa’s Club Licensing and Financial Fair Play Rules. The Commission found that, had all of the relevant agreements been reported accurately in the club’s accounts, it would have been in breach of both the League’s and Uefa’s spending limits by a very substantial amount.
“In addition, during the course of the four-year investigation conducted by the Premier League, the club committed multiple breaches of its duties of co-operation and utmost good faith towards the league. The commission concluded that the club had ‘made concerted efforts to stop and frustrate the PL investigation’.”
Premier League: ‘City broke rules for a decade’
Richard Masters, the Premier League chief executive said: “The core decision establishes the facts of what happened at Manchester City during this period. It details how the club systematically broke Premier League Rules for nearly a decade.
“It also vindicates the Premier League’s decision to pursue this case against Manchester City. While the process to date has been both long and difficult, the League has remained determined that the facts be established independently.
“It is a key responsibility of the Premier League to ensure that the Rules, approved by the clubs themselves, are upheld to protect the integrity of the competition. It is paramount that the League remains competitive and fair for all clubs and for the fans. We take that role extremely seriously.
“This disciplinary 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.”
Manchester City: ‘The club is innocent’
City said in a statement: “Manchester City FC is both 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.
“The Premier League process remains ongoing, with significant elements uncompleted. Manchester City will now pursue the appeal avenues open to it, on the basis that the opinion contains clear material errors, of law, principle and fact, and is unsafe.
“The club has diligently respected due process for eight years on the basis that the Premier League Board and executive would behave as an independent, impartial and fair-minded regulator, free from partisan influence.
“The club is obviously restricted in what it can say further until all future proceedings are complete.”