Man City v the Premier League: A Verdict?
The Athletic has reported that the Independent Commission tasked with determining the Premier League's case against Manchester City FC (City) may have found the club liable in relation to 114 of the 115 alleged breaches. At the time of writing, no official decision has been published and the reports remain unconfirmed.
We are still waiting on official confirmation of this, but crucially the Premier League does not appear to have refuted the revelations with any real gusto. If true, then this is perhaps the most significant regulatory issue in English sport for decades, if not ever.
Background
The investigation was initially triggered following the explosive revelations following the publication by Der Spiegel of the Football Leaks hacks. The Premier League announced on 6 February 2023, in a statement that caught many off guard, that it referred a number of alleged rule breaches by City to a commission for further adjudication. The charges relate to nine seasons from 2009/10 to 2017/18.
Timeline (taken from BBC Sport website)
November 2018: Football Leaks allegations emerge with Der Spiegel publishing claims Manchester City breached financial fair play rules.
March 2019: UEFA launches a formal investigation off the back of Der Spiegel's findings.
May 2019: City criticise the investigation and launch an appeal process.
November 2019: The Court of Arbitration for Sport (CAS) deems City's appeal inadmissible.
February 2020: UEFA announces a two-year ban for City from European competitions and a €30m fine.
July 2020: City's European ban is overturned after an appeal to CAS
July 2021: City lose a jurisdiction ruling that allows the media to report the Premier League is continuing to investigate the champions for alleged financial breaches.
April 2022: Der Spiegel publishes a fresh report claiming the Premier League has been investigating the club for three years, providing detailed claims.
February 2023: The Premier League charges City with 115 financial breaches.
September 2024: The start of a 10-week hearing between the Premier League and City on the 115 charges.
September 2026: Reports emerge that a verdict has been reached, with sources telling the BBC that City have been found guilty of breaking the majority of the charges.
The Charges
The 115 alleged breaches fall into 5 individual groups:
Group 1 (50 breaches) – Acting in Good Faith
These concern the obligation to provide “in the utmost good faith”, accurate financial information that provides a true and fair view of City’s finances. Particular importance is attached to the accurate reporting of revenue (especially sponsorship revenue) which City received, in addition to operating costs and related parties, or as the Premier League Handbook uses the ‘Associated Party Transaction’. The Premier League Handbook defines this as means, in respect of any Club, a Transaction of £500,000 or more, that is, whether directly or indirectly, between:
a Club and an Associated Party;
a Player registered to the Club and an Associated Party of that Club; or
a Manager or Senior Official of the Club and an Associated Party of that Club.
The allegations here concern that City and their sponsors manipulated contracts to circumvent Premier League rules. Der Spiegel says the club allegedly misled regulators by not revealing they had directed money to the club from Abu Dhabi owner Sheikh Mansour via sponsors linked to him and artificially inflated the value of their commercial income to help meet financial sustainability rules requiring clubs to break even.
Group 2 (24 breaches) – Player and Manager Remuneration
This relates to providing details of manager and player remuneration. The Premier League allege that breaches of the Rules requiring a member club to provide them with full details of any manager and player remuneration in its relevant contracts.
Particularly, the Rules require any employment contract a club has with a manager or player to be evidenced in writing and ensure that it is properly registered with the Premier League. It must also include the standard clauses set out in the Premier League Handbook. It is alleged that City has breached both Rules.
Group 3 (5 breaches) – UEFA Financial Fair Regulations
The Premier League must ensure that its members (the clubs) comply with all regulations set out by UEFA, specifically, the regulations concerning Financial Fair Play (“FFP”). In 2020, UEFA imposed a ban on City (a 2-year European Competition ban) and a £30 million fine having found the Club guilty of breaching club Licensing and Financial Fair Play Regulations (further details can be found in my previous blog on the subject).
However, this was overturned by CAS on appeal, which ruled that some of the alleged offences were timed barred and City only received a €10 million fine.
Unfortunately, the Premier League has no such rules on limitation (meaning how long you have to bring a charge) so do not have the same time pressure and, as such, this would not be a defence that City can rely on to fight the charges. The alleged breaches are said to have taken place during the seasons 2013/14 – 2017/18.
Group 4 (6 breaches) – Profitability and Sustainability Rules
The Premier League has alleged that City has breached rules related to its Profitability and Sustainability regulations throughout 2015 to 2018. The Premier League requires clubs to submit annual accounts to the Premier League before 1st March each season along with copies of its director’s report and auditor’s report.
Group 5 (30 breaches) – Cooperation with the Premier League
These alleged breaches concern the period from the 2018/19 season to the present season (2022/23). Further, it is alleged that City breached the Rules requiring member clubs to fully cooperate with and assist the Premier League with its investigations, including, “by providing documents and information to the Premier League in the utmost good faith”. In brief, it is alleged that City have been actively engaging in conduct with the intent to circumnavigate the Rules.
Potential Sanctions
Unlimited Fine
Rule W.51 of the Premier League Handbook states that the Commission may impose a fine, unlimited in amount.
Suspension
Moreover, where the respondent is a club, the Premier League can suspend it from playing any league matches. However, this is improbable given the logistics of such suspension, nevertheless, it is an option open to the Commission.
Points Deduction
The Commission could deduct points from City. However, it is not difficult to foresee the problems arising from such a move, particularly, when looking at which season this could and would be applied to, meaning that any points deduction could be applied immediately, or applied to future seasons.
There is some sort of precedent in this area in the case of Juventus who were recently handed a 15-point deduction as a result of breaching Italian regulations. However, the value of this comparison is limited given the different regulatory framework and governing body.
Expulsion
The Premier League could also expel City from the league. It can only be assumed that this is only reserved for exceptional circumstances. However, it is not inconceivable in the event that it is found proven that City breached all or most of the rules it stands accused of.
Any order it thinks fit
The Rules permit the Commission to impose any such sanction that it sees fit in the circumstances. This could include, for example, automatic relegation, a transfer ban, or a combination of both.
It is also open to the Commission to take retrospective action whereby it decides to strip the Club of any trophies won throughout seasons where the breaches occurred. Whether the Commission possesses an express power to retrospectively alter competition outcomes remains a complex legal question and would likely be subject to further challenge
Conclusion
There has been much commentary on the subject, but from a legal perspective, the time taken to get to this point is somewhat extraordinary, but this could perhaps be explained by the sheer number of charges levelled against City, and the Independent Commission having to make judgments on each of the 115 charges individually.
Comparisons have inevitably been made with the 74 charges that Chelsea admitted and accepted regulatory responsibility for earlier this year for financial irregularities relating to off the books payments to agents (more on that here). But there are important differences between the two cases despite some fundamental alignments between them in the fact that the clubs engaged in aggressive regulatory arbitrage to boost financial investment into the team as a way of getting around the financial sustainability rules. Chelsea self-reported their breaches, actively engaged with the investigation and adjudication process, and pleaded guilty to the charges against them. That undoubtedly played into the relatively lenient fine imposed upon them by the FA.
In comparison, City have adopted a robust and highly adversarial approach to challenging the allegations and aspects of the Premier League's regulatory framework. They have engaged in extensive litigation with the Premier League regarding the validity of the Associated Party Rules, the arbitration process, and have been reported to have been less than forthcoming with providing documentary evidence to the Premier League. A fact that has resulted in a significant proportion of the charges.
This is highly likely to be factored into any sanction imposed upon them, as a general principle of this aspect of the process is that a defendant party will get credit for pleading guilty at an early stage, and cooperating in an open and transparent way with an investigative body. Not doing so, may risk a more punitive and harsher sanction being imposed.
However, this is highly unlikely to be the end of the story. If what has been reported is true, then it would be astonishing if City did not appeal the verdicts reported to have been handed down. So you can expect there to be another season in this seemingly endless drama.
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