The Premier League (PL) recently announced it has referred a number of alleged breaches of competition rules by Manchester City Football Club (“City”) covering a 14 years period since 2009, to an independent commission (“Commission”). Specifically, the PL has charged City with alleged breaches (“Charges”) of 115 of its financial rules (the “Rules”) after a four-year investigation.
Background
The investigation was initially triggered following the explosive revelations following the publication by Der Spiegel of the Football Leaks hacks. The PL 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.
This post looks at the Charges against City and the potential sanctions that City could face if the Commission find against them, but we will make no judgment regarding City’s guilt or innocence.
Why Now?
The timing of the charges was a surprise to many, but some industry observers believe that the looming presence of the proposed Independent Regulator for English Football (IREF) is a significant driving force behind the announcement of the charges.
The introduction of IREF has been proposed as a method of bringing in a more coordinated and independent method of regulating the game in England and Wales, due to the fractured nature of regulation, and the perceived failures of the governing bodies to effectively govern and enforce regulations, particularly in relation to financial stability. The announcement of enforcement action is believed by many to be an attempt by the PL to show that it is capable of keeping its own house in order.
At the date of publication, some news outlets are reporting that in their rush to announce, they made several errors in reference to the rules that were broken and had to amend their statement to include reference to the correct rules.
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. There is distinct importance on the reporting of revenue (especially sponsorship revenue) which City received, in addition to operating costs and related parties, or as the PL Handbook uses the ‘Associated Party Transaction’. The PL 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) a Club and an Associated Party;
(b) a Player registered to the Club and an Associated Party of that Club; or
(c) 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 PL 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 PL 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 PL. It must also include the standard clauses set out in the PL Handbook. It is alleged that City has breached both Rules.
Group 3 (5 breaches) – UEFA Financial Fair Regulations
The PL 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 PL 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
The PL has alleged that City has breached rules related to its Profitability and Sustainability regulations throughout 2015 to 2018. The PL requires clubs to submit annual accounts to the PL 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 PL with its investigations, including, “by providing documents and information to the PL 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 PL Handbook states that the Commission may impose a fine, unlimited in amount.
Suspension
Moreover, where the respondent is a club, the PL 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.
Expulsion
The PL 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.
Conclusion
Although the hearing will be conducted in private, there will be much huge speculation over the coming months and throughout the hearing as to the potential outcomes. Nonetheless, should the Commission find that City have breached the Rules there will, no doubt, be moves from other PL clubs to have the record books updated and trophies reallocated.
Furthermore, some clubs may seek financial compensation for missing out on European competition. Additionally, UEFA will be very interested in the outcome and may come calling on City’s door again and moreover, there may be a demand for the PL to make an example of City, thereby deterring other clubs from adopting the same tactics.
As stated earlier in the post, the PL is fighting the imposition of the IREF and must be seen to be capable of keeping its house in order, and discredit the need for the IREF, so an element of context needs to be added to why this has been announced now, but such context may not be relevant to be the severity of the allegations, and their potential impact on English football.