Inside Manchester City’s £900m financial breaches as Premier League sanction looms

Manchester City artificially inflated revenues and reduced costs by more than £900 million through “sham” commercial arrangements during a nine-season period, an independent Commission has found in a landmark Premier League financial case.

The club has been found guilty of all charges relating to serious breaches of the Premier League’s financial rules between the 2009/10 and 2017/18 seasons, while three of four alleged breaches relating to its failure to co-operate with the League’s investigation were also upheld.

A sanction has not yet been decided and will be determined separately, while Manchester City has until Friday, 2 October to appeal the findings.

What the Commission found Manchester City did

At the centre of the case were commercial arrangements the Commission found did not reflect the true agreements between the parties.

Manchester City arranged “sham” contracts with a number of commercial partners and relied on “sham” agreements with others to artificially increase the club’s revenues and reduce its costs.

According to the findings, several sponsorship deals formed part of a disguised funding scheme.

The companies involved 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 Manchester City.

Further “sham” arrangements funded by ADUG allowed the club to record lower operating expenses than it actually incurred.

The Commission also found there was a “sham” circular arrangement involving Fordham, an entity that purchased the club’s players’ image rights, which was funded by ADUG.

More than £900m in revenues and costs

The scale of the arrangements is one of the most significant findings contained in the decision.

The Commission found the schemes were designed to artificially inflate Manchester City’s revenues and reduce its costs by more than £900 million during the affected period.

The purpose was to make it appear that the club complied with financial rules.

The consequence, according to the Commission, was that Manchester City 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“.

Manchester City breached Premier League and UEFA spending limits

The financial arrangements also affected the figures Manchester City reported for the Premier League’s Profitability and Sustainability Rules and UEFA’s Club Licensing and Financial Fair Play Rules.

The Commission found that Manchester City failed to accurately report its income and expenditure for the purposes of those rules.

Had all the relevant agreements been accurately reflected in the club’s accounts, the Commission found Manchester City would have breached both the Premier League’s and UEFA’s spending limits by a very substantial amount.

Commission says City tried to frustrate investigation

The findings extend beyond Manchester City’s financial reporting.

The Premier League investigated the club for four years, during which Manchester City was accused of failing to meet its obligations to co-operate with the process.

Three of the four alleged breaches concerning the club’s duties of co-operation and utmost good faith towards the Premier League were upheld.

The Commission concluded that Manchester City had “made concerted efforts to stop and frustrate the PL investigation”.

Richard Masters: ‘Most significant in Premier League history’

Premier League Chief Executive Richard Masters described the disciplinary case and decision as the most significant the competition has faced.

“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.”

What happens next for Manchester City?

With the charges proved, the sanction will be addressed at a separate hearing before the independent Commission.

Under Premier League rules, that hearing will remain private and confidential until publication of the outcome is permitted.

Manchester City also has the right to appeal the Commission’s findings and has until Friday, 2 October to do so.

The findings are contained in a Core Decision, with a redacted version published in the Premier League’s Manchester City independent Commission Core Decision.

The Commission’s award also contains a large number of additional appendices, which the Premier League says it is committed to publishing as soon as it is able.

The League can publish the Core Decision because the Commission ruled, and an Appeal Board confirmed, that the decision is a “final award”.

The Premier League Board intends for the full process, including any appeals and publication of relevant decisions, to be concluded as soon as possible.

For now, the core findings are established: Manchester City have been found guilty of serious financial rule breaches covering nine seasons, with arrangements used to artificially inflate revenues and reduce costs by more than £900 million.

The next stage will determine the consequences.

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