Manchester City were found guilty of all charges of breaching the Premier League’s financial rules, with the independent commission’s 40-page “core decision” appearing to confirm the worst interpretation of the club’s behaviour. Central to the verdict is the conclusion that City’s lucrative sponsorship arrangements with Abu Dhabi companies were “shams” — the product of what the commission called the “Disguised Funding Scheme”.
The commission traced the scheme back to the club’s takeover. When Sheikh Mansour bin Zayed al-Nahyan bought Manchester City in 2008 he set out “ambitious plans”, but those ambitions could not be met by the finances the club was then generating. The commission found City recognised from the early days of his ownership that very significant funds would be required, and initially relied on extra injections of “owner equity” from Mansour. That, the club accepted, was not a sustainable model — particularly with owner equity excluded from financial fair play rules — so it decided it needed to grow its commercial operations, including by seeking high-value sponsorship arrangements in the UAE generally and Abu Dhabi in particular.
What followed was the Disguised Funding Scheme. Under it, City entered into sponsorship agreements with Abu Dhabi sponsors that recorded substantial fees well above fair market value. The sponsors were not liable for those full fees, however, and did not pay them: they paid only a small percentage, which the commission called the “base sum”, while the remainder — the “tagged sum” — was paid by Mansour, or by Abu Dhabi United Group (ADUG), the company he had formed to control the club. The commission found the arrangement allowed City to present its commercial revenues from Abu Dhabi sponsorship agreements, and so its income generally, as “far, far greater than was in fact the case”, while concealing from third parties the true extent of ADUG’s equity contributions. “Each of the Abu Dhabi sponsorship agreements was a sham,” it concluded.
The numbers were considerable. Across the nine seasons under investigation, from 2009-10 to 2017-18, City booked £949.94m in sponsorship revenues from Abu Dhabi-based companies. Only £119.25m of that arrived as base fees; the remaining £830.69m were tagged sums paid by ADUG. By some estimates, that £830m accounted for as much as 30% of the club’s revenue across the period — a sum far larger than the total revenue of most of their Premier League rivals. The funding also grew sharply over time, from £22.5m in tagged sums in 2009-10 to £134.73m in 2017-18, the highest total of the seasons examined.
City’s defence was that the sponsors had paid all the money they owed, but had required financial assistance from the Abu Dhabi government and its crown prince court “from time to time” to meet their sponsorship obligations. On that account, although government money reached the sponsors, the club itself was not involved.
The charges were split into four blocks, and once the first was proven — relating to the provision of accurate financial information — a domino effect followed. Blocks two and three concerned City’s obligation to meet the financial rules first of Uefa and then of the Premier League; removing the tagged sums from any balance sheet meant the club had failed to comply with either set of regulations in any of the seasons with which it was charged. The submission of inaccurate financial information also put City in breach of the fourth block, covering the duties of cooperation owed to the Premier League. There the commission went further, finding the club had “made concerted efforts to stop and frustrate the Premier League investigation” and had “concocted” explanations for the Disguised Funding Scheme “well after the event in an attempt to obscure and conceal the reality”.
The commission was equally damning about the evidence called by the club. “Evidence given by a number of important factual witnesses called to give evidence on behalf of the club was false in a number of key respects,” it wrote, adding that some of those falsehoods were deliberate: “Certain of those factual witnesses had given evidence at the hearing that they knew to be untrue and so had been dishonest.” The verdict also records that, in the event of City being found guilty, the Premier League had reserved the right to challenge “additional and perhaps more egregious acts of non-cooperation” relating to the club’s behaviour during the league’s own investigation.
Smaller charges were proven as well. Payments totalling more than £15m were found to have been made to three former employees — understood to include Roberto Mancini and Yaya Touré — that were “not recorded in an employment contract … but instead recorded in a consultancy agreement”. A separate scheme known as the “Fordham arrangement” was shown to be another sham, in which City sold their players’ image rights to a third party that was “in reality little more than a front for ADUG”. The only charge City were cleared on related to one subset of the club’s obligation to act “in the utmost good faith” towards the Premier League.
The commission described the case as “fiercely contested”, with neither side pulling its punches. City were revealed to have sought to dismiss the Premier League’s investigation, its decision to charge the club and its decision to prosecute the charges, and the verdict was published only after one party failed in an attempt to keep it private. “The proceedings were at all times extremely hard fought on both sides,” the commission said. “We in no way mean that as a criticism of either party; it is simply fact. No stone was left unturned.” That intensity helps explain the scale of the undertaking: evidence submissions ran to “many, many thousands of pages”, the core bundle of documents to “tens of thousands” of pages, and even the index used at the hearing to 1,000 pages. The decision landed more than two years after proceedings began, and the commission admitted the delay. “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,” it wrote. “That is regrettable.”
City continue to deny wrongdoing and intend to appeal before Friday, saying they will do so “on the basis that the opinion contains clear material errors, of law, principle and fact, and is unsafe”. The club’s chief executive, Ferran Soriano, told employees in a video that the decision was based on a “Premier League conspiracy theory”. Submissions are likely to continue, with the commission also due to meet to decide upon its sanction.