It seems that thereâs plenty of confusion surrounding the situation of Manchester Cityâs 115 charges for breaching Premier League rules and how it relates to their prior case with Uefa and CAS. Yet thereâs not much out there in the mainstream media explaining it in that much detail.
As such, I thought it might be helpful to provide a rough summary answering some of the most common questions about it all.
Note: since I drafted all this, the BBC has released a similar version of FAQs about the case which can be found here:
The below also has some information that the BBC did not elaborate upon though.
Following an investigation by the Premier League, Man City has been charged with 115 counts of breaching Premier League rules:
- 54 counts of failing to provide accurate financial information
- 14 failures to provide accurate details for player and manager payments
- 5 failures to comply with Uefa rules including FFP
- 7 breaches of Premier League PSR rules
- 35 failures to co-operate with Premier League investigations
In November 2018, German Publication âDer Spiegelâ released a story about how Man City had been subverting Profit and Sustainability Rules (PSR) and Financial Fair Play (FFP) rules. These rules, introduced in Uefa competitions in 2011/12 and the Premier League in 2012/13, prevented clubs from undertaking unlimited spending using debt or owner funds (known as equity). Instead, clubs were required to spend what they âearnedâ such as from matchday revenue, broadcast revenue or commercial deals, such as sponsorships.
The storyâs source was a cache of leaked emails that Der Spiegel had obtained between Man City executives, including the Chief Executive Office (CEO) and Chief Financial Officer (CFO).
The emails, which are numerous and took place over many years, go into precise detail about how Man City sought to subvert FFP rules by disguising equity payments from the owner as sponsorship revenue, by channelling the funds through their sponsorsâ accounts.
This formed the initial basis of investigations by Uefa and the Premier League. The accusation is that by disguising equity payments as sponsorship revenues, they would have subsequently misreported their financial accounts, hence the charges of failing to provide accurate financial information.
Uefa estimated that at least £204million of equity payments were disguised as sponsorship revenues which would also result in substantial breaches to PSR and FFP rules.
Subsequently, there were further reports that Man City paid players and managers âoff the booksâ, resulting in charges for failing to provide accurate details for player and manager payments, which would also have knock on effects for the above charges as well.
Man City didnât officially confirm or deny the authenticity of the emails during the Uefa investigation. However, Man City eventually released their own âoriginal versionsâ of some of the emails during one of the hearings.
The original versions of those emails matched the equivalent contents of the leaked emails. A few of the emails submitted by Man City as âoriginalsâ have been attached to this tweet.
The nature of the accusation is complex and the Premier League lacks broad powers of investigation because it is not a Government body. It relies on its members to co-operate with investigations and provide the information that they request.
Man City sought to challenge the investigation over many years in the UK Courts of Law, thereby delaying the investigation and subsequent prosecution.bbc.co.uk/sport/footballâŠ
It is Man Cityâs legal right to challenge contracts and their application in the UK Court of Law and this is what they have with the Premier League - a legally binding contract in the form of the Premier League Rule Book contained within its Handbook. It is this contract that provides the Premier League with its powers to investigate.
However, some of these actions may also be considered breach of contract depending on their legitimacy. That is probably why Man City has been charged with 35 counts of failing to comply with the investigation.
Man City were charged and adjudicated by Uefa for similar but not identical offences. However, the basis for Uefaâs investigation and charges originated from the same source - the leaked emails published in Der Spiegel.
Uefa found Man City guilty and applied a number of sanctions, including expulsion from the Champions League.
Man City appealed the verdict to CAS (the Court of Arbitration for Sport).
CAS decided that the charges relating to failure to provide accurate financial information and resulting breaches in FFP were not proven and as such, overturned Uefaâs sanction to ban Man City from the Champions League.
CAS decided that Uefa were within their rights to investigate Man City and that Man City substantially failed to comply with the investigation and gave them a fine for these offences.
The fully published decision by CAS (which also contains the email evidence they used) can be found here:
Firstly, the Premier League will have separate evidence to Uefa. Their investigation ran for longer and incorporated matters that neither Uefa nor CAS considered.
Secondly, there are some different charges that must be addressed; such as the charges for failure to provide accurate details for player and manager payments.
Thirdly, because the rules are different. Uefa and the Premier League have different rules meaning differences in offences and how they are adjudicated.
Fourthly, because there were significant issues with the CAS decision that the Premier League were potentially uncomfortable with and felt still required addressing - more detail on that is provided below.
Lastly, because they are obligated to. The Premier League has a contractual obligation to maintain the sporting integrity of the competition by ensuring its rules are adhered to and if there are breaches of those rules, that they result in suitable sanctions. The obligation extends to all of its members.tas-cas.org/fileadmin/userâŠ
The first is around required standard of evidence.
CAS decided that just because there were multiple emails, over a number of years, between Man City top executives, including its CEO and CFO, outlining in precise detail how they sought to subvert FFP by channelling owner equity payments through sponsors, along with corresponding schedules of payments from those sponsors matching Man Cityâs accounts; that this did not constitute sufficient evidence to prove that such events actually took place.
CAS insisted that the evidence they would require in order to be satisfied that such an action took place would be the accounts and bank statements of the owner and the sponsors, showing the money from the owner entering the sponsorsâ accounts.
There are two rather concerning implications of such a required standard.
The first is that it would in effect, make FFP impossible to enforce. Uefa does not have the power to demand such information and as such, this establishes a tactic for any club to break FFP without ever being sanctioned.
The second is that it never addressed why Man City execs would write such emails. What plausible rationale could there be for them to write in such precise detail, instructions for subverting FFP over years, if this were not in fact happening? CAS never addressed this.
The second major issue is regarding offences and evidence that were excluded by CAS.
Uefa has a 5-year âstatute of limitationsâ relating to certain offences, effectively time-barring them from being prosecuted more than 5 years after they occur. Uefa ignored this statute when investigating and prosecuting Man City. Uefaâs rationale for ignoring the statue was since they accused Man City of hiding their offences and delaying the investigation, this resulted in a heavily delayed prosecution, pushing it past the time limit. CASâs interpretation of Uefaâs rules was that the statute of limitations must still apply.
The implication of this was that certain offences were dismissed but more importantly, certain pieces of evidence were excluded too. Any pieces of evidence obtained by Uefa that arose as a result of the investigation for time-barred offences were then excluded by CAS. This included some very important pieces of evidence to Uefaâs case.
The last major issue is regarding potential conflicts of interest and subsequently, concerns around lack of independence.
Standard practice for a CAS tribunal is that each party, Man City and Uefa, get to select one arbitrator, who must be independent and suitably qualified. Then the third arbitarator, the chairman, is selected by CASâs own appeals arbitration division.
The UK newspaper, the Guardian, reported that there were questions regarding the independence of the arbitrator selected by Man City because there were potential conflicts of interest at play. The arbitrator selected by Man City was a partner in the law firm White and Case whose clients included two of the sponsors accused of helping Man City disguise equity payments as sponsorship revenue.
Also, when it came to the appointment of the chairman, the Guardian reported that there was a deviation in standard procedure. Instead of CASâs own appeals arbitration division independently selecting the chairman, Man City recommended the candidate that CAS then selected. It should be noted that Uefa did not object to the Chairman.
There are several reasons why this case is different from the previous case that was adjudicated by CAS:
- Firstly, the case will be heard by an Independent Commission that will be subject to English Law and not Swiss Law. This will result in a different process of evidentiary review and possibly a different standard of evidence required. It also seems likely that the Commission will not allow the question of why Man City execs wrote those emails to go unanswered.
- Unlike Uefa, the Premier League has no statute of limitations time-barring offences or evidence - the offences and associated evidence that CAS refused to consider in their decision, some of which appears very damning, can be considered by the Independnet Commission in its decision.
- The Commission will be made up of independent parties, not selected or proposed by Man City or the Premier League. As such, there should be no issues relating to conflicts of interest or independence.
All of these reasons mean that the above issues relating to the CAS decision above should not apply here.
Also, there are two further differences at play:
- As mentioned previously, the Premier League is applying more and different charges than Uefa did in relation to failures to provide accurate details for player and manager payments, as well as different charges for failure to co-operate with the investigation given it was a completely different investigation undertaken.
- This would also suggest that the Premier League has additional evidence that Uefa did not possess.
No, that option is not open to them. The Premier League contract does not permit appeals to CAS and the Independent Commission process is considered final.
Itâs impossible to know what sanctions the Independent Commission will decide upon. It will depend which charges Man City are convicted of and how the Commission assesses their severity.
Many sanctions are open to the Commission ranging from warnings, to fines, to points deductions, relegation, stripping of prior honours and even permanent expulsion from the Premier League.
Other clubs have fallen foul of FFP and PSR previously and received single digit points deductions or merely fines. However, it is worth noting that this case is substantially more severe than those charged against any other club previously.
The accusation is that Man City did not just breach FFP⊠but that they purposefully hid an enormous breach which completely distorted the sporting integrity of the competition and then, that they refused to comply with the contractually required process of investigation and sanction needed to ensure such sporting integrity can be maintained.
These are enormous charges because if proved, it not only renders previous seasons and honours of the Premier League as tainted but itâs also heavily damaging to the brand and subsequent desirability of the Premier League as an entertainment product. What is the point of watching a sport that has been fixed?
As such, if the charges are proven, itâs far more likely that the sanctions will be extremely severe.
An impossible question to answer with any certainty.
It could well come down to what standard of proof is applied.
In UK Law, criminal cases have a high bar for finding someone guilty - they must be found guilty beyond a reasonable doubt - whereas civil cases have a much lower bar of what is most likely to have occured based on the balance of probabilities.
e.g., Based on the evidence, does the Commission believe it is more likely that the owner channelled funds through the sponsors than not?
If this bar is applied, which seems likely given the nature of the proceeding, then the emails in question certainly seem like sufficient evidence to hold such a belief.
No plausible explanation has ever been provided for why else those emails would exist.
Again, this is not known. The rumoured timeline is Summer 2025. This is because the hearings will likely run for many months due to the volume and complexity of the charges and associated evidence.
ð§µ6/6
Last of this thread just to say that in the coming weeks I will publish 2 more threads on this topic.
1) A summary of what was in the hacked emails released by Der Spiegel, simplified so they can be understood by all (highlighting which emails have been verified by Man City as genuine)
And
2) A full dissection of the CAS judgement, analysing the contentious majority decisions, their flaws and their potential implications
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A false narrative has infected the discourse surrounding Man Cityâs fate for the PLâs 115+ charges. That the PL must provide accounting or transaction records to âproveâ that the discussions in the leaked emails actually happened. That without this, Man City will escape the charges, and that it will be impossible for the PL to obtain this information.
This. Is. Bullsh*t.
Complete and utter bullsh*t.
This false narrative is almost certainly borne out of poor analysis on the CAS decision, which has been used to peddle misinformation about the case by supposed âexpertsâ.
This was asserted by a 2/3 majority of the CAS Panel and it was one of the most bizarre statements in the CAS decision.
It is bizarre because it either demonstrates gross negligence or highly concerning, irrelevant, misinformation. Either way, it calls into question the integrity of the decision.
This is because CAS operates a standard of proof known as âComfortable Satisfactionâ which, by definition, must sit between a standard of proof known as âon the balance of probabilitiesâ and another known as âbeyond reasonable doubtâ.
In para. 216, the statement makes the point that accounting or transaction evidence is needed to âascertainâ the arrangements discussed in the Leaked Emails were in fact executed.
To âascertainâ means to make certain. This isnât just my opinion - ask any (competent) lawyer and they will confirm this. This would equate to a standard of proof âbeyond any doubtâ. No such standard exists. You never need to be certain. You ðºððð make a determination using the applicable standard of proof. Anything else is improper.
So, either 2/3 of the CAS were grossly misapplying the standard of proof or they were making a completely irrelevant statement that is highly misleading. This is one of the reasons why the CAS decision is impossible to trust, especially after it was revealed that Man City proposed 2/3 of the CAS arbitrators, both of whom were reported to have concerning apparent conflicts of interest in the case.
And for those who wrongly doubt the above; just a reminder, one CAS arbitrator disagreed with the CAS decision. That CAS arbitrator saw fit to sanction Man City for the alleged offences, based on a tiny fraction of the evidence that the PL will have⊠and at a higher standard of proof (comfortable satisfaction) than the PL will face (on the balance of probabilities). Itâs always so funny that people seem to forget this and just skate past it as if it never happened.
We donât know which arbitrator disagreed with the other two⊠but I feel highly confident that I can guessâŠ
Itâs simple - sufficient evidence to convince the IC that, ðŒð» ððµð² ð¯ð®ð¹ð®ð»ð°ð² ðŒð³ ðœð¿ðŒð¯ð®ð¯ð¶ð¹ð¶ðð¶ð²ð, Man City did what they are accused of. This was also confirmed in recent relevant case law.
In Bank St Petersburg PJSC v Vitaly Arkhangelsky & Ors [2020] EWCA Civ 408, the Appeals Court confirmed that even in cases of fraud or dishonesty the correct test is whether the allegation has been proven to be more likely than not (the balance of probabilities). There is no requirement to prove that the fraud has occurred beyond all possible doubt, or to prefer an innocent explanation in place of a dishonest one. There is no requirement to âmake certainâ or âbe sureâ. To assert otherwise is to assert nonsense and demonstrate a total lack of understanding the relevant law.
The emails will be more than enough to convince the IC that Man City has done what they are accused of. Far more.
The CAS panel only got to see 6 emails.
Yet the entire CAS Panel made a unanimous finding that those emails (including from Man Cityâs CFO, COO and Head of Finance) discussed arrangements to have Man Cityâs owner fund the sponsorship payments. You can see this finding in para. 290 of the CAS decision.
A 2/3 majority of the CAS Panel decided that this was insufficient evidence to say that other actors necessary to fulfil the arrangements were complicit or even capable of fulfilling the arrangements. They decided more evidence would be required to demonstrate this to their comfortable satisfaction, especially because to fulfil the arrangements, it would have required these individuals to commit criminal acts.
The other arbitrator disagreed.
This should not be skated past either by the way. Because it means that the CAS Panel unanimously found that Man Cityâs CFO, COO and Head of Finance sought a criminal conspiracy and were party to a criminal conspiracy. That is a direct, inarguable implication of such a finding.
And that was based on just those 6 emails.
The remainder of the (hundreds) of leaked emails available to view in the public domain demonstrate that the other actors were complicit - including a Man City Board Director, UAE Government and the Sponsors. They also admit, multiple times, that they have undertaken the arrangements.
In a criminal fraud case, this level of evidence would be considered âgold standardâ. Itâs the equivalent of catching a criminal enterprise admitting to everything they have done on recording, going into precise detail about how they did it. Gameâs up at that point. Denying it all in witness testimony would be ridiculous and only subject them to further charges of perjury. The prosecution is going to win unless the defence can have the evidence thrown out. And thatâs for a criminal case with a standard of proof of beyond reasonable doubt!
The leaked cache of emails fully demonstrate:
1., What Man City sought to do, in precise detail
2., That they knew this was wrong
3., That the named actors had the capacity to fulfil the arrangements
4., That sponsors were complicit in the arrangements
5., That the arrangements were fulfilled
6., That this carried on for years
The PL has Man City absolutely bang to rights. And anyone who actually understands the evidence and what it means, knows this. If they say otherwise it can only be because they either do not understand the evidence or they are either consciously or unconsciously biased from seeing whatâs right in front of their face. I believe that erroneous statement in the CAS decision has gone a long way to establishing this bias. But itâs an irrelevant nonsense.
And by the way, none of this is to say the PL doesnât have powerful accounting and transaction evidence. They do, in a number of areas. I have previously outlined in my threads where they have this and it will all be very helpful to strengthening their case. But it isnât needed.
I go into more detail on why the CAS hearing was a farce here:
Why wonât people just believe Man Cityâs leadership team regarding the PLâs charges for breaching FFP rules?
After all, theyâve been crystal clear on this⊠They said they did exactly what theyâre accused of.
Thatâs what they wrote in their emails that were leaked anyway.
And thereâs no question about that - even the CAS panel said that the 6 emails they saw âdiscuss an arrangement whereby Etihadâs sponsorship contributions would be funded by HHSM and/or ADUGâ (ADUG = Man Cityâs owner, supposedly owned by Sheikh Mansour, HHSM).
Most Man City fans say it never happened though⊠that they never cheated.
But then those same fans also say that they have the smartest, most capable exec team in football. So how does that work?
If theyâre so smart then they wouldnât have been so ridiculously moronic as to write such things if they were not true.
So that means they think theyâre all lying for some bizarre unknown reason then, I guess?
Letâs take a look at what they wroteâŠ
Man Cityâs COO, Graham Wallace, wrote that ADUG (Man Cityâs owner) was funding the sponsors.
So what is it Man City fans?
Are you saying that heâs wrong and a moron? Or a liar?
Man Cityâs Head of Finance, Andrew Widdowson, wrote that cash from Man Cityâs shareholder needed to be paid through its sponsors, Etihad and Etisalat. Just like Etihad did for them the year before.
Thereâs also this powerpoint pack on the summary of investment made by Man Cityâs owner into the club.
It makes crystal clear that lots of that funding was for âsupplement to Abu Dhabi partnership dealsâ and âfunding via Abu Dhabi Partnersâ.
So what is it Man City fans?
Are you saying that heâs wrong and a moron? Or a liar?
Uefaâs main charges against Man City back in 2019-2020 focused on the premise that Man City was subverting FFP.
The allegation was that one individual, Simon Pearce, was facilitating this by channelling funds from Man Cityâs owner (a company called ADUG, supposedly owned by Shiekh Mansour) to Man Cityâs sponsors (UAE state-owned companies such as Etisalat and Etihad). That way, owner funds known as equity contributions could be injected into Man City whilst disguising them as legitimate sponsorship revenue. This would enable Man City to subvert FFP rules and as a consequence, spend more than the rules permitted. The allegation is that Man City over-spent this way by more than â¬830m.
For reference, Simon Pearce was a Board Director of Man City, as well as a senior advisor to the dictator of the UAE. He was a director in the UAEâs Executive Affairs Authority (EAA) - the UAE Govt. department that exclusively serves the dictator - at the same time as being a Man City director.
Uefa sanctioned Man City for these charges of subverting FFP, banning them from the Champions League for 2 years. Man City did not defend themselves at Uefaâs hearings and instead, sought to fast-track the case to a final appeal at CAS.
Now, Iâve covered in previous threads why the CAS hearing was a farce - a key reason being that in a rush to finish the hearing before the start of the new season, Uefa agreed to use just 6 of the hundreds of damning emails as evidence at the hearing. These 6 emails were sent over a span of a few years, mostly by Man Cityâs top execs to Simon Pearce.
What many donât realise is that CAS unanimously found, on the basis of those 6 emails alone, that ð ð®ð» ðð¶ðð ð²ð ð²ð°ð ðµð®ð± ð°ðŒð»ððœð¶ð¿ð²ð± ððŒ ððð¯ðð²ð¿ð ððð£. This was a finding of fact (para. 290 of the CAS decision).
However, a (2/3) majority of the CAS Panel decided that the 6 emails were insufficient to also say that Simon Pearce, ADUG and the sponsors then followed through and acted on these emails, despite them continuing for years.
A (2/3) majority of the CAS panel decided that the limited email evidence they viewed was crucially lacking:
At the Independent Commission, the PL will have originals of all of the leaked emails submitted as evidence. It will also likely have far more evidence too, that is not in the public domain, care of the discovery process. However, we can only work with what we can see publiclyâŠ. but thatâs enough.
The emails wonât generally be used in isolation (unless to impeach specific testimony from a witness). Instead, they will be used collectively to build context and demonstrate a series of connecting actions and events. I have covered them holistically at length in a series of threads linked below.
However, for ease of focus, in this thread I will examine just 2 specific groupings of emails that will likely be the most damning to Man City given what they containâŠð§µ
The photos of leaked emails attached to this post encompass the following:
1., An email from Simon Pearce to Omar Awad (a member of the EAA) asking Awad to make a payment of £31.7 million to Man City from an ADUG bank account. i.e., Pearce authorises payments from ADUG.
2., Confirmation from Awad that the payment has been made and how much is left in the account.
3., Pearce asking for a copy of the transfer record.
4., Awad asking someone else within EAA to forward Pearce a copy of the transfer.
5., The copy of the transfer record being sent to Pearce from an Associate Manager of Finance within EAA.
6., Jorge Chumillas (Man Cityâs CFO) thanking Pearce in response to an email from Pearce providing the record.
7., An email in 2015 from Chumillas to Ali Alfrayhat (another member of the EAA), CCing Simon Pearce and Ferran Soriano (Man Cityâs CEO), sharing an invoice for payment to DSM (the agent of one of Man Cityâs players) and asking Alfrayhat to pay DSM from ADUGâs account.
8., An email from Chumillas to Pearce, Alfrayhat and Soriano confirming when the last payment from ADUG needs to be made to DSM.
9., An email from Pearce to Soriano and others confirming that Awad is âvery important and helpful in facilitating our financial administration of Cityâ.
None of these were in evidence at the CAS hearing.
This is absolutely crushing evidence that the PL can use to show that:
- Simon Pearce represented ADUG and was able to authorise payments by ADUG.
- ADUG made payments on behalf of Man City, for its benefit.
- Man City was a state-owned and controlled entity.
Alone, these emails are not sufficient to demonstrate that Man City subverted FFP by disguising equity as sponsorship income. However, even CAS stated that evidence such as this, in concert with the evidence they saw, is what they needed to deem Pearce unreliable as a witness, which would have collapsed Cityâs defence at CAS.
It is also worth noting that these emails are likely sufficient, alone, to sustain all of the PLâs charges under Financial Reporting. This is because these emails demonstrate that Man City and its sponsors were Associated Parties, which needed to be declared in the accounts (they did not). Really serious stuff.
The attached run of leaked emails involve: Andrew Widdowson (Man Cityâs Head of Finance), Simon Pearce, Jorge Chumillas (Man Cityâs CFO) and sometimes CCing Ferran Soriano (Man Cityâs CEO). It also involves Peter Baumgartner (Chief Commercial Officer of Etihad) - this is key.
None of the run, except for âEmail 5 from CASâ, was submitted as evidence at the CAS hearing.
This run of emails starts with a concern from within Man City, over short-term cash-flow and the recognition that monies are still required from Etihad.
Widdowson (HoF) informs Chumillas (CFO) of the cash flow issue, who then asks Pearce for clarity on when money is coming from Etihad.
Pearce confirms it will be there soon. However, he asks for an explanation on how the amount demanded has been calculated.
Chumillas (CFO) works through this with Widdowson (HoF) and supplies Pearce with the details (thatâs âEmail 5 from CASâ). In this email, Chumillas explains that Man City still requires £57m from its £65m sponsorship contract, explaining that Etihad should only pay £8m of the £65m itself, whilst the rest is ADUG contribution (disguised owner funds).
This is evidence of the arrangements being fulfilled, with confirmation of monies being transferred to the sponsor by Pearce and with the sponsor clearly aware of this. Pearce offers to do it again, outlining some options at the end of the email.
The rest of the run confirms receipt of the payment; demonstrating that the arrangements have been put into action from start to finish.
This run is by far the most damaging piece of evidence in the entire cache of leaked emails. It would have turned upside down a number of key witness testimonies at CAS as well as some of the Panelâs key findings.
I can only imagine what the Uefa legal team must have been thinking and feeling as Man Cityâs witnesses declared, under oath, that they had not undertaken such arrangements; knowing full well what was said in these emails but unable to produce them to impeach. They must have felt so foolish for dropping the demand that the whole cache of emails be provided by Man City.
Thankfully, this wonât be an issue for the PL at the Independent Commission.
In reality, Man City are accused of more than 115 breaches of the rules as you can see in the photo attached. It highlights 129 individual rule breaches that Man City are accused of.
But itâs not the number of breaches that matters to be honest - itâs more about the implications of the breaches that affects and informs any potential sanction.
In this thread, I will examine the nature of the breaches and their implications; then explore what a suitable sanction might be, and why.
In order to explain the breaches, l will connect them with the alleged actions that results in the breaches⊠ð§µ
The charge here is that Man City arranged for its registered owner (a company called ADUG, supposedly owned by Sheikh Mansour) to transfer funds to its sponsors, who would then pay Man City that money as if it were legitimate commercial revenue.
Money injected by an owner into its company is called equity. Uefaâs FFP rules and the PLâs FFP/PSR rules restricted equity contributions.
By disguising equity as commercial revenue, Man City could smuggle it into the club and subvert the rules, enabling them to spend more than the rules permitted.
This results in the charged breaches of âCompliance with Uefa regulationsâ and âProfit and sustainabilityâ.
As you can see in this linked thread, the email evidence in the public domain discusses arrangements to disguise £685m (â¬833m) of equity as sponsorship income over 7 seasons.
The thread also shows the potential sporting impact of such an action⊠that all of Man Cityâs major player acquisitions from 2011/12 onwards can be tied to such disguised equity injections. It highlights how those players helped Man City achieve its âsuccessâ that it otherwise likely would not have had. It shows itâs all tainted - every title and every cup.
This action relates to charges that Man City paid its former manager Mancini, some players and their agents from sources other than Man City (such as from its owner or associated parties).
This results in charged breaches of âManager and player remunerationâ.
It could also connect in charged breaches of âCompliance with Uefa regulationsâ and âProfit and sustainabilityâ. This is because if the monies were paid from accounts external to Man City but for Man Cityâs benefit then such payments would not be incorporated into FFP/PSR calculations and would subvert the rules.
As it happens, the magnitude of these breaches is far lower than the magnitude of Action 1 (sponsor payments) in terms of additional spending power. As such, the impact it could have had on sporting success would likely have been less significant.
However, it still could have had some impact - such as being able to win competitive transfer battles ahead of other teams who sought to do so whilst adhering to the rules.
But what is more significant is the apparent willingness to break the rules, repeatedly and as if it were business as usual. It goes to informing a perspective on the culture within Man City as an organisation. An important consideration when deciding an appropriate sanction.
Opportunistic breaches that are out of character are viewed differently from someone happy to commit breaches of the rules any chance they get. It demonstrates a complete disregard for rules or integrity.
In my interactions on Man Cityâs 115, I often observe many folks fail to truly grasp the potential impact that the charged breaches could have had on PL outcomes.
Maybe thatâs why they think Man City will only get a slap on the wrist for the charges?
As such, I wanted to do some indicative analysis, year by year, on the potential scale of sporting impact.
For this analysis, I will not incorporate the potential impact of the charges relating to off-the-books remuneration and instead, only focus on the potential impact of the charges for disguised equity injections.
Reading the leaked emails, they outline ongoing arrangements to subvert FFP by the following amounts:
£69.5m annually from 2011/12, increasing to £92.5m annually in 2013/14, increasing to £122.5m annually in 2015/16 and carrying on until the 2017/18 season (at least).
The Der Spiegel leaks came in November 2018 and so itâs not possible to know what actions took place for 2018/19 onwards.
Converting to Euros at the time, this means the emails discussed subversion of FFP/PSR rules to the tune of:
2011/12 - â¬77.2m
2012/13 - â¬80.1m
2013/14 - â¬106.3m
2014/15 - â¬117.1m
2015/16 - â¬170.1m
2016/17 - â¬145.0m
2017/18 - â¬136.9m
â¬833m total over the 7 seasons
Letâs take a look at the potential impact of these injections, season by season ð§µ
ð®ð¬ðð/ðð®
Man Cityâs league position: 1st with 89 points
2nd with 89 points was Man U
5th with 65 points was Newcastle
â¬77.2m was injected
In the summer before the season started, City signed:
Aguero for â¬40m
Nasri for â¬27.5m
Total â¬67.5m
Remaining from the injection: â¬9.7m
I think itâs fair to say that Nasri and Agueroooo (in particular) were critical to Man City winning that title ahead of Man U on GD. Probably a stretch to say they ensured top 4 though.
ð®ð¬ðð®/ðð¯
Man Cityâs league position: 2nd with 78 points
5th with 72 points was Spurs
â¬80.1m was injected
In the summer before the season started, City signed:
Garcia for â¬20m
Nastasic for â¬15m
Rodwell for â¬15m
Total â¬50m
Remaining from the injections to date: â¬39.9m (9.7 + 80.1 - 50)
Acquisitions of Aguero, Nasri, Garcia, Nastasic, Rodwell helped Man City win 6 points more than Spurs and clinch top 4, resulting in UCL income the subsequent year.
Thereâs a lot of hate for the Premier Leagueâs Profit and Sustainability Rules (PSR) at the moment.
If you donât know what they are, there is a brilliant explainer on the rules in the ArsenalVision podcast where the host @YankeeGunner interviews football finance expert @KieranMaguire all about it. You can find that here:
Definitely worth a listen - Kieran explains them better than I ever could.
It was in that podcast where Kieran reveals the UK Govt. asked him for input on how to improve the rules. Kieranâs response was âwhat are your objectives for it?â
Until you know what you are trying to achieve - your objectives - itâs not possible to intentionally implement a startegy for success. You just do aimless things which can be counter to your interests.
So I thought I would cover off this:
ð. ððŒð»ðð²ð ð: High level overview of the rules
ð®. ððððð²ð: The hate for the rules
ð¯. ð¢ð¯ð·ð²ð°ðð¶ðð²ð: Define a purpose for âPSRâ
ð°. ðð¶ð ð¶ð»ðŽ ð¶ð: New rules that could work
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ð. ððŒð»ðð²ð ð: High level overview of the rules
In 2009, Uefa explored the introduction of âFinancial Fair Playâ (FFP) rules as means of addressing increasing loss-making in football. They would apply to any club participating in a Uefa competition.
More and more clubs were racking up losses and supporting them with debt at an alarming rate. It was a warning sign for more clubs going bankrupt. Uefa explicitly stated they wanted to address this; to help ensure ongoing financial sustainability in football.
Some âjournalistsâ have suggested that Uefa introduced the rules because of mounting debt but that is not true. Debt is not bad per se. In fact, it can be extremely advantageous because it is usually cheaper than equity. It only becomes a problem if you lack the cashflows to service the debt (its interest and capital repayment schedule). These rules were introduced at a time of record low interest rates, so debt was not the real problem. The issue explicitly being addressed was loss-making.
However, given the name used (Financial âFair Playâ), loss-making was likely not the only issue being addressed hereâŠ
Abramovichâs takeover of Chelsea in 2003 changed everything. Suddenly, there was a club owner with very deep pockets whose objective was not financial success or sustainability. He was content to make heavy losses in order to achieve success on the pitch, largely believed to be a sportswashing exercise. He wanted British citizenship.
His spending massively distorted the transfer market in fees & player wages, resulting in other clubs spending more and more to try and keep up, even though they lacked the same financial means.
This had knock on effects for fans in the forms of increased ticket prices, merchandise and eventually, broadcast fees. Market distortion is a serious issue which most European governments seek to regulate against. Football was already going this way - Abramovich was simply a catalyst that accelerated it.
So in 2010, Uefa approved a set of FFP rules to be implemented for the 2011/12 season (and first assessed in 2012/13).
The rules were intended to make clubs âbreak evenâ. i.e., broadly limit spending to what they make from revenues (broadcasting, match day, commercial). In theory, that would stop the loss-making and help prevent more clubs from going bankrupt. There was a real need for this. 2010 had record levels of loss-making across football clubs in Europe.
Subsequently, the Premier League (and other football leagues) followed suit. The Premier League (PL) introduced its own set of FFP rules a year after Uefaâs. They were similar, albeit slightly more lenient. These rules applied to any club playing in the PL. Neither Uefa nor the PL refer to the rules as FFP anymore. The PL calls its rules Profit and Sustainability Rules (PSR) and Uefa refers to Financial Sustainability rules.
For a long time, Uefaâs and the PLâs FFP rules followed a similar construct; over a 3-year period, a clubâs footballing expenses (player and coach wages, agent fees and amortisation of player registrations*) could only exceed a clubâs revenues (broadcast, match day and commercial) by a limited amount. This was a profit-based calculation and not cash-based, due to the amortisation of player registrations*
(e.g., if a club buys a player for £50m on a 5-year contract, the yearly expense is £50m/5 = £10m in its profit & loss accounts - it is spread out over the contract length. This applies whether the fee is paid all up front or in instalments over a number of years. It is a profit accounting principle).
More recently, both Uefa and the PL have explored different forms of rules though.
Uefa still has the above rules around breaking even on profits (or at least restricting the losses). It has also introduced a yearly squad cost control. This sets a maximum ratio for expenses as a percentage of revenue. It was 90% last year, 80% this year and 70% next year (which is what it will stay at per the new rules).
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The PL has followed suit, introducing a similar concept of an 85% ratio and is now exploring an additional set of rules whereby all clubs will be anchored in their spending (setting a maximum spend) connected to the minimum broadcast revenues of any club in the PL. e.g., if the lowest earning club in the PL makes £100m from TV rights, all clubs will be limited to a maximum spend of 4.5 x £100m = £450m in a year, regardless of how much they make themselves).
The PL is experimenting with different rules so it can abolish the historical profit-based system from 2025/26.
Why are they changing the rules and experimenting with various options? Well, there have been issues with the rulesâŠ