Man City judged guilty by Premier League commission over repeated financial breaches
Manchester City were found guilty by a Premier League independent commission in a ruling published on Tuesday, which concluded the club was guilty of all charges relating to serious breaches of financial rules and all but one charge concerning a failure to co-operate with the investigation. The 40-page document uses the word "sham" eight times and opens with the Oxford English definition: "To cheat, trick, deceive, delude with false pretences; to impose upon, take in, hoax."
The ruling sets out that Manchester City's owners, Abu Dhabi United Group, recognised from the 2009-10 season that achieving their stated ambitions would require substantial additional spending and that losses for 2009-10 would exceed the then-record single-season Premier League loss of £140m attributed to Chelsea in 2006. With both UEFA and Premier League financial rules imminent, the club concluded its only option was to increase commercial revenue to reduce reliance on owner funding, and in early 2010 began entering sponsorship agreements it recorded as record amounts and "significantly above fair market value."
The commission describes a central mechanism it calls the Disguised Funding Scheme, in which sponsorship deals were split into a base fee paid by the sponsor and a "tagged sum" paid by the club's owners so that sponsors did not pay the full contract value. The panel said this arrangement "gave the misleading impression to third parties (including regulators and its auditors) in its financial statements and any required FFP returns that its commercial revenues from sponsorship agreements were far, far greater than was in fact the case." Across the seasons from 2009-10 to 2017-18 the ruling records commercial income of £949.94m, of which only £119.25m represented base fees and £830.69m represented tagged sums paid by the owners.
The commission found the disguised funding scheme was adjusted at times to "assist with continued concealment" and to "reduce the likelihood of difficult questions being asked," and gives a May 2013 example in which the club identified a £9.9m shortfall less than a week before the end of the 2012-13 financial year and generated modified sponsor agreements that increased recorded sponsorship fees to cover bonuses for events that had already taken place and to pay for a U.S. tour. The ruling also details Project Longbow and says one strand, the Fordham Arrangement, was "little more than a front," with funds used so Fordham could acquire the club's entitlement to players' image rights at an inflated price; £24.5m was wrongly recorded as operating income and £49.414m was wrongly excluded from operating expenses.
The commission found further devices were used to move expensive contracts off the club's books by routing remuneration through third parties and recording payments as consultancy agreements, thereby concealing liabilities; three separate cases are cited for payments of £8.866m, £7.4m and £0.5m. The ruling lists overstatements and exclusions across the 2009-10 to 2017-18 accounts, including income overstated by over £830m and multiple wrongly excluded expense items totaling the sums above.
On the conduct of the investigation and the evidence presented, the commission said the club "made concerted efforts to stop and frustrate the Premier League investigation" and that evidence from a number of factual witnesses "was false in a number of key respects," adding that certain witnesses "had given evidence at the hearing that they knew to be untrue and so had been dishonest." The panel concluded the club knew its annual accounts "did not provide a true and fair view of the financial position" and that the club "was reckless as to whether those annual accounts provided a true and fair view," finding it had failed to act "with utmost good faith" and had "breached duties of co-operation that it owed to the Premier League."
Manchester City have denied the allegations; the club said the "opinion contains clear material errors, of law, principle and fact, and is unsafe" and referred to "a comprehensive body of irrefutable evidence that exists in support of all of its positions," adding that "the club has diligently respected due process for eight years on the basis that the Premier League Board and Executive would behave as an independent, impartial and fair-minded regulator, free from partisan influence." Chief executive Ferran Soriano released a video calling the case "a conspiracy theory," referring to the independent commission as a "Premier League Commission," and saying the alleged diversion of funds "could not happen and … did not happen." The club intends to appeal and, according to the club, will pursue "all other legal avenues." It has until Friday to lodge an appeal.
Any sanction will be determined at a separate hearing by the independent commission and the club's appeal is pending; the ruling and the appeal timetable now set the next procedural steps in the Premier League's process.
