By Jonathan Copping, Lawyer, Stone King, London, UK
The UEFA financial fair play investigation into Manchester City (City) could lead to the club facing a Champions League ban.
The investigation highlights the difficulties of trying to bring success to a football club in a very short space of time. If found guilty of breaking financial fair play rules, it will be the second time in five years that UEFA has punished City. In 2014, UEFA handed down a £49 million fine, transfer cap and a reduced Champions League squad.
Yves Leterme, the chairman and chief investigator of the UEFA club financial control body investigatory chamber, has concluded that City has a case to answer and has, therefore, referred the case to the adjudicatory chamber to issue a ruling and decide the level of punishment.
UEFA decided to investigate City, following a number of documents being published in the German magazine Der Spiegel, which alleged that City had mislead UEFA over its finances. The documents allegedly showed that City had created a number of complex structures to disguise the level of investment into the club from owner Sheikh Mansour.
It is alleged that a £67.5 million deal with Etihad, City’s sponsor, included £59.5 million worth of investment from Sheikh Mansour’s Abu Dhabi United Group. It has also been alleged that City were involved in selling off image rights to a company alleged to be funded by Abu Dhabi United Group.
City has completely denied the allegations with its chairman Khaldoon Al Mubarak recently stating:
“I believe, quite comfortably, if the process is going to be judged on facts then unquestionably we will prevail. If it’s not about facts and it’s about other things, then it is a different conversation”
The UEFA financial fair play rules were introduced in the 2011-12 season. The crux of the rules is the break-even requirement, where clubs are required not to spend more than the income they generate, and they must balance their books over a three-year period.
City is not the only football club to be hit by financial fair play penalties. Paris St-Germain also received the same penalties as City in 2014. Other clubs to receive fines include Zenit Saint Petersburg, Galatasaray and Fenerbahce.
It is not expected that the punishment in the UEFA ruling is likely to lead to City being banned from next season’s Champions League. But, if UEFA does choose a Champions League ban, it is almost certain that City would appeal the punishment and the case would end up at the Court of Arbitration for Sport. UEFA could offer City a rehabilitative approach to correcting the breaches of financial fair play by granting an extension to the break-even requirement.
Whatever the outcome of the current UEFA City financial fair play investigation, it shows that UEFA is determined to investigate any potential breaches and highlights the difficulties that clubs face by trying to buy success quickly.
In the 2018-19 season, City achieved an unprecedented domestic quadruple (Premier League, League Cup, FA Cup and Community Shield).
Thus, if UEFA does, in fact, hand down a severe punishment, not just a financial penalty, it may limit the ability of City to challenge for major football honours in the coming seasons.
Jonathan Copping may be contacted by e-mail at ‘JonathanCopping@stoneking.co.uk’