Manchester City could cripple football Financial mismanagement will prove costly

Over the past 15 years, by far the most successful team in English football has been Manchester City. Since being bought Sheikh Mansour, the son of the Emir of Abu Dhabi, in 2008, they have been transformed from a club famed for almost slapstick misfortune to relentless winners.

As well as eight Premier Leagues and three FA Cups they also lifted the Champions League as part of a Treble in 2022-23. Under the Catalan manager Pep Guardiola they’ve also helped popularise a possession-based form of football at every level of the English game.

Now, though, an imminent judgement could transform their fortunes — and could have a potentially seismic impact on the English game as a whole.

The club faces 130 charges of breaching financial regulations between 2009-18 — that is, the first nine years after their acquisition by the UAE. Under the Profit and Sustainability Rules (PSR)  introduced by the Premier League 10 years ago, clubs are permitted to lose no more than £105 million over a three-year period. The rules include various allowances for investment in, for example, stadium development, academies and women’s football.

Last season, Everton were docked 10 points, reduced to six on appeal, for having lost £19.5 million more than the permissible amount. A further two points were then deducted for a loss of £16.6 million over the threshold in the following accounting window — a relatively low sanction, because the club had already been punished for two of the three years in question. Nottingham Forest were docked four points because their losses were £34.5 million over the threshold, which, in this case, since the club had spent two of the three seasons under consideration in the second tier, was £61 million.

Those can be considered benchmark figures. If City are found to be in breach — and it should be stressed that they deny all charges — it could be for hundreds of millions. In addition, Everton and Forest ultimately co-operated with the investigation into them. Of City’s charges, 35 relate to non-compliance. If they were found guilty, the punishment would almost certainly be severe. There has been talk of expulsion from the Premier League, but a hefty fine and huge points deduction is more likely — something that would make relegation all but certain.

That would circumvent the issue that if City were expelled, the Football League, which administers the Championship and Leagues One and Two, would be under no compulsion to accept them. It would also effectively lengthen the sanction to two years – one of being relegated and (at least) one in the Championship earning promotion. There would also be knock-on effects for future PSR calculations given City’s earning power would necessarily be reduced.

City are alleged to have manipulated their accounts in two ways. First, they’re accused of artificially inflating the value of sponsorship deals from companies linked to the club ownership. Second, it’s claimed they made third-party payments to players and coaches to top up their official salaries.

Der Spiegel, for instance, reported that when Roberto Mancini was appointed as manager in 2009, he signed not only a £1.45 million-a-year deal with City, but also a £1.75 million annual salary for four days a year of consultancy for the Abu Dhabi club Al Jazira, which happens to be owned by the City owner Sheikh Mansour.

The leaks that led to the Spiegel investigation also brought charges from Uefa, which initially banned City from the Champions League for two years, only for the Court of Arbitration for Sport to rule that many of the offences were time-barred, overturning the suspension.

There are broader questions here too. After all, some want to scrap the Financial Fair Play rule. They ask: would you interfere with the free market? Why stop owners from spending whatever they like on their clubs?

To which the answers are straightforward. First, it is not a free market if some of the parties involved are the investment arms of states; Saudi Arabia and the UAE are not free markets.

More to the point, sport is not a business like any other. It has a community role, but what is effectively being sold is not the excellence of a company’s product but the competition between clubs.

Two decades ago, I spoke to Zoran Avramović, the marketing manager of Red Star Belgrade, one of the two biggest clubs in Serbia. Nobody came to games any more, he said, because Red Star beat the smaller Serbian sides too easily, and then lost in Europe because their players never got used to having to defend and fight. “What should we do?” he asked plaintively. “Subsidise the little sides?” To which the response can only be: yes.

The Victorians understood this. The English league is the oldest in the world, founded in 1888. It was immediately realised that if a team won, that would attract more spectators. More spectators meant more money, which meant they could attract better players. And that meant they were more likely to win, a cycle leading to monopoly and tedium.

Initially, it was agreed that home teams should pay the away side £10, a levy that from 1918 became 20% of gate receipts, mitigating the advantage of having a bigger stadium. It was abolished only in 1983. In 1901, a maximum wage was introduced. Although the cap soon became seen as repressive, players battling it until it was eventually abolished in 1961, the initial intention was to reduce the capacity of wealthier sides to lure the best players to play for them.

A set of rules known as FFP (Financial Fair Play) was implemented by Uefa at the start of the 2011-12 season. Its initial aim was to prevent clubs overspending and getting into unmanageable debt. This is what happened at Leeds United under Peter Ridsdale, which ultimately threatened the club’s very existence. FFP also prevented owners acting as Roman Abramovich had after buying Chelsea in 2003, splurging cash and distorting the market.

Nevertheless, City have consistently argued the regulations are unfair and protect the existing elite. They have taken a series of legal actions against the Premier League, challenging APT rules under competition law.

City’s challenges reflect a paradox of football: that it is simultaneously a business and not a business, or at least not a conventional business.

This is a point the Crystal Palace owner Steve Parish made at the Financial Times Business of Football summit at the end of February. “We are constantly being told we are not a business but a sport,” he said, “and that we are part of the fabric of the community, and that we need to prioritise winning over everything. At the same time, we’re in court being treated to the Nth degree like a business.”

The Premier League itself operates effectively as a club; it has 20 members, each of whom have a vote. The regulations City keep challenging have all been voted for by the League, which requires a two-thirds majority for any change. And this is where the issue becomes potentially existential.

In an email published by Der Spiegel in 2018, a City lawyer claimed that the club chairman, Khaldoon al-Mubarak, had said that he “would rather spend £30 million on the 50 best lawyers in the world to sue them for the next 10 years” than accept sanction from UEFA, which is football’s European governing body.

It’s safe to assume that if City are found guilty, they will appeal, and then potentially take legal action to overturn the verdict. They have much greater resources than the Premier League. The costs could therefore cripple the whole system, whatever the ultimate outcome.

But equally, if City are found not guilty, or if they are found guilty but other clubs feel the sanction is insufficient, these rivals could take their own legal action. The precedents of Everton and Forest are there.

There is plenty of fury about City and the way they have behaved, even leaving the specifics of the charges aside. It has even been mooted that a majority of clubs could quit the Premier League to rejoin the Football League, from which they split in 1992. That, frankly, seems unlikely, but it is a measure of the depth of feeling that it is being discussed at all.

And the consequences for City could be profound. Twice before, clubs have been found guilty of making significant illegal payments. The first were City themselves in 1906, the second Sunderland in 1957. Both ended up being relegated soon after. It took City 30 years to recover; Sunderland arguably never really have.

Then there’s the possibility of civil action. In March 2009, West Ham paid Sheffield United around £20 million to settle a claim that they had stayed up at Sheffield United’s expense by fielding Carlos Tévez when he was not properly registered.

If one club suing over relegation was worth £20 million then, what would multiple clubs suing over missed titles, missed qualification for Europe, missed prize money and relegation over multiple seasons look like now? The cost could be billions. Would Sheikh Mansour fund that? Would he retain his interest in the team at all? And if he and his funding went, what would City have left?

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Jonathan Wilson is a columnist for the Guardian, the editor of the Blizzard, the co-host of the podcast It Was What It Was and author of 12 books on football history and one novel.

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