Manchester City’s Legal Battles Against the Premier League: What Do the Verdicts Mean for the Future of Football?

The Premier League has come around again, and Manchester City are aiming to continue their Premier League dominance with a fifth consecutive title. However, there is much uncertainty off the pitch surrounding the Club’s success as they have been marred by charges of breaking financial fair play rules over one hundred times over nine-years, dating between 2009-2018, to which they won the Title three times during this period.

The 115 alleged breaches are:

• 54 breaches for failure to provide accurate and up-to-date financial information from 2009-10, and 2017-18.
• 14 breaches for failure to provide accurate financial reports for player and manager compensation from 2009-10 to and 2017-18.
• 5 breaches for failure to comply with UEFA’s regulations, including UEFA’s Club Licensing and Financial Fair Play Regulations.
• 7 breaches of the Premier League’s profitability and sustainability regulations from 2015-16, and 2017-18.
• 35 breaches for failure to cooperate with Premier League investigation from December 2018 to present day.

 

Financial Fair Play Rules

The Premier League, Football League and the UEFA all possess their own regulations that governs club finances. The UEFA was the first football organisation to introduce financial fair play rules (FFP) ahead of the 2011/12 season. Under these initial regulations, football clubs were not permitted to spend more than €5m of what they earnt over a three-year rolling period, or €30m if the club owner was able to cover their losses. Under the Premier League financial framework, clubs are prevented from paying substantially more than they earn. Premier league clubs must also submit accounts annually, disclose all payments made to agents and pay transfer fees, salaries and tax bills promptly.

The investigation into the financial activity of the Club began following the 2018 publication of leaked documents by Der Speigel, a German media outlet. They have since dedicated three-years to further investigate the Club’s empire. The outlet has published a four-part series on the Club’s majority shareholder, the sheikh of Abu Dhabi, suggesting he has repeatedly broken Premier League financial rules. The media outlet stated that ‘Manchester City has managed to cheat its way into the top echelon of European football and create a global, immensely profitable football empire, ignoring rules along the way. The Club’s newfound glory is rooted in lies.’

Due to unprecedented delays, it has taken years for the Independent Commission to investigate the alleged breaches against the Club. However, the hearing has now been brought forward to mid-September 2024, with a decision not likely until Spring 2025. Possible sanctions include club suspension, points deductions, match replays and order to pay compensation. The Club will be able to appeal the decision to the Premier League appeal panel comprising six members. An appeal would further delay the imposition of any sanctions or points deductions, which may well fall into the following football season.

 

Associated Party Transaction Rules

Distinct from their breaches of competition rules, Manchester City instigated an arbitration hearing against the Premier League surrounding the legality of the League’s associated party transaction (APT) rules which determine whether club’s sponsorship deals are financially ‘fair.’ The APT rules set by the Premier League require that, any club, its players, manager or senior official must disclose any dealings with ‘associated parties’ to the Premier League. ‘Associated parties’ are defined as companies or persons who have a significant interest in the club, financially or otherwise. The Premier League’s financial board will then review each transaction to assess whether it represents a ‘fair market value.’ These rules are specifically designed to prevent Billionaire owner’s from using their enhanced commercial revenues to artificially inflate the Club’s income. A practice that directly conflicts with existing Profitability and Sustainability Rules. The best example of this is Manchester City’s primary sponsor being Etihad Airways, which is sported on their front of their football shirts. The airline has direct links to the Club’s Abu Dhabi owners.

Manchester City has claimed that they were victims of ‘discrimination’ within a 165-page legal document, stating that a ‘tyranny of the majority’ of teams across the league had gone against the Club to implement such rules aimed at diminishing their success and the APT rules are anti-competitive and in breach of English Competition laws. This is essentially an aggressive litigation tactic by City to commence proceedings against the Premier League prior to a decision on its 115 alleged breaches are made. The dispute resolution hearing provides City with the opportunity to analyse the Premier League’s lawyers before the September hearing. In any event, Manchester City will likely bring forth damages claim against the Premier League which frankly the Premier League cannot afford. A verdict on Manchester City’s case against the Premier League is imminent and should City have success, it could undermine Premier League’s broader case against the Club.

Where Now?

As the Premier League pursues City and City sue the Premier League, another ‘sub-plot’ has since emerged. It is thought that some of Manchester City’s rivals are likely to seek compensation for loss of earnings either through not winning Premier League titles or failing to qualify for the Champions or Europa League due to City’s sheer dominance over the past decade. But of course, any legal success is unrealistic because even teams with significantly lower wage bills and ‘lower-quality’ players still can over-achieve- take Leicester City for example, who had their own Cinderella story when they shocked the world and won the Premier League in the 2015/16 season.

Club rivals are largely left hoping that the Premier League’s independent commission serves up satisfactory justice. Tebas, La Liga’s President concludes, ‘the path the Premier League is taking now is important, after many years in which we have not seen proceedings against their own clubs for financial fair plays issues. The path they are trying to take is very important for all of European football.’ The Premier League’s economic sustainability is incredibly important as it ensures that there is no inflation in salaries from ‘state money.’ Thus, the result of Manchester City is a highly significant one.