European football’s financial regulators are poised to recommend that newly minted Premier League champions Manchester City be barred from the Champions League, the New York Times reported Monday.
European football’s governing body UEFA and the Premier League launched an investigation this year after allegations made in German magazine Der Spiegel that the club broke Financial Fair Play rules.
Members of the investigatory chamber of UEFA’s financial control board, set up to analyze the accounts of clubs suspected of breaking cost-control regulations, met two weeks ago in Switzerland to finalize their conclusions, the newspaper said.
“The investigatory panel’s leader, the former prime minister of Belgium Yves Leterme, will have the final say on the submission to a separate adjudicatory chamber, which could be filed as soon as this week. The body is expected to seek at least a one-season ban,” the Times said.
It was unclear if such a ban, if levied, would be enforced next season or in the 2020-21 campaign, the Times said, noting that with qualifying for Europe’s most prestigious and lucrative club championship set to start in June there is little time to finalize a sanction.
Manchester City would also have the right to appeal such a ban to the Court of Arbitration for Sport.
Manchester City vigorously denied any financial irregularities, saying in March they welcomed UEFA’s investigation as an opportunity to clear their name.
City, who were fined 60 million euros ($67.3 million) and subjected to squad, wage and spending caps in a 2014 settlement agreed with UEFA following a previous breach of the rules.
But the club says the claims made in Der Spiegel were an “organized and clear” attempt to damage its reputation.
An investigation into accusations that Premier League champion Manchester City misled European soccer’s financial regulators in pursuit of its success on the field is expected to recommend that the team be barred from the Champions League, European soccer’s richest competition and the trophy the club covets most.
English soccer authorities and officials at UEFA, European soccer’s governing body and the organizer of the Champions League, have for months been investigating Manchester City amid allegations of rule-breaking revealed in damaging leaks over much of the past year. Members of the investigatory chamber of UEFA’s financial control board, a group set up to analyze the accounts of clubs suspected of breaking strict cost-control regulations, met two weeks ago in Nyon, Switzerland, to finalize their conclusions.
The investigatory panel’s leader, the former prime minister of Belgium Yves Leterme, will have the final say on the submission to a separate adjudicatory chamber, which could be filed as soon as this week. The body is expected to seek at least a one-season ban.
Even the suggestion of a ban would be a stinging rebuke for Manchester City and its Gulf owners, who celebrated a fourth Premier League title in eight seasons on Sunday. They long have sought to add the Champions League — club soccer’s top prize — to the club’s growing haul of domestic trophies, and any effort to bar the team is likely to spark a monumental legal fight.
Manchester City’s current squad, assembled and financed at the cost of more than $1 billion, is just the latest example of the financial might the club’s owner, Sheik Mansour bin Zayed al-Nahyan, the brother of the ruler of the United Arab Emirates, can bring to bear. Sheik Mansour has invested billions over the past two decades — on players, coaches, facilities and the team’s operations — to transform Manchester City, which played in England’s second tier as recently as 2002, into one of soccer’s biggest and most successful brands.
It remains unclear if any Champions League ban, if levied, would be enforced next season or in the 2020-21 campaign. Qualification games for next season’s tournament begin in June, meaning UEFA faces a race against time to finalize a sanction that City would have the right to appeal to the Court of Arbitration for Sport.
Manchester City has vigorously denied wrongdoing, and its officials have warned UEFA that they would mount an aggressive response to any effort to bar the club from the competition. “The accusation of financial irregularities are entirely false,” City said in a statement earlier this year. “The club’s published accounts are full and complete and a matter of legal and regulatory record.”
If UEFA is unable to establish a case and enforce a punishment, it risks seeing its system of financial rules — in place since 2011, and designed to impose a measure of financial fairness within the European soccer economy — rendered meaningless. Several officials on the financial control bodies also have said privately that their reputations could be harmed if their work is seen to be toothless.
Many of the allegations of financial impropriety and rule-breaking lodged against Manchester City came to light after they were reported by news media outlets with access to the so-called Football Leaks files. The files are said to include emails and internal club documents showing efforts by City to circumvent UEFA’s financial fair-play regulations by masking cash infusions from a United Arab Emirates state-backed investment company through inflated sponsorship agreements with entities including the U.A.E.’s national airline, Etihad. Etihad is City’s principal sponsor, its name adorning the team’s stadium, its signage during matches and even the front of the players’ jerseys.
City has not labeled false any of the information reported to date. Instead, it has dismissed the reports as “an organized and clear attempt” to smear the club’s reputation through the publication of documents that it says were obtained illegally. The European authorities in January unmasked a Portuguese citizen as the hacker behind Football Leaks, a clandestine operation that revealed some of the soccer industry’s most closely held secrets.
UEFA’s financial rules, first implemented in 2011, were designed to prevent clubs from risking their financial futures by overspending on talent. At the time, dozens of teams were tens of millions of dollars in debt, in part because of a rapid rise in the cost of top players fueled by lavish spending by a handful of superwealthy owners.
The rules permit sponsorships from companies linked to a club’s owners as they try to balance their accounts, provided the agreements are struck at prices that reflect the market rate.
Etihad signed up as principal sponsor of Manchester City a year after Sheikh Mansur’s takeover, branding the club’s jersey, its stadium and an affiliated campus City has built. But an internal email published by German news weekly Der Spiegel last year suggested that the airline financed only 8 million pounds ($10.4 million) of the 59.5 million pound ($77.8 million) agreement, with the rest coming from ADUG, the investment vehicle Mansour used to buy City. The Speigel reports also outlined a number of other arrangements that allowed the club to evade UEFA’s financial regulations.
According to the people with knowledge of the investigation, City’s punishment most likely will be linked to an accusation that it provided misleading statements in resolving an earlier case, as well as false statements to licensing authorities in England, and not over the true value of the sponsorship agreements. That made the case a curious fit for the financial control officials, who were assigned the case instead of UEFA’s main disciplinary body.
In 2014, City agreed to a settlement agreement with UEFA related to an earlier breach of the spending rules; as punishment, it agreed to pay a conditional 49 million pound fine (about $63.4 million) and to accept restrictions on incoming transfers.
As part of their current inquiry, the UEFA investigators, an independent group of governance and finance specialists led by Leterme, met with City officials in April in Switzerland. The investigators were unconvinced by the club’s explanations, according to a person with knowledge of those discussions.
Their decision to press forward in seeking punishment against Manchester City could have serious implications for UEFA, which essentially would be accusing a team backed by the U.A.E.’s royal family of cheating and lying to a range of stakeholders, including the Premier League, as it built itself into a champion.
The outcome of the case will be monitored closely amid mounting concern over the credibility of UEFA’s financial fair play regulations when it comes to sanctioning the biggest clubs. Paris St.-Germain, the French club that also is owned by Gulf royalty, in its case the ruling family of Qatar, managed to avoid a major punishment recently when it faced similar questions about its sponsorship agreements, and its ability to comply with the financial control mechanisms, when it bought the world’s two most-expensive players — the forwards Neymar and Kylian Mbappé — in a single summer transfer window.
P.S.G. and UEFA have a tangled relationship. The team’s owners also run beIN Sports, the broadcaster that is UEFA’s biggest media rights buyer. Both the club and beIN Sports are run by Nasser al-Khelaifi, a Qatari national who was elected to a position on UEFA’s executive board earlier this year.