Manchester City take on UEFA
Europe’s richest club takes on the continent’s governing body
UEFA dare not lose its financial fairplay case against Manchester City. Europe’s governing body has already lost one FFP case against a mega-rich, state-aided club – the Qatari-owned Paris Saint-Germain – on a technicality. A second such failure against Abu Dhabi-owned City would undermine the regulatory power it claims over the European game.
And such a blow against UEFA’s authority would encourage critics who believe the old models of sporting association to be outdated and irrelevant in the modern, new-tech era.
An obvious first development would be a renewed pursuit by the elite clubs of that long-envisioned super league to usurp the primacy of the UEFA Champions League from which the governing body rakes in billions.
The independent adjudicatory chamber of UEFA’s Club Financial Control Body (CFCB) say City have broken the FFP rules by “overstating its sponsorship revenue in its accounts and in the break-even information submitted
to UEFA between 2012 and 2016”, adding that the club “failed to cooperate in the investigation”. Hence the two-season ban from European club competition and €30million fine.
The fine is small change for City, but any suspension will affect status, TV revenues and sponsorship income – neighbours United have already seen their finances take a hit from European absence – so how did it come to this?
An investigation was launched after German newspaper Der Spiegel published leaked documents in November 2018 alleging City had inflated the value of a sponsorship deal to mislead UEFA over compliance with FFP rules regarding independent revenue sources and requiring clubs to break even.
The source of the leaks was a Portuguese computer wiz named
“They are laughing at the system. It is not just about PSG but also Manchester City...this is damaging football” Javier Tebas, president of the Spanish league, on Gulf-state investment
Rui Pinto, who has been extradited home from Hungary and is now in prison awaiting trial on more than 90 charges. These concern domestic hacking offences – which have in turn prompted tax and fraud-squad raids on Portugal’s top clubs and agents.
City have history with UEFA and were fined in 2014 for a previous breach of regulations. The latest punishment prompted speculation about the continuance of manager Pep Guardiola, who is contracted until the summer of next year, and superstar players such as Kevin De Bruyne.
In February, City had an appeal registered by the Court of Arbitration for Sport, with the club’s chief executive, Ferran Soriano, saying the breaches are
“simply not true”. CAS, meanwhile, has commented that “it is not possible” to say when the matter will be resolved.
The genesis lies back in 2009 when UEFA enacted its financial fairplay regulations, forcing clubs to provide accounted evidence that they were not spending more than they earned.
Michel Platini, UEFA’s then-president, was the driving force. His concern was the increasing number of top-division European clubs going bankrupt and/or failing to pay their players on time and/or failing to honour transfer payments.
Whatever else may be ascribed to Platini in the corridors of UEFA and FIFA power, he worked a miracle in pushing the project ahead in defiance of many big clubs and some of his own staff who thought it unworkable.
The regulations threatened uncooperative clubs with European bans, fines, the withholding of prize money and transfer prohibitions. However, the preference of both Platini and his uncertain legal advisers was carrot rather than stick: guilty clubs would be invited to negotiate a settlement over two or three years in return for a slap on the administrative wrist.
Platini said: “Fifty per cent of our clubs are losing money and we need to stop this downward spiral. We don’t want to kill or hurt the clubs. This is to help them.
“Living within your means is essential for all of us and it’s now time for football to do the same.”
FFP was launched in 2011 and met predictable teething problems. A string of lower and middle-order clubs were punished, prompting complaints that the rules were a “giants’ charter” which prevented them from rising up the football ladder.
Manchester City and PSG were caught early and settled. So while a UEFA panel led by David Gill, the ex-Manchester United CEO, was tasked to devise more flexibility, City chairman Khaldoon Al Mubarak commented: “We have moved beyond the period of heavy investment required to make the club competitive.”
In other words City and PSG had both accepted UEFA’s yellow card of a €60m fine with €40m suspended and squad limitation as a necessary price for playing financial catch-up with the Real Madrids and Barcelonas.
Disciplinary actions began to flow as more clubs qualified for European competition and fell within the FFP remit. In February 2015, Liverpool and Sparta Prague were cleared of suspected
breaches but Hapoel Tel-Aviv (Israel), Hull City (England), Panathinaikos (Greece) and Ruch Chorzow (Poland) all had to enter into settlements.
One month later Platini was vindicated when he was re-elected UEFA president, with FFP working more dramatically than even he had expected. The total net losses of Europe’s clubs had fallen from €1.7billion in 2011 to €400m.
Platini felt sufficiently encouraged to ease some transfer-spending rules and said: “The objectives remain the same but now we are evolving out of a period of austerity to one where we can offer more opportunities for growth again.”
Days later the international game was engulfed in the FIFAGate scandal and within months Platini was banished himself. Not that it mattered as far as FFP was concerned as the principle, and the machinery, had not only been established but, apparently, set in stone.
Proof came in 2016 when Galatasaray appealed to CAS against a European ban. The case erupted from a highly complex domestic tangle involving high-level political and commercial interests. Galatasaray thought they had a solid case but CAS ruled in favour of UEFA.
UEFA, thus armed, imposed an even heavier three-year ban on Serbia’s Partizan over unpaid transfer fees, wages and social and tax debts. Partizan could hardly complain: they had broken FFP rules three times in five years.
A new era dawned for UEFA with a new FFP challenge. Perceptions had been growing that the CFCB was content to lay down the law to the modest and the minnows but reluctant to take on the big boys with their deep pockets to pay the finest legal brains.
In 2016 UEFA elected a new president in Aleksander Ceferin to succeed Platini, who had fallen victim to a FIFA financial tangle of his own making. Ceferin was a comparative unknown, but within a year he was presented with a major FFP test by PSG’s record-busting purchases of Neymar from Barcelona and Kylian Mbappe from Monaco.
PSG were careful this time around. They paid €222m for Neymar but signed Mbappe on loan for a year, which meant the €140m purchase would figure in the next year’s accounts.
Had they learned their lesson? Ceferin said: “I hope so. If that is not the case then we will teach them.
“I am not talking only about Paris Saint-Germain. We will apply exactly the same rules to all of them. If we did not respect our own rules then we would be a toothless tiger.”
By now a new word had entered the football lexicon: sport-washing – the process through which rich Gulf states such as Qatar (PSG) and the UAE (City) were burnishing their national public image in the west via football.
Javier Tebas, combative president of the Spanish league, was furious. He said: “They are laughing at the system. It is not just about PSG but also Manchester City. What happens when this money comes into European football? It brings inflation of salaries and transfer fees.
“This is damaging football. There is an incredible risk when such money comes in from nation states.”
UEFA continued to issue a mixture of bans and fines to clubs from Albania, Greece, Kazakhstan, Serbia, Switzerland and Turkey. Finally they went in search of the big fish, banning Italy’s Milan for a year and launching investigations into Galatasaray and PSG.
The investigations were closed and then reopened at the request of CFCB chair Jose Narciso da Cunha Rodrigues. But the reversions were submitted out of time and appeals on that technicality by both Galatasaray and PSG were vindicated by CAS.
By now, however, Football Leaks had exploded. Initially, UEFA felt unable to act on material hacked illicitly. But a change of heart was enabled after judicial authorities in at least nine countries took an active interest in suggestions of a wide range of misconduct including tax evasion by clubs, officials, agents and players.
UEFA ordered its club finance panel to investigate “several alleged violations of FFP that were recently made public in various media outlets”, while City rejected “the accusation of financial irregularities [as] entirely false”.
All of which means that UEFA,
City and financial fairplay are now in uncharted waters.