Manchester City, guilty of "fictitious commercial contracts" and of presenting misleading accounts to the Premier

LondonThe independent commission tasked with investigating the 115 charges brought by the Premier League against Manchester City has concluded that the club "seriously and systematically" breached the competition's financial regulations between the 2009-10 and 2017-18 seasons. According to the resolution, City – bought in 2008 by Sheikh Mansour, owner of the Abu Dhabi United Group (ADUG), an investment vehicle of the emirate's royal family – used "fictitious commercial contracts" and other deceptive accounting mechanisms to artificially inflate its revenue. Thus, the club – which was managed for a decade by Pep Guardiola until last season – also managed to reduce its expenses by more than 900 million pounds. In this way, a financial situation more favorable than the reality was presented.

The decision officially published this Tuesday – and which this newspaper already reported on last Friday, based on a leak from The Athletic and Reuters – addresses why the commission considers 114 of the 115 charges to be proven, a fact that was already pointed out in the aforementioned leaks. The central element of the resolution –called the Core Decision – is the finding that Manchester City resorted during the nine seasons to various commercial agreements that did not reflect the economic reality of the operations. These "fictitious contracts" with several of its commercial sponsors were part of the system to hide more than 830 million pounds in "secret funding," according to the Premier League.

The simulated agreements appeared to have conditions different from those actually agreed upon between the parties. The club thus recorded higher commercial revenues than it actually obtained and, at the same time, presented expenses lower than the real ones. The mechanism implied that several of City's sponsors would have only paid a portion of the amounts formally listed as sponsorship revenue. The rest was funded directly by the Abu Dhabi United Group Investment & Development Ltd (ADUG), the entity that owns the club.

But the reaction from Manchester City – whose chief executive has been former Barça vice-president Ferran Soriano since 2012 – has not been long in coming. In a statement issued mid-afternoon, it reads that "the club is innocent of the accusations made by the Premier League." It defends itself by stating that "there is a wide body of irrefutable evidence that supports all of its positions in relation to this case".

Furthermore, in an internal message addressed to the club's staff, Soriano asserts that "the entire Premier League case against us is based on a single false accusation: that the owner's personal money was introduced in some way, and secretly, to the club through some Abu Dhabi sponsors." Soriano asserts that "this is simply not true." The evidence presented to the commission that reinforces his statement, adds the club's chief executive, "includes bank statements, money transfers, testimonies, and everything necessary to categorically prove that the money did not come from the owner."

Manchester City has until Friday to appeal against this verdict, which it will do as follows from the aforementioned public statement, and as Soriano states in his message to the employees. City also accuses the competition's governing body of "not acting as an independent, impartial, and objective regulator, free from partisan influences." And, in the internal video, he goes even further and asserts that the verdict "supports the Premier League's conspiracy theory."

Financial sustainability

In the 40 pages –partially redacted– of the explosive decision, it is highlighted that City's practices were of determining importance, as compliance with the league's financial sustainability rules and UEFA's financial fair play depended on the figures declared by the clubs. The commission concludes that, if the real revenues and costs had been computed, Manchester City would have significantly exceeded the limits established by both organizations. For this reason, the matter is not limited to a formal or administrative issue, but directly affects the legality of its economic management during a key period of its transformation into one of the main powers of English and European football.

The tribunal has also analyzed City's behavior during the investigation. In this area, it concludes that the club violated its obligations of cooperation and good faith with the Premier League in three of the four charges. According to the resolution, the lack of collaboration hindered the development of the inquiries and constitutes an additional breach of the competition's regulations.

Faced with these conclusions, the Premier League considers that a "systematic breach" of its rules over nearly a decade by the club has been proven. The competition's chief executive, Richard Masters, has described the proceeding as the most important in the league's history and has stated that the resolution establishes the facts about what happened during the investigated period.

Despite the forcefulness of the verdict, the case is not yet closed. While the commission has determined the facts it considers proven, it has not yet set any sanctions. The process, therefore, has not ended. The Premier League and City will now have to face a new phase to determine the potential corresponding sanction. This hearing will be held before the same independent commission and, in accordance with the competition's rules, it will be private and confidential until the result can be published. Among the penalties provided for by the rules are fines, point deductions, and other sporting measures.

For the moment, the resolution does not annul any title achieved by the club. The Premier League's chief executive, Richard Masters, has assured that "the disciplinary procedure and the decision are the most significant in the history of the Premier League". And he has highlighted that they want to move forward "with speed in the rest of the process to provide certainty to the League, to our clubs and to the fans". The investigation against City began in December 2018.