Manchester City’s Ban and Financial Fair Play – Is It As Fair As It Could Be?

In the wake of the reigning Premier League champions Manchester City’s ban, lots of eyebrows have been raised. There are quite a few big questions floating around. Most prominently: what they did, how did UEFA find out, are they really guilty, whether or not the punishment meted out to the English giants will be upheld and finally, what if it is overturned. Will this break the very laws of FFP for good? Could this potentially be the biggest institutional change to football and the transfer markets since the Bosman ruling or the introduction of FFP itself?

And as a follow up to these questions, there’s also a big one behind it. One that questions the very foundations of the rules football clubs are ordered to abide by. Is Financial Fair Play really fair? It is about time football takes a long and hard look at one of its biggest, most important laws. And maybe, just maybe there are a few ways that the system could benefit every club regardless of its stature.

But first, let us take a look at all the details of Manchester City’s ban as it stands.

Man City’s Ban – The Full Story

After a detailed investigation, the Adjudicatory Chamber of UEFA’s Club Financial Control Body (CFCB) imposed a 2 season ban on Manchester City starting from the 2020/21 campaign. Under the current conditions of the suspension, Man City will be unable to participate in any UEFA competitions. In addition to the ban, they have also been fined 30 million Euros.

The Grounds

The CFCB, in an official statement, declared that Manchester City have been found guilty of committing “serious breaches” of UEFA’s Licensing and Financial Fair Play regulations. City allegedly overstated their sponsorship revenue in their accounts and thus the information submitted to UEFA in the break-even reports was false. They were also charged with uncooperative behavior with regards to the investigation and lack of compliance with due procedure.

The sponsorship money that Manchester City earned from Etihad airways in a very lucrative deal was in fact not all legitimate. Or at least, the figures concerning the club’s dealings were fabricated. In 2012 and 2013, the sponsorship revenue that supposedly came from Etihad was actually inflated by cash infusions from City Football Group, a holding company of Abu Dhabi United group. The Abu Dhabi United group is a private equity firm owned of course, by Sheikh Mansour, aka the owner of Manchester City and one of the richest men in the world.

The Roots

This fiasco actually goes way back to late 2018 when a Portuguese hacker named Rui Pinto leaked a trove of internal documents that could be potentially indemnifying and supplied the leaks to numerous European media outlets. German outlet ‘Der Spiegel’ was all over the scene as they published the information, leaving Manchester City under immense scrutiny. The investigations into the matter began immediately and most media outlets and sports lawyers proclaimed that the most likely outcome would be a recommendation that Manchester City would face at least a one-season ban from all UEFA competitions. Especially since they had already been sanctioned once in 2014.

Former Belgian Prime Minister and the CFCB’s chief investigator Yves Leterme began leading a thorough investigation. In a furious retort, Manchester City, demanded not only that the case be dropped (since the leaks completely undermined the integrity of the investigation) but also that UEFA should compensate the club. The club released the following statement:

“UEFA has systematically breached, and continues to breach, its duty of confidence”

They also added that the leaks and decisions to refer the club for reprimand had caused them “serious harm and loss”. They claimed that there had been “a basic lack of due process” and that Leterme had ignored “a comprehensive body of irrefutable evidence” that the club had not misled the CFCB with its FFP filings in 2014. Naturally, City also denied any wrongdoing and vehemently deemed the accusations as false and backed it up by saying the information provided by the club are complete, true and within a legal and regulatory record.

To the neutral observer, their behavior could be seen as rather defensive and suspicious. Even more so when they claimed the contents of the leaked emails were taken out of context. They tried to nip the matter in the bud in  May 2019 as they registered an appeal with the Court of Arbitration for Sport against the decision to refer them for punishment. This appeal, however, was rejected because, at the time, UEFA had imposed no concrete punishment. The CAS did, however, label the leaks as “worrisome”.

Following this appeal’s rejection, the CFCB’s Adjudicatory Chamber started hearing the case for Manchester City’s ban in December. The chamber is a five-person panel chaired by José Narciso da Cunha Rodrigues, who was formerly a judge at the European court of justice. The CFCB is judicially independent of UEFA administration and the senior lawyers make decisions purely based on the merits of the evidence.

City Declare War

After UEFA finally announced its decision to ban City from European competition for 2 years, the English giants stated that they were “disappointed but not surprised.” They claimed that there was little doubt in what the decision would be since the process was “flawed and consistently leaked.”

The CEO of the club, Ferran Soriano, made the club’s stance clear in a video interview five days after the ban’s announcement. He maintained that Man City had provided “irrefutable evidence that the claims are not true.” Even Pep Guardiola added in support that he stands by the club 100%. City are adamant that the case is not finished. They will lodge another appeal to the CAS in order to either reduce or overturn the ban completely.

The resolution of this trial will be crucial in more ways than one. The stakes are very high but as of now, the final verdict seems uncertain. It seems as though this will be yet another lengthy process. This is the most significant punishment that UEFA has handed out in recent times, however, they will have to have complete and detailed records to prove their case. UEFA previously had failed to provide adequate evidence against Paris Saint Germain when they were also accused of overspending. The case with AC Milan’s ban was also resolved before a verdict from the CAS.

What Might the Repercussions Be?

According to the 2019 Forbes report, Manchester City are the 5th most valuable club in the world. Their owner is one of the richest men in the world belonging to an aristocratic royal family, who in all likelihood have much more money and many more resources than UEFA itself. Man City have the legal arsenal, equipped to launch a full-blown assault against UEFA. This can either completely tip the scales in their favor or delay the verdict so much that it has no immediate repercussions on the club. Unless of course, UEFA’s case is airtight.

If City do lose the case, it will put a massive dent in their funds and might cause severe consequences to their competitive future in Europe. Missing out on the Champions League could cost them well over 90 million Euros per season. Not only that but it could mean that several of their massive superstars could leave for better opportunities. And who can ignore the immense humiliation that the club, its owners and its fans would face?

As for UEFA though, if they were to lose this trial, it might spell the end of its decade long financial principles for good. They might have to be completely reworked or just scrapped altogether. Its jurisdiction over the member clubs would be completely weakened and their very credibility as an institution could be in serious danger.

Is Financial Fair Play Really All That Fair?

To be perfectly honest, there are plenty of things that UEFA have done right with FFP. At least their attempts have been rooted in genuine concern for healthy competition and overall financial well being. When UEFA came up with the idea for FFP they had the following basic objectives in mind:

• Clubs should be more transparent with their finances and thus increase their credibility.
• Clubs should be self-sustaining, meaning that they spend based on their own revenues.
• Expenditures must be rational and a vicious circle of debt should not come into play.
• Clubs should focus on the long-term benefits by investing in their infrastructure, youth setups, and training facilities.

On the basis of these ideals, the Financial Fair Play system was put into place in order to promote the spirit of the game on the pitch as well as off it. However, as has been the case throughout history, the fundamental principles of capitalism took over. And capitalism makes no exceptions, not even for something as pure as football.

Either by finding loopholes or just bypassing the systems altogether, the rich become richer and the poor stay poor. Financial Fair Play’s current model has definitely failed to account for some of the situations it has faced.

PSG’s Sly Move for Mbappe

Kylian Mbappe’s transfer from Monaco to PSG is a glaring example of some peculiarities regarding FFP. Of course, in 2017 PSG managed to secure the services of Neymar for a world record fee of 222 million Euros. A transfer that changed the market as we know it and inflated player prices through the roof. And in the same summer no less, PSG also managed to bring Kylian Mbappe to the Parc des Princes. Granted he was not as big a star as he is today, but even so, he was valued well over a 100 million with clubs like Real Madrid and Man United in hot pursuit as well. There was no way PSG could justify buying him after the ludicrous sum spent on Neymar so they found and exploited a loophole in the system. One that left the footballing world comically scratching their heads at its simplicity. All they did was sign him on loan with an agreement for a purchase option after the one-year loan spell for a whopping 180 million Euros.

Something so obvious yet potentially game-changing (not in a good way) was totally unaccounted for in the regulations. This meant PSG had plenty of time to generate revenues and whatnot until the next assessment period and get away scot-free.

So Why is it Unfair and Is There Any Solution?

To understand how FFP is not entirely fair to the smaller clubs, we need to consider a hypothetical example. Let us say that a relatively small club like Brighton in the Premier League get taken over by multi-billionaire owners such as the Abu Dhabi group. In the current scenario, with the current FFP regulations, Brighton would not be able to fulfill the aspirations of reaching the very top alongside clubs like Manchester United, Chelsea or whoever. Despite the owners having a ton of money to pump in, it would make no difference because Brighton do not have a big brand, a recognized project and they do not have a global outreach anywhere near the likes of United or City.

The only way to establish their brand and make them generate revenue is by attracting big players and creating widespread buzz about the club. However, they do not have any sources of pre-existing revenue to be able to spend on players. So essentially, the owners’ willingness and ability to spend on the club is irrelevant, null and void. The nature of the current FFP rules is of a paradoxical nature and hence far from fair, let alone beneficial to any smaller clubs who aspire to grow as a financial as well as footballing institution. They need revenue to generate revenue and thus these clubs are stuck in a rut.

Now, one can argue that the club owners can spend all the money on youth development, training facilities and infrastructure, etc. since FFP wants to make football viable long term. But realistically speaking, in such a profit-oriented sphere, what potential investor is going to be willing to pump billions into a club’s future without any guarantee of returns. There is no incentive other than the hopes of developing a world-class youth project that consistently churns out talented players. With the huge emphasis on the transfer market today, the prospect of taking a club to the top solely through investing in youth is a lengthy process and success is a long shot at best.

Is There a Solution?

Perhaps there is. This solution will involve making drastic changes to the current rules and regulations but this might certainly level the playing field a lot more:

A transfer fee cap and wage cap.

Sounds very basic but perhaps it is the only way that the smaller clubs may be able to compete with the giants. Now say we revisit Brighton’s above mentioned hypothetical scenario. For example, if UEFA have set the transfer cap to 350 million Euros, meaning that all clubs cannot spend more than 350 million in transfer fees in a given window. This would mean that Brighton’s owners could pump money into the club’s transfer funds within the rules in order for them to attract the big-name players. The fixed cap would mean that Brighton could spend similar amounts of money to City, Chelsea etc. and the big dogs do not get any additional advantages. The wage cap means that the bigger clubs can’t attract players solely on the basis of more lucrative wages either.

Of course, this most likely brings about a world of new complications but strictly from a financial sense it is a lot more ‘fair.’ And furthermore, clubs can keep spending on their youth setups and infrastructure to try and achieve long term sustainability, thus keeping UEFA’s aim of long term viability intact. This is, of course, a purely hypothetical scenario and one that will definitely have flaws and complications if it were to be implemented. But again the current FFP model is not airtight and it took a long time of planning and hypothesizing to put this into action too. Perhaps with a lot more planning and constant evolution, football can arrive at its ‘least objectionable model’ of financial fair play.

No system is perfect and it must keep evolving especially because football is so dynamic. The best that can be done is to create a system with as few loopholes as possible, one that accounts for as many extraordinary circumstances in the future and keeps things running smoothly in the present.

Written by Aaryan Parasnis 

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