Our CEO and founder Toby Harper comments on UEFA's recent ban of Manchester City from the Champions' League due to 'serious breaches' of financial fair play regulations.
It’s the news that’s sent shock waves through European football, dashing the hopes of thousands of fans and spreading fear through other clubs: Manchester City have been dramatically banned from the Champions League until 2022. Accused of serious breaches relating to UEFA’s club licensing and financial fair play (FFP) rules, the team have also been fined 30m Euros (£25m) by the European regulating body.
The club plan to appeal UEFA’s decision. If they fight their corner with the same tenacity they show on the pitch, UEFA could be in for the legal long haul. But whatever happens next, one thing is for certain: football will never be the same again.
Introduced in 2012 to prevent clubs from spending beyond their means, financial fair play, in simple terms, requires football clubs taking part in UEFA competitions to balance their income with their expenditure. It’s not the first time Manchester City have fallen foul of the regulations: they were first found to have broken the rules in 2014 and were fined and punished then. If Manchester City have deliberately contravened FFP rules this time, they have to be punished again. The key question though is whether the current punishment, £25m and a two-year Champions League ban, fits the crime. City’s lawyers will say not. But one line in the statement provides the clue as to how they will attack the appeal: ‘A case initiated by UEFA, prosecuted by UEFA and judged by UEFA.’
Expect lawyers now to argue over the way the case was brought, carried out and ruled upon. We may even see the details of the case facing City reach a higher court, where a judge may be asked to rule on the very essence of financial fair play. Another likely consequence of the action is that City demand other clubs’ accounts are forensically analysed in the same way, and that they are published for everyone to see.
For UEFA’s part, the telling phrase in their judgment was that City ‘failed to cooperate in the investigation of this case.’ That is shorthand for not being interested and that they felt City weren’t taking the allegations seriously.
Forgetting the opposing sides, the case will be decided on where the facts actually lie. UEFA’s financial fair play state clubs can only lose £25m over three seasons, otherwise they will be in breach of FFP rules and liable to a fine or suspension. UEFA also has the powers to investigate if a club's owner injects money into a club through a sponsorship deal, in order to ensure it is a fair market price. UEFA say City overstated their sponsorship revenue in accounts submitted between 2012 and 2016. City deny this and it is expected to be a key part of the appeal.
Central too will be leaked emails, which came to light in 2018 through Football Leaks, suggesting that City's Abu Dhabi owners paid the club directly rather than the sponsor Etihad. They also indicated other sponsorship deals with companies related to the owners were secretly backdated.
City insist the emails were taken out of context and their lawyers may also point to the fact hacked evidence is an unfair basis upon which to prosecute or punish. Is it reliable? This really gets to the the heart of the issue, as City claim UEFA is acting as investigator, prosecutor and judge.
The current Premier League champions plan to take their case to the Court of Arbitration for Sport (CAS). Although the stakes are high, the timescale is likely to be quick. City will want this sorted by the summer, and football will insist on it.
Will the ban be overturned? As lawyers, we look to previous cases. In 2018, CAS ruled that a one-year ban for AC Milan was too severe, even though the court said UEFA had been right to impose sanctions. Our prediction for worst-case scenario is a one-year ban: two seems unlikely.
Whatever decision the Court of Arbitration takes, UEFA has sent a clear message: they are blowing the whistle on billionaire football owners who think they can act however they like.