Pep Guardiola outside the Etihad.
Photo by Nigel Roddis/EPA

Could Manchester City's Acquittal Transform European Football Forever?

While it may not mean the end of Financial Fair Play, the decision might encourage more billionaire owners to gamble on breaking the rules.
July 15, 2020, 12:48pm

On Monday, the Court of Arbitration for Sport announced that they had overturned Manchester City's two-year European football ban, after finding the Premier League club had not misled authorities about the source and scale of their sponsorship deals. The announcement had the feeling of a genuine bombshell moment for football.

The battle lines of rival fandoms were quickly drawn on social media, with Football Twitter choked with memes depicting UEFA – European football's governing body – as clowns, or showing them on the shoulders of the dancing pallbearers. Commentator Gary Lineker outlined the domesday scenario when he tweeted: "Hard to see how UEFA's FFP rules can survive this. In fact, can UEFA survive the ramifications?"

Despite the ruling, UEFA claim that Financial Fair Play (FFP) remains in place, reaffirming their commitment to their spending regulations soon after the ban they had handed down to Manchester City was lifted. In a curt statement, UEFA said: "Over the last few years, Financial Fair Play has played a significant role in protecting clubs and helping them become financially sustainable, and UEFA and ECA remain committed to its principles."

Manchester City fans, naturally, were somewhere between relieved, delighted and exultant. Speaking to VICE News, one fan, who asked not to be named, said: “It would have been a kick in the teeth after all the club’s been through to be banned from Europe at what should be the peak of our history.

"Dig into any of the commercials that happen behind the scenes at the big clubs, and you’ll find stuff that's sailing pretty close to the wind – that’s just how business works when vast sums of cash and teams of lawyers are involved. I’m glad to have it behind us, and I'm looking forward to two more years in Europe."

The story of City’s meteoric rise should be familiar to anyone with even a passing interest in English football. Having dropped into the third tier in the late 1990s, before setting their upwards trajectory in motion by winning the Second Division play-off final against Gillingham, they were promoted again in the early 2000s and established themselves as a mid-table Premier League side.

Then, in 2008, they were subject to what – for their fans, at least – was a dream takeover. Over the last 12 years, they have spent around £1.5 billion on transfer fees alone, attracted generational talents like Sergio Aguero, Kevin De Bruyne and Raheem Sterling, won four league titles and, in 2016, brought in one of the best coaches in the world, in Pep Guardiola. Winning the Champions League is their next big ambition.

FFP – introduced at the outset of the 2011-12 season, when City won their first Premier League title under Roberto Mancini – was intended to stop clubs from spending more than they earned and, in many cases, spiralling towards financial oblivion.

The reasons for UEFA's failed attempt to ban City from the competition go back to 2018, when German outlet Der Spiegel published a series of exposes on City's business practices. These referenced leaked internal emails which appeared to show that City's owner Sheikh Mansour bin Zayed al-Nahyan – a member of the Abu Dhabi royal family, who rule autocratically – had massively subsidised sponsorship deals in previous years, with the club hierarchy colluding to deceive UEFA in the process. According to Der Spiegel: "Manchester City financial reports were a web of lies; the team walked all over the Financial Fair Play rules."

City's stadium and shirts are sponsored by Etihad, the state-owned airline of Abu Dhabi, while they also came under scrutiny for their deals with the Abu Dhabi Tourism Authority, Emirati telecommunications company Etisalat, and Aabar, an Abu Dhabi investment firm. Der Spiegel reported that the club and its sponsors had essentially collaborated to inflate commercial revenues in an attempt to get around FFP regulations – revelations which looked even worse given that City, along with Qatari-owned Paris Saint-Germain and seven other clubs, had already been heavily sanctioned for violating FFP rules in 2014.

UEFA’s vengeful disciplinary machinery clanked into life and, in March of 2019, it was announced that their independent Club Financial Control Body would be investigating “several alleged violations of FFP that were recently made public in various media outlets”. After much wrangling between the two sides, with City claiming they had fallen victim to “illegal hacking” after initially stating “the attempt to damage the club's reputation is organised and clear”, the Adjudicatory Chamber of the Club Financial Control Body finally came to a decision in February.

They found City guilty of “serious breaches” of FFP by overstating sponsorship revenue between 2012 and 2016, as well as failing to cooperate with their investigation, banning City from European competition for two seasons and ordering them to pay a €30 million fine. City appealed to the Court of Arbitration for Sport, who ruled on Monday that the ban should be overturned and the fine reduced to €10 million.

Though they are yet to publish their full reasons, the CAS ruling stated that most of the alleged breaches were “either not established or time-barred”, with UEFA’s own regulations stating that prosecution for FFP breaches is barred after five years. While CAS agreed that City had failed to cooperate with UEFA's investigators – technically an FFP breach in itself, hence the €10 million fine – they did not find that City had disguised equity funding as sponsorship contributions.

The decision has been almost universally hailed as a victory for City, if not as moral and ethical vindication of their behaviour. The immediate upshot is that they will be able to compete in the Champions League next season, which, given the television revenue and prize money on offer, should soften the shuddering financial blow of the coronavirus crisis and the cost of games played behind closed doors.

Many speculated that, had City been excluded from the Champions League, their best players would have looked to move on this summer. Guardiola, likewise, may have been forced to consider his future had the ultimate silverware no longer been on offer. Instead, the City show is still on the road, and lurid fantasies about an irreversible decline for the club have gone up in smoke.

While many have suggested that City’s win could bring the long-term viability of FFP into question, it has broadly done the job it was meant to do. According to the Associated Press, European clubs made a combined profit of €140 million in 2018, compared to losses of €1.163 billion in 2009, before FFP was conceived. While the rapid inflation of transfer fees and wages has continued, not helped by the cumulative expenditure of City and PSG, the original arrivistes at Chelsea and the money-mad old guard at Real Madrid, the rate has at least slowed. European football is in better financial health than it used to be, coronavirus crisis aside.

“People say it’s inefficient, but FFP has succeeded massively on its own terms,” says Martin Calladine, author of The Ugly Game: How Football Lost Its Magic and What It Could Learn From the NFL. “Its job wasn’t to make football free and fair for all, but to stop clubs from destroying themselves by getting involved in an arms race with expenditure, and to stop them spending money that they didn’t have. Generally, it’s done that very successfully.”

So what might the domesday scenario, of football without financial regulation, look like? “The first thing to appreciate is that, while there have always been clubs that are able to outspend others, if you look at the levels of wealth that some top clubs have now, it’s almost limitless,” says Calladine. “Paris Saint-Germain, Man City, even Newcastle if they are taken over by Saudi Arabia, have effectively unlimited money. They are backed by governments.

"It could lead to a complete collapse in competitiveness. I think you’d see the introduction of B-teams all across Europe where they don’t already exist. Plus, I think you’d see a massive spiralling of transfer fees and wages of the sort that was beginning to happen before FFP really started to bite. Some of the huge jumps in transfer fees into the hundreds of millions that we have seen, that will accelerate beyond all measure, and competitiveness would be massively, massively harmed by that.”

Calladine adds that, without a strong central authority to enforce financial regulation, European football would be more vulnerable to a breakaway "Super League" – essentially an exclusive members’ club for the richest teams – while the nature of football fandom could change, with fans becoming less attached to clubs as they morph into franchises and more focused on the cult of personality around players like Cristiano Ronaldo or Lionel Messi. While it's too early to sound the death knell for FFP, there’s no doubt that UEFA’s authority has taken a knock.

“When you see that UEFA went ahead and handed out a ban when there was clearly a good chance it would end up time-barred, having botched the same prosecution of PSG [for a separate investigation], you do have to question how seriously and how competently they are able to prosecute their own rules,” says Nick Harris, editor of Sporting Intelligence. “If you take that view, then you have to be sceptical over whether or not they really want to deal with the issue.”

While FFP may not be under immediate threat, Harris adds that City's victory could encourage other mega-wealthy owners to seek out regulatory loopholes going forwards. He also makes clear that, while City have come out on top, their €10 million fine is not insignificant. “There’s not an exoneration here. A £9 million or €10 million fine is not a small amount of money,” he says. “I know it’s buttons to Abu Dhabi, but it’s a significant amount. You could run three or four League Two clubs for a year on that… it’s a serious, serious breach of the FFP rules, which compel clubs to go along with inquiries.”

City may not have escaped entirely unscathed, but UEFA has lost enough face that other clubs may gamble on breaking the rules in the future. In the long-term, that could continue to erode trust in FFP’s enforceability. While checks and balances remain in place, billionaire owners and state proxies would much rather European football was a horribly skewed free market free-for-all. Whether UEFA can resist that desire in the long-term is the big question.

@W_F_Magee