Manchester City’s two-year ban from the Champions League for a serious breach of Uefa’s financial fair play rules has been overturned by the court of arbitration for sport, which has also reduced the club’s fine to €10m (£9m) from €30m.
City said in a statement: “The club welcomes the implications of today’s ruling as a validation of the cub’s position and the body of evidence that it was able to present. The club wishes to thank the panel members for their diligence and the due process that they administered.”
City, whose executives had furiously denied wrongdoing and throughout a 20-month saga consistently accused Uefa’s processes and decision-makers of being biased against the club, had appealed to Cas after the adjudicatory chamber of Uefa’s club financial control body (CFCB) imposed the sanctions in February.
A panel of three European lawyers convened by Cas heard the appeal by video conference from 8-10 June.
The Champions League ban, a most severe sanction, and a €30m fine were imposed by the CFCB after it concluded that City had committed “serious breaches” of Uefa’s FFP regulations “by overstating its sponsorship revenue in its accounts and in the break-even information submitted to Uefa between 2012 and 2016”.
Uefa said in response to Monday’s verdict: “Uefa notes that the CAS panel found that there was insufficient conclusive evidence to uphold all of the CFCB’s conclusions in this specific case and that many of the alleged breaches were time-barred due to the five-year time period foreseen in the Uefa regulations.
“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 [European Club Association] remain committed to its principles.”
The guilty finding followed an investigation sparked by the publication of “leaked” emails and documents by the German magazine Der Spiegel in November 2018. A selection of the published City documents appeared to show that City’s owner, Sheikh Mansour bin Zayed al-Nahyan of the Abu Dhabi ruling family, was mostly funding the huge, £67.5m annual sponsorship of the City shirt, stadium and academy by his country’s airline, Etihad. One of the leaked emails suggested that only £8m of that sponsorship in 2015-16 was funded directly by Etihad and the rest was coming from Mansour’s own company vehicle for the ownership of City, the Abu Dhabi United Group.
FFP rules are aimed at encouraging clubs to break even and spend only money they make in revenues, not pay excessively for players in wages and transfer fees subsidised by outside funding from owners. The system means that sponsorships are an important element of clubs’ financial reporting and ability to sign players, and must truly be commercial revenues from outside companies, not disguised owner funding.
City refused to comment or engage with initial inquiries from Uefa and the CFCB’s investigatory chamber, on the basis that the emails had been leaked or stolen. Der Spiegel, in its extensive coverage, had anonymised its source as “John”, and quoted him saying he had not hacked computers to obtain the emails.
Shortly after Der Spiegel’s publication, the source was identified as a Portuguese national, Rui Pinto, who was arrested shortly afterwards and has been charged with 147 criminal offences, including hacking and other cybercrimes, which he denies. The charges relate to Portuguese football clubs and other organisations, not to the “leaks” of City’s or Uefa’s emails.
After the CFCB’s investigatory chamber began a formal inquiry to examine whether the documents did expose the overstatement of sponsorship income, City initially welcomed it, and said they would present evidence to show “the accusation of financial irregularities are entirely false”. However the investigatory chamber was not convinced, and charged the club last May.
The adjudicatory chamber, chaired by José Narciso da Cunha Rodrigues, a former general prosecutor in Portugal, and including the prominent English sports law barrister Charles Flint QC, determined after hearings in January that City had indeed committed serious breaches of FFP, and also that the club had failed to co-operate in the investigation carried out by the investigatory chamber.
City then issued a public statement accusing the process of having been “prejudicial” and claiming it had ignored “a comprehensive body of irrefutable evidence”. Declaring that they did not recognise that the CFCB and its senior lawyers operate independently of Uefa itself City alleged that it was “a case initiated by Uefa, prosecuted by Uefa and judged by Uefa”. The club’s statement expressed confidence that they would get “an impartial judgment” at Cas.
A few days later, however, City’s chief executive Ferran Soriano acknowledged the independence of the CFCB chambers, by saying of them: “This is not Uefa,” and describing Uefa as an “association of associations” with people who work “very hard for the benefit of … the clubs of Uefa like ours, but also for the benefit of football”.
QR code