Manchester United could look to sue Manchester City for "tens of millions of pounds" in compensation if a guilty verdict against their cross-town rivals for breaching Premier League regulations is upheld.
City are set to be found guilty of 114 of 115 charges brought by the Premier League, although the Blues have indicated the process hasn't yet concluded and confirmed they will appeal any decision that goes against them.
Clubs weigh compensation claims
While we await confirmation of the independent panel's verdict and the written reasons for the decision, Premier League clubs are considering their legal position regarding potential compensation claims against City, who faced charges of breaching spending rules between 2009 and 2018.
While the panel will dish out sporting sanctions if a guilty verdict is upheld, rival clubs can also pursue their own financial claims under Premier League rules and United are reportedly one of at least four sides that preserved the right to claim compensation before the statute of limitations passed.
Proving causation is key
Any financial claim is only likely to be heard once the appeal process has run its course, but Tom Murray, Co-Founder and Partner at Three Points, and a specialist in sports law, explained what a club like United would need to prove.
"Historically, compensation cases brought by one club against another were rare. The challenge in these types of cases is proving causation. This involves constructing what is known as a counterfactual which means carrying out a hypothetical analysis of what would have happened had Manchester City not breached the Premier League's rules," he said.
"This could involve demonstrating that had Manchester City not breached the Premier League's rules, a particular club would have won the Premier League or would have qualified for the Champions League. If you think about it, that can be quite challenging.
"It doesn't necessarily follow that in a situation where Manchester City had less money to spend on players that they would have had less sporting success. Whilst there is a correlation between the amount a club spends on its squad and its sporting success, the is not necessarily a causal link between the two."
Burnley v Everton sets precedent
The most recent precedent for a successful claim was in June, when Burnley sued Everton and received £35 million in compensation for the Toffees' PSR breaches. Although Everton have appealed, that case shows a club successfully suing another club for Premier League rule breaches.
In that case, experts were called to show the material impact Everton's breaches had on Burnley, and any club that brings a case against City is likely to follow a similar path.
"There'll be experts that are brought forward," said Murray. "So in the Burnley v Everton case, there were different experts who came forward and did an analysis to try and connect how much money Everton spent in excess of the upper loss threshold and the sporting advantage that was conferred as a result of that overspend. There's lots of statistical and financial analysis that's adduced."
United's close finishes strengthen case
United twice finished second to City during the period which covers the charges, while in 2015/16 they missed out on Champions League qualification to the Blues.
That season, and the 2011/12 runners-up finish, both saw City finish ahead of United on goal difference, and Murray explained how those campaigns will be easier to bring a claim against, rather than the 2017/18 season when City beat United to the title by 19 points.
"Absolutely, because the margins are much more narrow," he said. "Whereas if someone ran away with the league, it gets harder and harder to show that the only reason they ran away with the league was that they managed to get away with breaching the financial regulations."
Although a claim may still be months or even years away, Murray estimates that a club like United would seek compensation in the tens of millions of pounds from City.
"It's definitely not going to be easy to calculate, but it will be significant, tens of millions of pounds, potentially," he said. "But I suspect that they're going to have to wait until they have the decision to be able to work that out."
"The type of process that some would be looking at is, assuming you can prove causation, how much money would we have received had we won the Premier League or had we qualified for the Champions League? And that's a feature of financial analysis which isn't too difficult to carry out."
"The hard thing is showing that Manchester City's breach meant that you didn't qualify for the Champions League or meant that you didn't win the league.
"Again it goes back to causation - trying to connect the breach with a sporting advantage and a particular loss suffered."
