Manchester City were found to have inflated sponsorship revenues by £830m from the 2009-10 to the 2017-18 seasons, according to the Premier League's independent commission.
Sponsorship deals ruled 'shams'
The commission's 40-page 'core decision' concluded that City's lucrative sponsorship arrangements were 'shams'. The club were found guilty of all charges of breaching the Premier League's financial rules.
When Sheikh Mansour bin Zayed al-Nahyan bought the club in 2008, he set out 'ambitious plans' for City, but those ambitions could not be met by the finances then being generated. The commission said: 'The club appreciated from the early days of [Mansour's] ownership that very significant funds would be required if the steps needed to realise ... ambitions were to be fulfilled.'
The Disguised Funding Scheme
The commission described a 'Disguised Funding Scheme' (DFS) where the club entered into sponsorship agreements with Abu Dhabi sponsors at well above fair market value. Sponsors would pay only a small percentage of the fee, the 'base sum', while the rest, the 'tagged sum', was paid by Mansour's Abu Dhabi United Group (ADUG).
The DFS allowed the club to state that its commercial revenues were 'far, far greater than was in fact the case' and conceal the true extent of equity contributions from ADUG. The commission concluded: 'Each of the Abu Dhabi sponsorship agreements was a sham.'
Scale of the funding
Over the nine seasons under investigation, City booked £949.94m in sponsorship revenues from Abu Dhabi-based companies. Of that total, only £119.25m had been paid in 'base fee'. The rest, £830.69m, were 'tagged sums' paid by ADUG.
The £830m accounted for as much as 30% of City's revenue over the period. In 2009-10, the commission identified £22.5m in 'tagged sums', rising to £134.73m by 2017-18.
Knock-on effect and further findings
Once the first block of charges was proven, relating to accurate financial information, a domino effect ensued. Removing the 'tagged sums' meant City failed to comply with Uefa and Premier League regulations 'in any of the seasons' under which they were charged.
The commission found the club had 'made concerted efforts to stop and frustrate the Premier League investigation' and had 'concocted' explanations for the DFS. It also made damning comments on witnesses, stating: 'Evidence given by a number of important factual witnesses called to give evidence on behalf of the club was false in a number of key respects.'
Further, payments totalling more than £15m, 'not recorded in an employment contract ... but instead recorded in a consultancy agreement', were made to three former employees, understood to include Roberto Mancini and Yaya Touré. A scheme known as the 'Fordham arrangement' was also shown to be a sham, selling players' image rights to a third party 'in reality little more than a front for ADUG'. The only charge City were cleared on related to one subset of obligations to act 'in the utmost good faith'.
City's response
The commission described the case as 'fiercely contested', with evidence submissions running to 'many, many thousands of pages'. City intend to appeal against the decision before Friday, stating the opinion 'contains clear material errors, of law, principle and fact, and is unsafe'. Their chief executive, Ferran Soriano, said the decision was based on a 'Premier League conspiracy theory'. The commission must also meet to decide upon its sanction.
