Manchester City have been found to have broken Premier League rules over a nine-year period, with an independent commission concluding the club filed misstated accounts and deliberately concealed the true state of its internal finances from football regulators and external auditors alike.
The concealment was achieved through undisclosed funding mechanisms and artificial expense reductions designed to make the club appear compliant with Profitability and Sustainability Rules (PSR). The commission also found the club arranged inflated commercial sponsorship deals that relied on disguised equity injections from the owner rather than genuine arm's-length commercial revenue.
Sham contracts and inflated revenue
By presenting these “sham” contracts as legitimate commercial income to auditors, the club filed financial statements that included artificially inflated revenue exceeding £900million between 2009 and 2018.
City's historical accounts before, during and following the period under investigation were signed off by BDO. The commission concluded there was systemic deception by club management rather than accusing BDO of intentional complicity.
Regulatory scrutiny and false testimony
With the findings of misstated accounts now public, financial accounting watchdogs such as the Financial Reporting Council (FRC) could potentially review the auditors' work, according to accounting experts. Regulatory bodies typically examine whether external auditors exercised sufficient professional scepticism when evaluating accounts.
The commission noted that several key factual witnesses called by City gave dishonest, untrue testimony in critical areas. Because external financial auditors rely on management representations during standard audits, such misleading statements prevented auditors from uncovering underlying financial misstatements.
Future reporting and appeal
Future financial statements submitted by City to regulators will be subjected to intense examination. Industry expectations suggest auditors handling the club's books moving forward will be required to implement the strictest compliance checks, independent funding verifications and heightened scrutiny over all equity-backed commercial agreements.
Manchester City have strongly rejected the commission's findings, maintaining that the accusations are entirely false. The ruling remains subject to an ongoing appeal process, during which no final determination or sanctions have been fully enacted. City intend to appeal against the verdict and continue to deny any wrongdoing.
