The Premier League has released a statement confirming that an independent commission has found Manchester City guilty of all charges related to serious breaches of financial rules, including the arrangement of 'sham contracts' with a number of commercial partners.
Commission findings
The independent Commission found Manchester City guilty of all charges related to serious breaches of the Premier League's financial rules over a nine-season period, and the majority of charges in relation to its failure to co-operate with the League's investigation.
Between Seasons 2009/10 and 2017/18, the Commission found that Manchester City arranged 'sham' contracts (which misrepresented the true agreement between the parties) with a number of its commercial partners, as well as relying on 'sham' agreements with others, to artificially inflate the club's revenues and reduce its costs.
Financial misconduct details
The club filed misstated accounts and concealed the true state of its finances from its auditors and football regulators. Manchester City was significantly in breach of both the Premier League's and UEFA's spending limits.
During the Premier League's investigation, Manchester City committed multiple breaches of its duties of co-operation and utmost good faith towards the League, with three of the four alleged breaches upheld.
The Commission found that Manchester City arranged 'sham' commercial deals with a number of its sponsors during the period, which were part of a disguised funding scheme, whereby those companies were only required to pay a portion of the relevant sponsorship fees. The remainder was funded by Abu Dhabi United Group Investment & Development Ltd (ADUG), which owned the club.
Impact and next steps
As part of the scheme, further 'sham' arrangements, funded by ADUG, were entered into to enable the club to record lower operating expenses than it actually incurred, as well as a 'sham' circular arrangement with Fordham, an entity that purchased the club's players' image rights, that was funded by ADUG.
The purpose of these schemes was found to have been to artificially inflate the club's revenues, and reduce its costs, by more than £900 million during the affected period, to appear to comply with financial rules. The consequence of this, as the Commission found, was that the club filed misstated accounts and concealed the true state of its finances from its auditors and football regulators. The Commission concluded that 'by its conduct the club clearly intended to circumvent the PL Rules'.
As a result, Manchester City failed to accurately report its income and expenditure for the purposes of the Premier League's Profitability and Sustainability Rules and UEFA's Club Licensing and Financial Fair Play Rules. The Commission found that, had all of the relevant agreements been reported accurately in the club's accounts, it would have been in breach of both the League's and UEFA's spending limits by a very substantial amount.
In addition, during the course of the four-year investigation conducted by the Premier League, the club committed multiple breaches of its duties of co-operation and utmost good faith towards the League. The Commission concluded that the club had 'made concerted efforts to stop and frustrate the PL investigation'.
The independent Commission's findings are set out in a Core Decision, of which a redacted version has been published. The Commission's award comprises both the Core Decision and a large number of additional appendices, which the League is committed to publishing as soon as it is able.
The League is able to publish the Core Decision because the Commission has ruled (and an Appeal Board has confirmed) that the Commission's decision is a 'final award'.
Now that the charges have been proved, the issue of sanction will be addressed separately in a further hearing with the independent Commission. In accordance with Premier League rules, that hearing will remain private and confidential until such a time as publication of the outcome is permitted. The club has the right to appeal the independent Commission's findings and has until Friday 2 October to exercise that right. The Premier League Board's intention is that the full process (including any appeals and publication of relevant decisions) is concluded as soon as possible.
