The year is 2009, European football’s aggregate debt is almost 2 billion Euros per annum with clubs in the English, Italian and Spanish leagues accounting for the vast majority of this debt. Enter the 2011/2012 season and the Financial Fair Play (FFP) scheme initiated by UEFA to stem the negative flows out of the domestic game. The idea was to make the game more commercially viable and inviting for businesses.
Fast forward to 2014, Manchester City were found to be in breach of FFP rules but agreed a settlement with UEFA in May of that year. Then in November of 2018, information from Football Leaks prompted the reopening of that case in March the following year. Four months later in May 2019, the case was referred to an independent adjudicator before finally; based on their findings; in February, Manchester City was handed a 2 year ban from European competition and a €30m fine. In July, that decision was somewhat overturned. As a result, City face only a €10m fine and they are no longer banned from competing in Europe. But what does this all mean?
First of all, to be clear; FFP is in place as a means of regulating expenditure of European clubs – a way of ensuring clubs exist within their means and not get themselves into debt. In layman’s terms, the way Financial Fair Play works is this: clubs can spend up to €5m more than they make over a specified period – usually three years – where the losses incurred over that time must not exceed a particular figure (unless the club owners can reimburse that amount). In other words, revenue accrued from television and ticket income as well commercial proceeds must be balanced against transfers, wages and other expenses. Money spent on stadiums, training facilities, youth development or community projects is exempt.
That part about commercial proceeds is where City had run into trouble. It was revealed that City had overstated their sponsorship deals. By some accounting wizardry, City’s owners had manipulated the money coming from sponsors like Etihad Airlines (for which their stadium is named) to sign over inflated sums before routing them through third parties for cash back benefits. For those of us who didn’t major in economics, suffice to say, it was against the rules.
Naturally, City appealed the ban and were successful in getting their suspension overturned, but it should be noted that the €30m fine that was cut to €10m was as a result of their poor participation in the investigation. That may be a black mark against City in future dealings with the European governing body going forward. What’s more, the wording in the ruling suggested that Man City would not be found innocent of their crimes as such, but rather, they were not found guilty. For example, imagine being brought up in court for murder, one which you committed in truth, but the prosecutors fail to present suitable evidence for conviction. That’s exactly the case here with Manchester City. For now, City is free to continue as they wish but we need to consider what that means.
Manchester City is seen widely as a premier destination for top class football. As such they are constantly linked to some of the biggest and most expensive players in the world. The main appeal for incoming and currently contracted players is the chance at winning trophies and competing at the highest level in Europe. With no European football on offer that might have hampered their transfer business for a few seasons. For example, one name linked to City at the moment is Thiago Alcantara. The Spanish playmaker has spent the last 7 years in Germany with Bayern Munich, a club which arguably wins the German Bundesliga before the season even starts. A player at his caliber would not consider a team like Man City should they not be involved in European football. Even manager Pep Guardiola was doubtful for staying at the club. The eccentric manager hasn’t won a Champions League title since leaving Barcelona in 2012, it’s one thing trying and failing; it’s another thing entirely not even to have a chance for two years.
EUROPEAN PLACES IN ENGLAND
Now, this situation may have originated in Abu Dhabi and inherited by Manchester but the shockwaves were felt throughout England. Chelsea, Manchester United, Leicester City, Wolverhampton Wanderers, Sheffield United, Arsenal and Tottenham Hotspurs were all keen on the conclusions of this investigation. Had City lost their appeal and the ban was upheld then the aforementioned teams would have been in the running to capitalize on the new opportunities presented to them. In England, the top four clubs in the Premier League table qualifies automatically for next season’s Champions League. Fifth place, sixth place and the winners of the FA Cup would all qualify for the Europa League as well. Manchester City finished in second place on the English Premier League table.
There were a few layers to it, but really the result of City’s appeal actually puts things back into recognized territory; as the undisputed second placed team this season, they will take their place in Champions League and pay a €10m fine, which is just a smidgen for a club as wealthy as them. So, normal service is resumed for Manchester City, and for whom it may concern, it’s business as usual.