The Premier League has now published a ’Core Decision’ (in redacted form) in its case against Manchester City. The result is no longer a matter of speculation: an independent Commission has found all charges relating to breaches of the League’s financial rules proved, spanning a nine-season period, together with most of the alleged failures to co-operate with the League’s investigation. The Premier League is not a public regulator in the orthodox sense; it is a private company operating through contractual rules agreed by its clubs. Publication of the core decision, even in redacted form and with detailed reasons to follow, strengthens the legitimacy of a process conducted behind closed doors and provides the necessary foundation for public scrutiny of any sanction.
The findings are stark and damning. Between 2009 and 2018, the Commission concluded that City used a ’disguised funding scheme’ under which substantial sums paid by its owner, Abu Dhabi United Group Investment & Development Ltd (ADUG), were presented as sponsorship income from commercial partners. The sponsors were liable only for a base sum, ADUG supplied the balance. These “sham” contracts underpinned a scheme which was designed, according to the Commission, to mislead auditors and regulators as to the true state of the club’s finances. The effect was to artificially inflate the club’s revenue by more than £830 million across the period and thereby reduce its apparent costs in order to satisfy both UEFA’s break-even requirements and the Premier League’s Profitability and Sustainability Rules, which in reality it had breached by a “very substantial amount”.
Subject to a successful appeal, the proceedings now move to penalty and the stakes for both sides could scarcely be higher. Any suggestion of a negotiated compromise on sanction is wide of the mark – an “Agreed Sanction” is available in some cases but not here. The disciplinary provisions are found at section W of the Premier League Rules and the Commission’s powers on sanction at Rule W.64. A vast financial penalty seems inevitable (and there is no limit on its size) but the critical question for the Commission will be how it approaches any sporting sanction. The Commission enjoys a wide discretion and may impose any penalty as it shall think is fit. However, under Rule W.64.4 (when dealing with a club) the Commission has an explicit power to suspend, deduct points or recommend expulsion from the League.
The Rules on penalty are not supplemented by any guidelines and comparisons with sanctions handed down in previous cases of financial misconduct are of limited application where the Premier League has never before grappled with sustained offending on such a scale. The breaches will surely be further aggravated by the Commission’s finding that “the Club clearly intended to circumvent the PL Rules” – this case was about concealment and dishonesty not mismanagement. As the Chief Executive of the Premier League commented after the publication of the Core Decision: “the club systematically broke Premier League rules for nearly a decade”. The breaches of the club’s duties of co-operation and good faith in the process itself will surely further elevate any sanction.
A points deduction at a level which leads to relegation, or expulsion, must therefore be regarded as realistic possibilities. The latter nuclear option has never been invoked but the unprecedented nature of the case means that the club must expect the Commission to consider it. The immediate question is when any sanction can take effect. The Premier League has expressed its intention “that the full process (including any appeals and publication of relevant decisions) is concluded as soon as possible”. After an eight-year investigation expedition would be widely welcomed but the timetable is not within the League’s control. Manchester City has confirmed that it will appeal the Commission’s decision ahead of the 2 October deadline and, under Rule W.86, an appeal ordinarily has a further 12 weeks in which to conclude, with another 30 days available to provide a decision.
An Appeal Board may vary or disapply those standard directions but, even if that period is abbreviated, further delay extending into the resumption of the Premier League competition following the international break appears inevitable. Issues of fairness will flow for a club that plays and loses to Manchester City in that period where a rival club does not. Similarly, if expulsion is to be the penalty and takes effect mid-way through the season, what happens to the points won or lost in fixtures against Manchester City to date? The timing of any final decision and ensuing sanction will be contentious whenever it falls.
This case, however, is about far more than Manchester City’s trophy cabinet in this or any previous season and the sporting consequences for its rivals. It is a test of the Premier League’s ability to regulate the clubs that generate its greatest wealth and global status. The new Independent Football Regulator will alter the wider governance landscape but it will not remove the League’s responsibility for enforcing the rules of its own competition. If City ultimately prevail in an appeal, the League’s authority may be gravely weakened. If the charges are upheld and meaningful sanctions follow, English football will have crossed into a new era: one in which ownership, governance and financial transparency can no longer be treated as matters of private club management.
Max Baines is a barrister at Red Lion Chambers specialising in financial crime and sports law.
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