Manchester City Ruling Reveals Financial Findings
The Manchester City ruling has detailed how the club was found to have breached serious financial rules, with an independent commission concluding that more than £830m in sponsorship funding was disguised over nine seasons.
The 40-page ruling, published on Tuesday, found Manchester City guilty of all charges relating to serious financial breaches and all but one concerning the club’s failure to cooperate with the Premier League’s investigation.
The document repeatedly refers to a “sham” and describes arrangements that, according to the panel, were designed to make the club’s commercial revenues appear significantly higher than they actually were.
Disguised Funding Scheme Involved £830m
Manchester City were bought by Abu Dhabi investors in 2008, but the ruling says the club’s financial difficulties became clear at the beginning of the 2009-10 season.
The new owners wanted to build a team capable of competing for major honours, but achieving those ambitions required substantial spending. The club expected significant losses for several seasons just as Uefa and the Premier League were preparing to introduce financial fair play rules.
According to the Manchester City ruling, increasing commercial revenue became an important way of addressing those financial pressures and reducing the club’s dependence on owner funding.
The commission found that sponsorship agreements were structured using a base fee and an additional tagged sum. Sponsors paid the base fee, while the club’s owners paid the tagged amount.
Between 2009-10 and 2017-18, commercial sponsorship income was recorded at £949.94m. However, the ruling said only £119.25m represented base fees, while £830.69m consisted of tagged sums paid by the owners.
The panel said this arrangement gave regulators and auditors a misleading impression of the amount of commercial revenue generated through sponsorship.
Manchester City denied the allegations and argued that the Premier League had misunderstood its sponsorship agreements. However, the panel rejected that explanation, describing it as untrue and saying it had been created after the events to conceal the reality of the funding arrangement.
Project Longbow and Fordham Arrangement
The Manchester City ruling also examined Project Longbow, launched by the club in 2012 as part of efforts to increase revenue and reduce operating losses.
The commission said several elements of the project were genuine, but concluded that one part, known as the Fordham Arrangement, was not.
Fordham was a third party that, according to the ruling, was “little more than a front”. The document said owner funds were used to allow Fordham to acquire the club’s entitlement to financial benefits from players’ image rights at an artificially inflated price.
The arrangement was described as another method of putting money into the club while concealing its true origin. The ruling said £24.5m was wrongly recorded as operating income, while £49.414m was wrongly excluded from operating expenses.
Player and Manager Payments Examined
The commission also found that Manchester City used another method involving payments to players and managers through third parties.
According to the ruling, remuneration that was actually funded by the owners was instead recorded through consultancy agreements, which concealed the true scale of the club’s liabilities.
Three cases were identified, with payments of £8.866m, £7.4m and £0.5m. The names of the individuals involved were redacted from the document and may be revealed when the full written reasons are published.
Manchester City Witnesses and Cooperation
The ruling also criticised the club’s conduct during the Premier League investigation, saying City had made concerted efforts to frustrate the inquiry.
Manchester City provided witness statements or documentary evidence from 24 people, with most giving evidence during the hearing. The commission said evidence from several important factual witnesses was false in key respects.
It further stated that some witnesses had provided information they knew to be untrue and had therefore acted dishonestly.
The commission also said Manchester City’s annual accounts did not provide a true and fair view of its financial position and that the club had been reckless about whether they did so.
The ruling concluded that the club had failed to act “with utmost good faith” and had breached its cooperation duties to the Premier League.
Overall, the Manchester City ruling says sponsorship income was overstated by more than £830m, while additional expenses were wrongly excluded and income was incorrectly recorded through the Fordham Arrangement. The findings form a detailed account of the financial breaches and conduct considered by the independent commission.
