Jeremy MooreHead of Sports Law

Financial Fair Play in the City?

 

Earlier this week the Court of Arbitration for Sport published their detailed reasons for overturning Manchester City’s 2 year ban from European competition and £30m fine.

The news that was greeted with great relief in parts of Manchester and with dismay from much of the rest of Europe, particularly those English clubs whose European hopes are affected by the situation at The Etihad.

By way of recap, the ban related to City’s alleged breaches of UEFA’s Financial Fair Play regulations, largely brought as a result of emails leaked to the German publication Der Speigel between City and 3rd parties. The article suggested that payments to the club which had purported to be made in accordance with its sponsorship arrangements with Etihad and Etisalat were in fact equity contributions made at the behest of City’s owners, ADUG. UEFA found that there was compelling evidence to support the case against City.

CAS however found that the allegation relating to Etisalat was time barred; the alleged breaches fell outside the 5 year statutory limit for prosecution as the payments were received in June 2012 and January 2013.

In respect of the allegations relating to Etihad CAS found, by a majority of 4 to 3, the allegation not to be proven based on evidence presented to it that had not been provided to UEFA. CAS went as far to say: “…the possibility cannot be excluded that Adjudicatory Chamber may have reached the same conclusions as the panel in the present proceedings, had such evidence been made available to it”.

On the separate charge of failing to co-operate with investigators at UEFA, CAS found the allegation to be proved, and imposed a new fine of 10M Euros.

The effect on the Premier League was immediate and significant. CAS’s ruling meant Manchester City’s second place finish in the League gave them a Champions League place, and, after their defeat against Manchester United on Sunday, condemned Leicester City to Europa League. Wolves’ 7th place finish meant they were going to miss out on Europe altogether.

The financial implications of this sudden repositioning cannot be underestimated. Qualification for a European place or a Champions League as opposed to Europa league place,or not qualifying for Europe at all, can make a difference of tens of millions to a club from TV revenues, attendances, sponsorship deals and other revenues.  Some might look on the 10M Euro fine imposed on City as a small price to pay for a place in Europe, if their failure to co-operate with EUFA’s investigators somehow prevented nefarious evidence reaching EUFA head office.

Surely, an allegation of failing to co-operate with an investigation into a breach should be met with a similar punishment as the punishment for the offence itself, in the same way that one can receive the same punishment for failing to provide a breath sample, as for being found guilty of DUI. Otherwise a dangerous precedent is set where there is every incentive to do everything possible to avoid scrutiny.

Similarly, a finding that a serious breach of FFP regulations might not be held to account simply because of timing issues will leave bad tastes at the likes of the King Power Stadium, Molineux and elsewhere around Europe.

In truth, the ruling leaves us in the dark as to whether FFP regulations were broken, a wholly unsatisfactory situation and one that UEFA would do well to seek to avoid in the future if they want to keep FFP rules, and their own integrity, intact.

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Jeremy Moore is a Solicitor and Partner in our Manchester office with a national reputation for his work in high profile and serious crime work, as well as assisting clubs and athletes in sports related matters.

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