Manchester City charges explained – What this might mean for Newcastle United

I’ve just read another impressive blog from Swiss Ramble, this one concerning Manchester City and the charges that the Premier League brought against them last week.

The charges are many and varied, unprecedented and together, add up to more than one hundred, some dating back to 2008.

In summary, it is claimed that City have over-stated sponsorship revenue and under-stated costs to improve their bottom line, thus helping them to stay within FFP targets, either by boosting profits or reducing losses.

What follows is my attempt at summarising the key points from the Swiss Ramble analysis.

The first thing to recognise is that whilst many commentators have presented this as a FFP issue, the fundamental allegation is that City have ‘cooked the books’ something that is a lot more serious, and which would amount to systematic cheating.

Naturally, Manchester City have been full on in their response, going as far as saying they ‘welcome’ the review.

The charges that have been brought amount to the following:

Inaccurate financial information

This is arguably the most serious charge. The Premier League argue that City have not provided a ‘true and fair’ representation of their financial position, inflating their revenue by disguising money put in by their owners. Much of the accusation centres on shirt sponsorship and stadium naming rights where it’s argued such deals do not represent ‘fair value’ something that seems to have some credence given commercial operations account for an ‘unhealthy’ 51% of total revenue.

City now have the highest commercial revenue in England and are only narrowly surpassed by PSG and Bayern Munich, both of whom also have a higher proportion of income from commercial operations as a percentage of total revenue.

The contentious issue of owner sponsorship isn’t new of course. Everton’s training ground is sponsored by Farhard Moshiri’s associate, Alisher Usmanov and Leicester City’s owners, King Power have paid for shirt and stadium sponsorship through to 2021. The Bavarians obtain a vast amount of revenue from Adidas, Audi and Allianz, whilst in Italy, the Agnelli family contribute a small fortune to Juventus with the Jeep (part of Fiat) shirt sponsorship. Furthermore, there are other high profile examples in Germany and Italy.

Remuneration Not Fully Divulged

This charge concerns City not providing full details of remuneration and wages. In 2013/14, City reduced their wage bill by £28m when it transferred several its staff to City Football Group (CFG). In addition, it is claimed that Roberto Mancini was remunerated more than his base salary for a 4 day per annum consultancy that was kept ‘off the books’.

Whilst CFG did charge the football club for services provided and Mancini’s consultancy payment was relatively small in the scheme of things, City do have a lower wage bill than Man Utd and Liverpool in England, whilst on the continent, PSG, Real Madrid and Barcelona all have higher wage bills. In addition, because of City’s huge commercial income, their wages to turnover ratio is now one of the lowest of leading European clubs and at 58% is well below UEFA’s recommended upper limit of 70% (interestingly, PSG’s is 111%, whilst Chelsea’s is 71%). Something feels a little off.

Compliance with UEFA’s FFP Rules

This isn’t a new accusation for Manchester City, the club having previously successfully defended a UEFA charge covering the period 2012 to 2016 where the Court for Arbitration and Sport (CAS) overturned a 2-year ban from European competition.

Whilst CAS has a track record of often passing judgement in favour of football clubs, for example in the case of PSG and Milan, it is interesting that whilst City were previously cleared and their ban subsequently lifted, they were still fined for a lack of co-operation with the UEFA investigation, something that doesn’t bode well in terms of the Premier League investigation (refer to point 5 below).

Compliance with Premier League’s Profitability and Sustainability Rules

Whilst these days, City seem to have no problems with meeting FFP targets, these charges cover the three seasons between 2015/16 and 2017/18 where matters were less clear cut.

Lack of Co-operation

Manchester City are charged with failing to co-operate with the Premier League in its investigation, including providing documents and information in the utmost good faith. The Premier League claim that one of the reasons this investigation has taken so long is that City has used numerous delaying tactics. As highlighted above, this accusation hardly bodes well, considering City have prior ‘form’ as per the UEFA fine.

What this might mean for Newcastle United

Much has been made of the FFP straitjacket we seem to find ourselves in, with the regulations effectively protecting the status quo, cementing the position of the traditional elite and making investing for future success pretty damn difficult. The reasons for this are threefold. Racking up losses is prohibited, as is the owner providing additional finance. This means player acquisitions must be shrewd and cannot be unlimited. Over the five years to 2021, Man City splashed out nearly £1 bn on new players, pretty much the same as Chelsea, but a lot more than Man Utd, Arsenal and Liverpool, never mind Newcastle United. Offloading players that are surplus to requirements can of course help, but only if there is talent keeping the bench warm in the first place.

One possible route out for Newcastle United is broadcasting revenue and qualification for European football. City’s broadcasting revenue increased five-fold from 2009 to 2022. In addition, City are the only English club to have qualified for the Champions League in each of the last 12 seasons. In the last 5-years, they earned nearly half a billion Euros from sitting at Europe’s top table. But you’ve got to get there in the first place and have the ability to sustain competing on multiple fronts week in, week out.

Despite Eddie’s best endeavours and the wholesale changes that are going on in and around the club since the takeover, this investigation serves to underline how difficult it will be for Newcastle United to gate-crash the party. Cynics point to the timing of the investigation; the Premier League acted when it did to precede publication of the Government’s white paper on football, something that is widely forecast to include a recommendation for an independent regulator. Given some of what City are accused of dates back so long, one can only surmise that the Premier League is incapable of effective governance.

If found guilty, the implications could be profound and far reaching for Man City. They could face a significant fine or even points deductions, potentially relegation. Although the more draconian sanctions are without precedent in the Premier League, they aren’t elsewhere; Juventus has recently suffered a 15-point deduction in Serie A following the discovery of accounting irregularities and in rugby union, Saracens were relegated after breaching a salary cap. Other clubs might also react, potentially arguing that results would have been different, including qualification for Europe, especially the lucrative Champions League. One precedent does seem to exist; when West Ham were found guilty of breaking rules on third-party ownership of players (Carlos Tevez), Sheffield United sued them, arguing they were only relegated because of the Argentine’s goals. At the time, they were awarded £20m.

Time will tell whether City will be found guilty. As Swiss Ramble sums it up:

Are these accusations serious? Definitely.

Will Manchester City be found guilty? Maybe.