On 14 February 2020, the Union of European Football Associations (UEFA) announced a ban on English football club, Manchester City, for breaching Financial Fair Play (FFP) regulations. The club was fined 30 million euros and barred from participating in UEFA cup competitions for the 2020-21 and 2021-22 seasons. This concluded an investigation launched in 2018 after documents published by German magazine Der Spiegel suggested the club had falsely inflated sponsorship deals in an attempt to circumvent FFP.
Financial Fair Play was introduced during the 2013-2014 season to restrict the amount of funds club owners can put in to cover losses. The aim was to focus on clubs to not overspend on transfer fees and players’ wages. Under the regulation, clubs are not allowed to operate on losses larger than 30 million euros and must show they can break even in the foreseeable future. If a club operates on losses over several seasons, the regulation provides sanctions within a set budgetary framework.
FFP was designed in order to make UEFA competitions a level playing field for all teams, and preventing them from becoming a “buy to win” scenario. Therefore, under FFP, money contributed by ownership must be declared. Meaning such funds are subtracted from the final budget, thus creating a deficit. Manchester City dodges this by rerouting the money from its ownership to the club through the different companies from Abu Dhabi.
Such action was possible because of the scale of its owner’s wealth and influence. Manchester City is owned by City Football Group, a holding company part of the Abu Dhabi Group. The man at the head of this group is Sheikh Mansour, Deputy Prime Minister of the United Arab Emirates and a member of the royal family.
While most football clubs operate on a budget set for the season, Manchester City has had the benefit of simply being able to print money. Whenever a financial hole needs to be filled, funds can be pumped from a variety of sources regarded as the Abu Dhabi partnership deals in order to dodge FFP sanctions. To not make it evident in the eyes of UEFA the club manipulated its earnings by falsifying dates in which payments were received.
These Abu Dhabi partnership deals are listed in the reports as Supplement to Abu Dhabi partnership deals. They represent the main sponsor of the team, Etihad Airways, which is owned by the half-brother of Sheikh Mansour. Interestingly enough, two other big sponsors of the club are the Abu Dhabi tourism authority and Etisalat, an Abu Dhabi telecommunications company.
In fact, leaked documents from Der Spiegel showed the 80 million euro sponsorship deal with Etihad was worth only 10 million. The rest was coming from Mansour’s own company.
The 2 season ban supposes a severe drawback and postpones the ambition of the club to lift the trophy for the first time in its history. Participation in the UEFA Champions League is worth around 85 million euros a year, and missing out on it could factor into the career decisions of the team’s star players, staff and potential signings.
Having said that, Manchester City has decided to appeal the decision by UEFA. As of today, they are guilty in the eyes of UEFA. Now it is up to the Court of Arbitration for Sports (CAS) to give the final verdict.
UEFA has made a statement. Rules must be followed. In the last 20 years, football has become a game for billionaires, just like children play board games. This overspending has led to astronomical transfer fees. In 2017, French Club Paris Saint-German made two breaking signings, Neymar da Silva and Kylian Mbappe worth 222 and 180 million euros respectively. Previously the most expensive transfer was Paul Pogba to Manchester United for 105 million.
As a consequence, UEFA´s next target to be subjected to further investigation is Paris Saint Germain (PSG), the club owned by a Qatari national fund. To give you some perspective, PSG has spent a total of 1.287 billion euros alone in transfer fees in the last 9 seasons. All these funds come from the links between its management and the government of Qatar.
An agreement was signed between PSG and the Qatar Tourism Authority worth 250 million euros per year. The aim of this major investment was to improve the global image of Qatar in the lead up to the Qatar 2022 World Cup. A tournament that has created much scepticism.
Love it or hate it, FFP is a necessary evil. The regulations are in place such that billionaire owners can’t come in, bankroll a club, then pull out of the set club down the line; and leave it with bills they can’t pay and deficits that could destroy the club. Clubs must be sustainable; owners can’t pump in money to make up for losses that clubs accrue.