On 14 February 2020, the Adjudicatory Chamber of the UEFA Club Financial Control Body issued a decision finding that Manchester City Football Club had committed serious breaches of the UEFA Club Licensing and Financial Fair Play Regulations between 2012 and 2016.
On 14 February 2020, the Adjudicatory Chamber of the UEFA Club Financial Control Body ("CFCB") issued a decision1 finding that Manchester City Football Club (the "Club") had committed serious breaches of the UEFA Club Licensing and Financial Fair Play Regulations between 2012 and 2016 (the "Decision").
As a result of the Decision, Manchester City face a €30,000,000 fine in addition to a two season ban from UEFA cup competitions. Participation in the UEFA Champions League, which the Club has competed in for the previous nine consecutive seasons, is estimated to be worth over €90,000,000 per year to the club in television and prize money.
This briefing outlines the rules and bodies involved in reaching the Decision.
Financial Fair Play Regulations
UEFA Club Licensing and Financial Fair Play Regulations ("FFP Regulations") were introduced in 2009 in response to deteriorating financial performance of many European clubs and to reduce what was seen as growing excesses in club football finances.
The FFP Regulations aim to introduce more discipline and rationality in club football finances, encourage clubs to operate on the basis of their own revenues and increase the transparency and credibility of the economic and financial capability of the clubs.2 Clubs are required to balance their spending with revenue (with some allowances) and are assessed against break-even requirements based on a period of three years of financial statements.
This issue of transparency is of particular significance to the Manchester City case. The CFCB concluded that over the period in question, an annual £67,500,000 sponsorship deal with Etihad Airlines was, in fact, largely being funded by the Club's owner Sheikh Mansour bin Zayed Al Nahyan.
It is noteworthy that, in 2014, both the Club and French football club Paris St. Germain ("PSG") were fined €60,000,000, their Champions League squad reduced to 21 players for the 2015-2016 season and restrictions on transfers after being found guilty of beaching the FFP Regulations by the CFCB. Seven other clubs were fined in 2014 under the FFP Regulations (including Galatasaray, Trabzonspor and Bursaspor from Turkey, the Russian sides Zenit St Petersburg, Anzhi Makhachkala and Rubin Kazan, and Levski Sofia from Bulgaria).
UEFA Club Financial Control Body
The CFCB is the UEFA body charged with overseeing the application of the FFP Regulations. Its authority is set out in the procedural rules governing the UEFA Club Financial Control Body (Edition 2019) (the "Procedural Rules"). As an organ for the administration of justice, the CFCB is a competent authority3 to impose disciplinary measures against parties that fail to meet the requirements set out in the FFP Regulations. Article 29 of the Procedural Rules details measures including the ability to impose fines and bans from UEFA competition that the Club now faces.
Investigations of the CFCB
Investigation and monitoring of FFP Regulations compliance is conducted by the investigatory chamber of the CFCB (the "Chamber"). The current Chief Investigator is Yves Leterme (Prime Minister of Belgium from 2007-2011) (the "Chief Investigator") who opened the investigation into Manchester City on 7 March 2019. Led by the Chief Investigator, the Chamber seeks to establish the facts and collect all evidence relevant to proceedings.
At the conclusion of an investigation, the Chief Investigator, having consulted with at least three of the other five additional members of the Chamber, may decide to dismiss, settle, or, as has occurred in this instance, refer the case to the adjudicatory chamber for a final decision (the "Adjudicatory Chamber").4
Decisions and Appeals
Upon referral by the Chief Investigator, the Adjudicatory Chamber of the CFCB holds proceedings in relation to a case. This five-member body is led by Chairman José Narciso da Cunha Rodrigues (judge of the Court of Justice of the European Union from 2000-2012).
The case against Manchester City was presented to the Adjudicatory Chamber at a hearing on 22 January 2020. The Adjudicatory Chamber found that the Club committed serious breaches of FFP Regulations by, "overstating its sponsorship revenue in its accounts and in the break-even information submitted to UEFA between 2012 and 2016."5
Aggrieved parties directly affected by a final decision of the CFCB have the right to appeal the decision6 to the Court of Arbitration for Sport ("CAS"). In a statement7 released on 14 February 2020 following UEFA's announcement, the Club stated that they will commence proceedings at the CAS at the earliest opportunity.
The full Adjudicatory Chamber decision remains unpublished pending the outcome of the appeal to CAS. As a result, it is unclear whether its findings provide any indication that further investigations are likely into the Club's sponsorship revenue in the years since 2016.
We have seen successful appeals to the CAS in recent years including UEFAs attempt to reopen an investigation of PSG from 2017 into FFP Regulation compliance by PSG (or the suspected lack thereof) in the 2015, 2016 and 2017 seasons which was successfully appealed to the CAS by PSG. In this case, the CFCB had set itself a 10-day time limit to revisit its investigation into PSG and their failure to adhere to their self-imposed deadline proved detrimental in front of the CAS. The CAS stated that "the decision issued on 13 June 2018 by the Investigatory Chamber of the Uefa CFCB (Club Financial Control Body) in which the investigation into Paris Saint-Germain's compliance with the Uefa Financial Fair Play regulations was closed is thus final and binding." Notably this appeal hinged on what could be argued as being a technicality.
FFP in Ireland
While UEFA and the Club prepare for the appeal of the Decision, the Investigatory Chamber is due to issue its next round of decisions on compliance with the FFP Regulations' break-even requirement in spring 20208. The remit of the CFCB extends to all clubs that have been granted a UEFA licence.
In Ireland, issues of corporate governance, funding models and sponsorship have dominated the sporting conversation over the past 12 months. The Football Association of Ireland ("FAI") is responsible for awarding UEFA licenses to Irish club sides and its club licensing system9 monitors financial fair play in domestic and UEFA club competitions.
Certain Irish clubs are within the jurisdiction of the CFCB and must ensure to conduct their business within the parameters of the FFP Regulations. Their responsibilities include: (i) to co-operate with all requests and enquiries; (ii) to provide all necessary information and/or relevant documents to fully demonstrate that monitoring requirements are fulfilled; (iii) to confirm the accuracy and completeness of all documentation provided.10
For the 2019-20 UEFA club competition season, the following SSE Airtricity League clubs were awarded UEFA Licenses: (i) Dundalk Football Club; (ii) Cork City Football Club; (iii) Shamrock Rovers Football Club; and (iv) St. Patrick's Athletic Football Club.
It is the FAI's responsibility, to ensure that all break-even information submitted by licenced clubs is complete and to inform the CFCB of any significant changes that take place.
1. Club Financial Control Body Adjudicatory Chamber decision on Manchester City Football Club, UEFA.com
2. Article 2, UEFA Club Licensing and Financial Fair Play Regulations (Edition 2018).
3. Article 3(1)(d), Procedural Rules governing the UEFA Club Financial Control Body (Edition 2019).
4. Article 14, Procedural Rules governing the UEFA Club Financial Control Body (Edition 2019).
5. Club Financial Control Body Adjudicatory Chamber decision on Manchester City Football Club, 14 February 2020.
6. Article 34, Procedural Rules governing the UEFA Club Financial Control Body (Edition 2019).
7. Manchester City Football Club, Club Statement, 14 February 2020.
8. UEFA Club Licensing and Financial Fair Play, Compliance and Investigation Activity Report 2017-19, page 52.
9. Football Association of Ireland Club Licensing Manual (approved by the FAI Board on 10 September 2019 and effective for the 2020 SSE Airtricity League and 2020/21 UEFA club competition seasons).
10. Section 3.4, Football Association of Ireland Club Licensing Manual.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.