LONDON – Manchester City, a Premier League heavyweight and one of the world’s richest clubs, successfully reversed on Monday its two-season ban from Europe’s top football competition, the Champions League.
The ban, introduced last year by European football’s governing body, UEFA, after City was accused of “serious violations” of the cost control regulations, was reversed by a three-member panel at the Court of Arbitration for Sport in Switzerland.
The final decision on the Champions League ban, which had hung over Manchester City for more than a year amid questions of its finances and credibility, will have significant consequences for both the club and UEFA.
For UEFA, the latest high-profile reversal of its efforts to enforce financial regulations means that the governing body is likely to be under scrutiny, with its defeat creating new doubts about the future of its so-called financial fair-play regulations and its ability and want to execute them.
The Court said in a statement published on its website that its panel found that the most serious violations found by UEFA were either “not established” or no longer relevant (according to the Court’s word “time-limited”).
The club, the panel found, was guilty of not cooperating with UEFA’s investigations and fined the club 10 million euros, about $ 11.3 million, a reduction from 20 million euros that UEFA had originally spent.
Since it was acquired in 2008 by Sheikh Mansour bin Zayed al Nahyan, a billionaire brother to the United Arab Emirates, Manchester City has risen from relative obscurity to become one of football’s most valuable and successful brands. It puts one of the best teams in the world and is led by Pep Guardiola, the Spanish coach who oversaw its collection of all available trophies in English football last season.
Manchester City remains in contention to win the Champions League this year; it won the first stage of its round of 16 tie against Real Madrid in March before the coronavirus pandemic forced a temporary halt to the event. UEFA is scheduled to resume the competition this summer.
“The club welcomes the implications of today’s decision as a validation of the club’s position and the evidence it could present,” Manchester City said in a brief statement.
The decision in favor of the city means that the team will continue to perform on one of the biggest sporting stages and one of its most lucrative. A two-year absence from the Champions League would have been worth more than $ 200 million, but it would also have been costly in terms of damage to City’s carefully cultivated reputation and its ability to attract top players and coaches.
This is the second time UEFA is deemed to have departed from its own rules on restrictions. In a previous case involving another prosperous Gulf-owned team, Paris St.-Germain, CAS submitted an appeal against the financial control body’s assessment arm, after UEFA’s determination of late.
UEFA said in a statement that the panel noted that many of the alleged violations “were time-limited due to the five-year period envisaged in the UEFA Regulations.”
The investigators had sought advice from UEFA’s internal legal team before they started working on the City case.
The rules were created in 2009 when several European clubs peaked on the brink of bankruptcy and have largely proved successful, even though they have worked against clubs like City and others. The prosperous teams have chafed all efforts to limit their spending, and up-and-coming teams supported by wealthy owners have lamented how the restrictions have prevented them from challenging the game’s more established forces.
The rules still hadn’t prevented City from winning anything but the Champions League title, the penny that its owners demand the most. It has another chance to win it in August, when the Champions League returns to a mini-knockout tournament in Lisbon with eight quarter-finalists.
But without the ban being surpassed, City can approach the event with a sense of ease that might have been lacking if it met a ban – and the likely departures for players who want to compete for European trophies over the next two seasons.
Lawyers for City and UEFA presented their arguments to the panel during a video hearing in early June. City had said it would not save any resources to defend itself. It claimed that the UEFA process was one-sided and that an impartial body such as CAS would reverse the decision, which came after damaging leaks in 2018 which indicated that the team had been using illegal accounting methods to circumvent UEFA’s cost control rules.
Citing internal documents and emails, these reports suggested that City had disguised $ 1 million in direct investment from its owner, Sheikh Mansour, as sponsorship revenue. A document published by German Week Der Spiegel appeared to show that the team’s main sponsor, the Abu Dhabi-based Etihad Airways, had only paid a fraction of a $ 85 million sponsorship deal.
City had denounced the publications as “out-of-context material allegedly hacked or stolen”, claiming the leaks were part of an “organized and clear attempt to damage the club’s reputation.”
Its rivals had demanded severe punishment, but left UEFA and its president, Aleksander Ceferin, pressed by powerful and rich forces on both sides. Ceferin said he had no role in UEFA’s investigation, which was handled independently by a group responsible for reviewing clubs’ compliance with the tax rules. That group, known as the Club Financial Control Body, ruled against City and adds a $ 30 million fine over the ban.
The allegations led to tensions between UEFA and City, which in November last year tried to short the case before CAS could decide its decision. This effort, in which City accused UEFA of leaking information on the matter to the news media, failed for technical reasons. Two of the three judges involved in the decision were in the current three arbitration panel.
Indications of the enmity between the City and the UEFA panel examining it were clarified in November’s ruling, when UEFA’s statement confirming the ban stated that City “failed to cooperate in the investigation.”
The bitterness reached out to many of the team’s supporters. Manchester City fans routinely jut the Champions League anthem on match days, and others have taken to social media to criticize what they perceive as unfair treatment of their UEFA team, which they accuse of dressing in the continent’s more established rivals.
On the day of the negotiation, a group of City fans unveiled a huge banner aimed at UEFA and accused it of having an agenda against its team. CAS, aware of the tensions, took the rare step of not disclosing the name of the three judges who heard the appeal until it was finalized in June.