The European Commission has officially announced that it is evaluating allegations that Manchester City has manipulated the football market. Legal experts have indicated to The i Paper that the new claims against the Premier League club are exceptionally serious. In 2023, La Liga, the top professional football division in Spain, lodged a report with the EU Commission, asserting that Manchester City has utilized various companies within the same Abu Dhabi ownership structure to bypass established regulations.
While City has refrained from commenting directly on these allegations, they have categorically denied any wrongdoing. An EU Commission spokesperson confirmed to The i Paper: “We can confirm receipt of La Liga’s submission. The Commission may investigate information regarding any suspected foreign subsidies that could distort the internal market across any economic sector, including sports. However, we cannot comment on ongoing assessments.”
In a remarkable statement made during the Financial Times Business of Football Summit, La Liga president Javier Tebas likened City’s purported activities to the infamous Enron financial scandal, wherein the American corporation concealed losses by transferring them to separate entities.
Key Allegations Against Manchester City
- Use of Third-Party Companies: Tebas claimed that City has a multitude of companies within its broader group that operate independently of the City Football Group. These external companies allegedly absorb financial losses, shielding the club itself from the impact.
- Request for EU Transparency: Tebas emphasized the importance of ensuring that all clubs adhere to the same standards of transparency and governance, both in terms of financial practices and sporting integrity.
- Regulatory Action: Tebas has urged the EU to take action under its newly established Foreign Subsidies Regulations, which allow for investigations into foreign state financial support that may distort European markets.
Even though Manchester City is based outside the EU, the ownership of the Spanish club Girona by City Football Group brings them under the EU Commission’s jurisdiction. This connection may play a crucial role in the Commission’s investigation.
The EU Commission possesses the authority to request extensive financial documents, including details of sponsorship agreements, contract valuations, and internal communications. As corporate lawyer and former financial advisor to Manchester City, Stefan Borson, noted, “Tebas isn’t merely asserting that City has received above-market subsidies; he claims there is a whole network of third-party companies that are artificially funding football clubs. Accusations of this magnitude are as serious as suggesting that the City Football Group is operating a scheme comparable to Enron, which is one of the largest financial frauds in history.”
Borson also pointed out that the Commission’s actions might be contingent upon the outcomes of the Premier League’s ongoing investigations into alleged financial breaches. “It seems unlikely that the European Commission would initiate action unless the 115 charges were substantiated; however, it is noteworthy that one of the initial Foreign Subsidies Regulation cases involved one of City’s sponsors, e& (formerly Etisalat), in its recent acquisition of a European telecommunications company,” he added.
La Liga’s report to the EU followed a period in which Manchester City had its UEFA sanctions significantly reduced by the Court of Arbitration for Sport (CAS). In 2020, following an investigation into financial misconduct, UEFA had initially banned City from the Champions League for two years and imposed a €30 million fine. However, City successfully appealed to CAS, resulting in the ban being lifted and the fine being reduced to €10 million.
Tebas remarked, “At this moment, I cannot speculate on possible sanctions for Manchester City regarding this issue. What I can say is that companies in Europe perceived to have distorted the market frequently face the need to return funds. We are advocating for sanctions against Manchester City.”
Simultaneously, City awaits the verdict from an independent commission regarding the 115 charges of alleged financial violations brought forth by the Premier League. This ruling is anticipated by the end of March, although it could be delayed. Potential sanctions could range from hefty fines and points deductions to the stripping of titles or even expulsion from the Premier League. Throughout these proceedings, Manchester City has consistently denied any allegations of misconduct.
