Premier League ‘shows its teeth’ with move against Manchester City

The status of the Premier League probe into Manchester City’s finances had become something of a running joke in the football world. After dragging on for more than four years, the investigation was seen by critics as emblematic of a lack of oversight in the richest competition in the world’s most loved sport.

While awaiting the outcome, City had won the league three times and, according to Deloitte, become the richest club in football by revenues.

But on Monday, the Premier League confounded its doubters, announcing more than 100 allegations of rule breaking by the English champions, over a period of more than a decade. The club has now been referred to an independent commission, which will weigh the charges and consider possible penalties including fines, points deductions or even forced relegation to a lower division.

“It’s potentially the biggest dispute between a sports governing body and a football club that we’ve had,” said Stephen Taylor Heath, head of sports law at JMW Solicitors. “It’s the Premier League showing its teeth really, saying they’re prepared to bring these charges against a powerful club. It’s a big step for the Premier League to take.”

City has been owned since 2008 by a member of Abu Dhabi’s royal family, although US private equity firm Silver Lake now owns more than 18 per cent of City Football Group, the club’s parent company with interests in more than a dozen teams around the world. Since the takeover, the club has spent more than €2bn on players, according to Transfermarkt, second only to Chelsea across European football.

The new owners have been at the forefront of multi-club ownership in football as increasingly sophisticated investors, ranging from private equity firms to billionaires, pour money into the sport.

This week’s move by the Premier League, unprecedented in scale during its 30-year history, is viewed by some as an effort to prove its mettle as the UK government works on plans for an independent football regulator. The scope of the new body, prompted by the attempted breakaway European Super League, was due to be outlined this week, although the league rejects suggestions the timing was deliberate.

“The Premier League will be keen to demonstrate that it is the best organisation to police its own rules and that an independent regulator is not needed,” said Tom Murray, a sports lawyer at Mishcon de Reya.

The dispute is also a test of how the Premier League balances its roles as competition organiser and enforcer against one of its own shareholders.

City has provided many of the sporting moments that helped the league gain popularity around the world — including Sergio Agüero’s last-minute title winner against Queens Park Rangers in 2012. It is also the only side to earn 100 points in a season.

“The Premier League wears multiple hats in setting, policing, and enforcing the rules, and it is facing potential external pressures from the government white paper on governance issues,” said Josh Charalambous, a sports lawyer at international law firm RPC. “It’s a balancing act.”

Rules on spending in English football have also come under intense scrutiny after Chelsea fuelled a record-breaking January transfer window.

The allegations against City include that it inflated sponsorship revenue over many years in order to meet spending rules, and that it used shadow contracts to pay some salaries. Many of the charges stem from the investigation itself with the Premier League saying the club failed to co-operate by providing relevant documents “in the utmost good faith”.

The club has denied any wrongdoing. “We look forward to this matter being put to rest once and for all,” it said on Monday.

The progress of the investigation had been kept under wraps until this week. City’s team is led by Lord David Pannick KC, the lawyer who forced the UK government to hold a parliamentary vote before it could trigger the legal process for leaving the EU, while the Premier League is represented by experts in sporting governance.

City has fought some of these legal battles before, with mixed results. In 2014, it reached a settlement with Uefa, the governing body of European football, over financial breaches. The club agreed to eventually pay a €10mn fine, and had restrictions placed on its squad size and wage bill.

In 2018, following a report into leaked documents by German newspaper Der Speigel about City’s finances, the club was again in the dock. In 2020, Uefa imposed a two-year ban from competing in the Champions League and a €30mn fine.

However, that ruling was overturned months later by the Court of Arbitration for Sport, throwing football’s regulatory regime into disarray.

Although the Premier League’s announcement has been applauded by those at rival leagues and City’s competitors — many of whom have long called for firmer action on spending rules — there is a sense that a final outcome could still be a long way off owing to the complexity of the allegations and the prospect of both camps wanting to appeal subsequent findings.

Javier Tebas, chief executive of Spain’s La Liga, said it was “incredible” that the Premier League investigation had taken so long, adding: “There are more cases, will it take so many years too?”

“It’s a start,” said a senior executive at one rival club. “But I think it’s going to run and run.”