An independent commission has determined that Manchester City violated multiple financial regulations, finding the club guilty of all but one charge related to a lack of cooperation in the investigation. The ruling, which was released on Tuesday, includes the term "sham" eight times and outlines the ways the club misrepresented its financial activities.
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According to the 40-page ruling, Manchester City's owners, the Abu Dhabi United Group, were aware from the 2009-10 season that significant overspending would occur if the club aimed for success. To address this, City implemented a strategy to inflate sponsorship income over nine seasons. The report highlights that these actions effectively concealed more than £830 million in sponsorship income, as well as an additional £90 million in expenses.
Manchester City was acquired by Abu Dhabi investors in 2008, and by early 2010, they had initiated sponsorship agreements that far exceeded fair market value. This approach, termed the "disguised funding scheme," involved splitting sponsorship deals into a base fee and an additional tagged amount. While sponsors paid the lower base fee, the club's owners covered the tagged sum, misleading regulators and auditors about the club's actual commercial revenues.
The commission found that commercial income from sponsors totaled £949.94 million from 2009-10 to 2017-18, with only £119.25 million from base fees, while £830.69 million came from tagged sums paid by the owners. Despite Manchester City's denials, claiming a misunderstanding of sponsorship agreements, the panel rejected this explanation, indicating it was fashioned post-facto to obscure the true nature of the funding.
An example cited involved addressing a £9.9 million shortfall in May 2013 just days before the financial year concluded. Last-minute modifications to sponsorship agreements boosted recorded fees, enabling compliance with UEFA's financial rules at that time.
The ruling also evaluated the club's Project Longbow. While some elements were legitimate, the Fordham Arrangement was deemed a facade. This agreement allowed funds from the owners to obscure their origin by inflating the price for acquiring financial benefits from player image rights, falsely reporting £24.5 million as operating income and excluding £49.414 million from expenses.
The investigation revealed that the club's conduct demonstrated an intent to circumvent Premier League rules, with several individuals providing false evidence. The ruling noted that City failed to ensure that their annual financial accounts represented a true and fair view, reflecting recklessness in their reporting. Such conduct showed a lack of good faith and a failure to cooperate with the Premier League's investigation.