Manchester City’s two-year European ban has been overturned by the Court of Arbitration for Sport, raising plenty of questions about Financial Fair Play. Kieran Maguire, an expert in football finances at the University of Liverpool, explains what happens next for UEFA and their controversial FFP rulebook.
CAS’s decision to overturn the original UEFA panel judgement from February will give a boost to Manchester City financially of up to a quarter of a billion pounds, such is the lucrative nature of the Champions League.
On the pitch it will allow City to recruit and retain players to try to maintain their position as one of the leading clubs in football.
Manchester City could benefit by up to a quarter of a billion pounds after CAS’s ruling
Man City boss Pep Guardiola (right) will be delighted with the outcome of the appeal verdict
City’s income has grown year-on-year since the arrival of Sheikh Mansour back in 2008
When Sheikh Mansour’s Abu Dhabi United acquired Manchester City in 2008 the club was generating income of £82million a year, less than a third of rivals Manchester United.
Around that time, City spent large sums on players to try to become competitive and compete for trophies. This led to significant losses and the transfer policy was erratic, with a series of expensive signings such as Robinho, Jo, Jack Rodwell, Wilfried Bony and Roque Santa Cruz all failing to deliver.
Since then things have taken a turn for the better, with City signing lucrative sponsorship details domestically, in the Middle East and elsewhere, catapulting them into the upper echelons of football finance.
It is these deals that resulted in the charges from UEFA and accusations of inflating the amounts received from the likes of Etihad Airways.
UEFA’s independent adjudicatory committee banned City from European competition for two seasons starting in 2020-21, as well as imposing a £27m fine. This led to City appealing to CAS, the highest-ranking sports court in the world.
As CAS looked into the case, many commentators were anticipating some form of dilution of the initial punishment but City’s complete exoneration from the charges in terms of the inflation of revenues charges has left UEFA in a reputational and credibility vacuum.
UEFA, and its president Aleksander Ceferin, must start again with their Financial Fair Play rules
City’s commercial income is huge, and is second only to their rivals Manchester United
PSG, also owned by a Middle Eastern sovereign wealth fund, were also cleared of FFP abuse charges in 2018, which was seen as a more minor blow to UEFA at the time.
PSG and City have always felt that they have been the targets of more established clubs in Europe who don’t like the idea of ‘new money’ challenging for honours and trophies.
How UEFA will deal with the CAS verdict is unclear. The initial aims of FFP to reduce debts within European football have seemed at odds with decisions to prosecute the likes of City and PSG, neither of whom owed money to banks.
The morphing of FFP into a vehicle that restricts spending has some merit, but most successful start-up businesses, and this is to a degree what a football club under new ownership is, tend to lose money before they become profitable.
The CAS verdict means that UEFA will have to revisit what they want FFP to achieve. There are some successful elements of the rules, especially in relation to those clubs who delay payments in terms of football debts on transfers.
City players will be playing in Champions League next season after their ban was overturned
A graph to show City’s operating losses – but FFP rules could change in the years to come
The breakeven model that has resulted in both PSG and City being cleared needs to be ripped up and replaced with something that is easier to enforce and adjudicate.
The prospective new owners of Newcastle and the ambitious existing owners at clubs such as Everton will be watching with great interest.
This is because any dilution of present FFP rules will have an impact upon the amount of money that their clubs, who haven’t been regular beneficiaries from the additional income from UEFA competitions, might be able to spend more money than had been initially envisaged. This could result in the Premier League ‘Big Six’ becoming a ‘Big Eight’ or more.
Whatever happens, the only thing guaranteed by the CAS ruling is that the accountants and lawyers who did an amazing job for Manchester City in presenting the club’s defence will continue to be looking at Range Rover brochures and skiing holidays, assuming that the latter return post COVID-19.
If Newcastle’s Saudi takeover goes through, they will be watching FFP rules with keen interest
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