Why was Manchester City found guilty of financial breaches?

An independent regulatory commission concluded that Manchester City systematically breached Premier League financial rules from the 2009-10 through 2017-18 seasons. The inquiry, which stemmed from more than 100 charges brought by the league in February 2023, found that the club used sham contracts and misleading accounts to obscure its real financial position.

According to the findings, the club exaggerated revenues and understated expenditures by upwards of £900m over nearly a decade. Investigators determined that of roughly £950m recorded in commercial sponsorship income across the period, only about £119m came from genuine commercial partners. The remaining £830.69m was covertly funded by the club's ownership vehicle, the Abu Dhabi United Group.

The commission identified several mechanisms used to avoid reporting massive financial deficits, including what would have been the largest single-season loss in Premier League history in 2009-10. Under a disguised funding structure, sponsors covered only a fraction of nominal contract fees, while the club's ownership quietly met the rest.

The panel also pointed to an initiative called Project Longbow, specifically an entity known as the Fordham Arrangement, which used owner capital to buy player image rights at inflated sums. This allowed City to report £24.5m in artificial income while keeping nearly £50m in expenses off its balance sheet. Furthermore, the club shifted millions of pounds in player and management compensation onto external consultancy deals financed by ownership. The commission also concluded that the club actively obstructed the inquiry and that multiple senior witnesses gave false testimony.

Manchester City has rejected every finding of wrongdoing, maintaining that the commission made material errors of law, principle, and fact. The club officially lodged an appeal, asserting that it has comprehensive evidence to demonstrate its innocence.

In its defense, the club claimed sponsorship payments were genuine commercial revenues that received occasional state assistance from Abu Dhabi, rather than illicit subsidies from its owner, Sheikh Mansour. Club leadership has suggested the allegations stem from a league conspiracy theory. Key commercial partner Etihad Airways also rejected accusations of improper transactions and noted it was considering legal options against the Premier League over damage to its reputation.

Possible league punishments span from fines to severe points deductions or outright expulsion from the top flight. An expulsion would require backing from 15 rival clubs, and City would need approval from 72 member teams to join the English Football League, leaving open the risk of dropping far down the football pyramid.

The fallout has also reached the UK Parliament. Dame Meg Hillier, chair of the Treasury Committee, asked HM Revenue and Customs to examine the unredacted documents. The move followed a report by think tank Tax Policy Associates suggesting the club could face up to £24m in unpaid taxes and penalties related to arrangements with former manager Roberto Mancini. Greater Manchester Police confirmed no criminal referrals have been submitted, though the Football Association is evaluating the findings for potential separate disciplinary steps. Competing clubs and players are also examining civil options for damages.

Manchester City's appeal will be heard behind closed doors by a new three-member panel. Under standard fast-track rules, proceedings would wrap up in 12 weeks with a verdict 30 days later, though timelines may be contested or extended. A separate hearing will determine sporting sanctions if the guilty findings stand.