It has been a joy to watch Manchester City this season. Even without long term injury
absentee Kevin De Bruyne, City's revolving cast of superstars have continued Pep Guardiola's
revolution. Last season, they romped to the Premier League title with 100 points, 18 points
clear of their city rivals Manchester United in second place.
That kind of dominance doesn't just take skill, or luck. Almost always – and Leicester City
are perhaps the only exception to this rule – it is the richest team that wins. And
Manchester City is the richest of the rich. Their success did not come cheap. Since the
club was sold to Sheikh Mansour bin Zayed al Nayhan – a leading member of Abu Dhabi's
royal family – in 2008, hundreds of millions of pounds have been poured in to the club.
The area around East Manchester was renovated. The club now had world class facilities as
well as a network of the clubs all around the world – in the US, Uruguay, Australia,
Spain and beyond – all under the City Football Group umbrella.
It was all thanks to an unlimited supply of money – yes – but also to the prudence
and strategic forward thinking of the owners from the United Arab Emirates, right? Canny
businesspeople who turned the biggest loss in football history – £197 million in a
single season – into a £10 million profit last season, the third season in a row the
club was in the black. In 2015, 13 percent of the club was sold to Chinese investors
for $400 million, valuing the club at today's exchange rate at £2.4 billion. Although it
would likely sell for more today if the club was put on the market.
Much of this financial turnaround was thanks to booming television and commercial revenue,
with the latter proving particularly lucrative. Huge sponsorships deals were signed with Etihad
Airways, the mobile phone network Etisalat, Abu Dhabi's tourism authority and Abu Dhabi
investment firm Aabar. All, of course, came from the United Arab Emirates where Sheikh
Mansour is the country's deputy prime minister and one of the UAE's most powerful men. The
companies were often run or owned by members of his own family. There had always been question
marks over the true value of those contracts; suggestions that they had been artificially
inflated to comply with UEFA's Financial Fair Play rules which were designed to curb just
such profligate spending from the bottomless pockets of Sheikhs and oligarchs. Or as the
then UEFA president Michael Platini called it, “financial doping”. Those accusations
were dismissed by the club. UEFA did conclude that City had inflated the market rate for
its sponsorship deals, but only received a slap on their wrists. More on that later.
But, at the start of November, a very different story began to emerge thanks to Football Leaks,
a mysterious organisation that has released sensitive documents exposing the dark underbelly
of football. This batch of internal documents, leaked to the German publication Der Spiegel
and shared with European Investigative Collaborations (EIC) appeared to show how Manchester City's
ownership had allegedly gone to extraordinary lengths to circumvent UEFA rules to pump huge
amounts of cash into the club, much of it officially off the books so that it appeared
to comply with FFP. In one leaked internal document, dated a few days before Sergio Aguero's
famous injury time goal against QPR clinched Manchester City its first Premier League title
in 2012, the “Total Cash Investments in MCFC” by Sheikh Mansour since his take over
stood at £1.1 billion.
Big spending to win the title was nothing new of course. Jack Walker, a self made steel
magnate, famously bankrolled Blackburn Rovers, his boyhood club, to the Premier League title
in 1995. But this was a different era, one where Financial Fair Play was the order of
the day. FFP was UEFA's attempt to reign in the debt that was threatening to sink European
clubs whilst also preventing billionaires from simply buying titles. But rather than
comply, the Football Leaks revelations show that Manchester City was hell bent on spending
the money they needed to catch up with Europe's elite anyway, and allegedly devising a secret
project to hide over £100 million worth of investment.
According to the leaked communications from within Manchester City, the club was massively
inflating its sponsorship contracts to hide cash injections from the owner, which would
be a clear breach of FFP. One such email reported on by Der Spiegel appears to show how City's
Chief Financial Officer Jorge Chumillas outlined how the sacking of Roberto Mancini left the
club with a £10 million liability. “We will have a shortfall of 9.9m pounds in order
to comply with UEFA FFP this season,” he wrote. “The deficit is due to RM [Roberto
Mancini] termination. I think that the only solution left would be an additional amount
of AD [Abu Dhabi] sponsorship revenues that covers this gap.”
Which is exactly what they did. Simon Pearce, an Australian PR executive who sits on City's
board and who is in charge of massaging Abu Dhabi's international image and reputation,
suggested backdating sponsorship contracts including a fee for winning the FA Cup. When
Chumillas asked Pearce if that was possible, Pearce replied: “Of course, we can do what
we want.” Most damningly the emails appeared to show that other contracts were in effect
sham deals funded by the Abu Dhabi royal family. Take the £15 million sponsorship deal with
Aabar. It was, in fact only £3million from the company, the rest from the family. “As
we discussed, the annual direct obligation for Aabar is GBP 3 million,” Pearce allegedly
wrote in one email. “The remaining 12 million GBP requirement will come from alternative
sources provided by His Highness.” This was, in effect, an attempt to cook the books
and pull the wool over UEFA's eyes, disguising cash investments by “His Highness” to
make Manchester City appear to be more profitable than it was. In total it appeared that the
extra money hidden from view amounted to £127.5 million.
There were other schemes too, one dubbed Project Longbow, that involved setting up a shell
company to buy the image rights of players from the club, which opened up what looked
like another stream of income. In effect, the money allegedly came from Abu Dhabi. Even
Roberto Mancini's contract appeared to be part paid by a football club in the UAE. Mancini
was also contracted to “advise” Al Jazira, an Abu Dhabi club owned by Sheikh Mansour,
which isn't part of CFG. It was another attempt to get more money of City's books.
But this still wasn't enough. When FFP was rolled out, for the 2013-2014 season, UEFA's
investigators zeroed in on what looked like artificially inflated sponsorship contracts.
Two clubs in particular concerned UEFA. Manchester City and PSG, effectively owned by the state
of Qatar. PSG had signed a five year, £190 million a year contract with the Qatar Tourism
Authority. The value of the contract was close to £1 billion. UEFA decided that the true
value of the contract was just under £2.5 million a year. The same discrepancies were
found at City. But rather than accept censure, which could have included a huge fine and
a ban from the Champions League, according to the leaks City threatened UEFA with legal
action that could bankrupt it. The club's lawyer Simon Cliff allegedly wrote in an email
that City's chairman “Khaldoon [al Mubarak] said he would rather spend 30 million on the
50 best lawyers in the world to sue them for the next 10 years.” UEFA would have to decided
whether to proceed as planned or “avoid the destruction of their rules and organisation.”
The Football Leaks trove of emails showed that the Gianni Infantino, who was then general
secretary of UEFA, bent over backwards to accommodate City and PSG for the breaches
of FFP they were found guilty of. In the end, both City and PSG accepted small fines and
a mild slap on the risks. City's internal team declared it mission accomplished.
So what's next? UEFA's new president has announced that they may go back and look at City and
PSG's cases but there are doubts about whether they can be punished given that both clubs
have already accepted censure. And will UEFA really want to take on the bottomless pit
of money that the royal families of Qatar and the UAE could use to destroy it?
But the revelations have done one thing. Until recently, the ownership of Manchester City
was seen as a benign, good news story that burnished Abu Dhabi's reputation. But recent
revelations about human rights abuses in the country, and the appalling lose of life and
levels of child starvation in the war in Yemen, a conflict the UAE is heavily involved in,
has tarnished the country's reputation.
Key figures at City like Mubarak and Sheikh Mansour are involved in the highest level
of economic and political decision making in the UAE. Separating the team from the political
and military actions of the country has become harder. In the wake of the Football Leaks
revelations, Amnesty International declared that “The UAE's enormous investment in Manchester
City is one of football's most brazen attempts to 'sportswash' a country's deeply tarnished
image through the glamour of the game.”
City have said very little about the revelations, although they haven't denied the probity of
the documents. Instead they have said that the leaks were an “organised and clear”
attempt to “damage the club’s reputation”. The club and city fans have long argued that
FFP is any case an unfair restraint on fair trade. Why should a club be restricted in
investing their own money in their club. A case could be made that FFP in fact entrenches
the dominance of the bigger clubs, and prevents new players, like City and PSG, from breaking
that cartel. But both clubs knew the rules and signed up to them. If UEFA decide not
to investigate City and PSG's alleged financial transgressions, then none of these revelations
will matter. It would be hard to imagine any revelations that could. Money and political
power will win. Like it always does.