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Man City woes continue as they could face a new Uefa investigation into Abu Dhabi sponsors

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Manchester City

More woes for Man City as they could face a new Uefa investigation into Abu Dhabi sponsors. Manchester City were banned from competing in the Champions League for two years and fined €30m (£25m) last Friday for the “very serious breach” found by Uefa’s club financial control body (CFCB), of overstating the sponsorships, principally from the Abu Dhabi state airline Etihad. The investigation by the CFCB’s investigatory chamber (IC), followed by hearings and conclusions reached by the adjudicatory chamber were based on internal City emails published by the German magazine Der Spiegel, which only covered the 2012-16 period.

City could face further investigations by Uefa’s financial fair play compliance body into the level of Abu Dhabi sponsorships they declared for the years since 2016, in light of the finding that they overstated their sponsorship for the four previous years from 2012. The investigatory chamber is responsible for assessing the financial submissions of European clubs competing in the Champions and Europa Leagues every year, and clearly approved City’s sponsorship figures since 2016, before the emails were published in November 2018.

The finding that City overstated the sponsorships, following the suggestion that Etihad was not fully funding the club’s stated £67.5m main partnership, presents the IC with two issues for the years since 2016.

The first is whether City’s submissions for those years, that Etihad was fully funding the sponsorship, can be taken at face value any more, or whether an investigation is needed to determine if it was being subsidised. The emails, particularly two sent by City’s then-chief financial officer, Jorge Chumillas, suggested that the Etihad sponsorship was largely being funded by ADUG, the company vehicle belonging to City’s owner, Sheikh Mansour of the Abu Dhabi ruling family.

An internal consultant’s report on Etihad’s finances produced in 2010 for Mansour’s brother, the Crown Prince of Abu Dhabi, Sheikh Mohamed bin-Zayed al-Nahyan, appeared to note that the country’s executive council, in effect the government, “covers” the City sponsorship. Both City and Etihad have denied that the sponsorship is subsidised, with City claiming that the CFCB chambers ignored “irrefutable evidence” to the contrary.

Etihad said in a statement: “The airline’s financial obligations, associated with the partnership of the club and the broader City Football Group, have always been, and remain, the sole liability and responsibility of Etihad Airways.” The second issue, which is understood to have been repeatedly postponed, is whether the Abu Dhabi sponsorships are technically “related” to the owner, Mansour. As the FFP rules seek to limit clubs’ losses even if bankrolled by an owner, “related” sponsorships are scrutinised to determine if they are for a genuine market value, or are in effect an owner putting money into a club under the guise of a commercial sponsorship.

In 2014 PwC, the consultant appointed by the CFCB to make further inquiries into clubs where necessary advised that three of the Abu Dhabi sponsors were related to City: the investment firm Aabar and telecommunications giant Etisalat, because Mansour was the chairman of the funds which owned them, and Etihad, which is state-owned. After further research into the ruling family’s involvement with them City fiercely rejected those findings and insisted that none of the Abu Dhabi sponsors was related.

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The issue was not pursued further as Uefa agreed a settlement with City, who had been assessed as having made a €180m loss for FFP in 2012 and 2013 when the rules permitted a loss of €45m. The issue of related parties is understood to have been under scrutiny by the IC again last year, but after Der Spiegel published the emails and the IC decided in March that it had to investigate the historic 2012-16 funding of the sponsorships, it again did not pursue it to a conclusion.

Now that both chambers of the CFCB have evidently concluded that the Etihad sponsorship was subsidised, the IC may have to examine again whether the airline and other sponsors are related to Mansour. The detail of the AC’s findings, including whether they concluded that City had overstated sponsorships from any other Abu Dhabi sponsors, is not yet known in detail because its full judgment is not being published pending City’s appeal to the court of arbitration for sport.

The IC will be assessing European clubs’ latest financial submissions, including City’s, over the coming weeks for their compliance with FFP rules as participants in the elite competitions next season. City said in their statement after the ban was announced that the CFCB had prejudged the issues from the beginning and run a “flawed” and biased process.

The current members of the IC who will be scrutinising City’s submissions are the chairman Yves Leterme, a former prime minister of Belgium, Jacobo Beltrán, a Spanish politician and senior advisor at the consultant Grant Thornton, Egon Franck, a professor at the University of Zurich who advised Uefa on the development of FFP, Konstantin Sonin, a Russian-born professor of economics at the University of Chicago, Petra Stanonik Bosnjak, a judge in Slovenia, and Yves Wehrli, managing partner and sports law specialist at the City and international legal firm Clifford Chance.

Source – The Guardian

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Prince

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