[Authors – Shubh Kavi and Swaraj Kariya, Final year Law Students at The Faculty of Law, Maharaja Sayajirao University of Baroda]
It has been close to a decade since the transformation of Manchester City from Manchester United’s “Noisy Neighbours” to a gargantuan force to be reckoned with. The transformation, brought about by injection of investments and the takeover of the club by Abu Dhabi’s oil barons, ushered in a new era for the club. The sudden success and the tides turning in England’s footballing echelons seemed almost like a fairy tale; the sheer accomplishments were not entirely enigmatic though. The abrupt success brought in by fresh Middle Eastern investments was met with equal parts suspicion from authorities and disdain from rivals, which ultimately culminated in the authorities from the UEFA smelling a rat; which meant that City were sitting on a ticking time bomb, one ring away from an investigation which ultimately happened leading to a drawing of the curtains in modern football’s club investigation saga and the momentary eclipse of the blue moon from European Football.
It didn’t come as a surprise when the UEFA Club Financial Control Body (CFCB) imposed disciplinary actions on Manchester City which mandated that it was barred from competing in Europe’s biggest club competition for breach of UEFA Club Licensing and Financial Fair Play Regulations after reports and allegations by German magazine Der Speigel and Football Leaks in 2018.
The Adjudicatory committee, which was founded in 2009, is an independent arm of the UEFA for administration of justice and ensures that the clubs fulfil the requirements which have been set in UEFA Club Licensing and Fair Play regulations which were put in place to bring an equilibrium between the Rich and the not so resourceful clubs and to tackle a debt crisis. It is also authorised to initiate disciplinary actions against the defaulting parties. The verdicts can be challenged at the Court of Arbitration for Sport (CAS).
CERTITUDE OF THE CASE
The Football Leaks hacking scandal threw the CFCB on Manchester City’s trail and after examining the evidence concluded that it had overstated its sponsorship revenues in its accounts and the break-even information between the years 2012-16. MCFC called out the process to be arbitrary as it was “initiated by UEFA, prosecuted by UEFA and judged by UEFA”. It fervently held that the accusations were false, and the process was unfair and ensured that it will appeal to the CAS to overturn the ban. The Club maintained that it would ensure that no stone was left unturned to refute the charges of “serious breaches of FFP regulations” levelled by UEFA whilst ensuring that it would mount an aggressive response to UEFA if it sought to seek a ban for the club in that competition. After the rejection of appeal in which the Club sought to terminate the investigation on procedural grounds, MCFC filed a fresh appeal and CAS overturned the ban imposed by UEFA on the club. Although it came as a shock to the general populace, it was not surprising when Manchester City’s Champions League ban was overturned owing to a mere technicality which was as clear as daylight to the armada of the brightest legal minds. The ban was reversed owing to a time limit which in this case was a period of five years on violations which required punishment and this loophole was the beacon of light for the aggrieved club since it meant that the investigators could no longer enforce or rule against any allegations levelled on Manchester City. The three-member bench also held that taking cognizance of the UEFA’s rules itself, irrespective of whether the findings were true, was inadmissible. The decision came as a huge breather to the fans and more importantly to the club’s offices since the ban would have meant a considerable downgrade due to star players leaving for better pastures, an irreparable loss of face across the footballing world and a cliff plummet in their revenues.
UEFA AND THE FINANCIAL FAIR PLAY
The initial ban on the Premier League giants was not a first of its kind; as a matter of fact the Financial Fair Play (FFP) rules have been quite effective in the past as they served as a deterrent on clubs overspending and hence ending up on the verge of bankruptcy. Clubs like Galatasaray and Dynamo Moscow have been banned from playing in Europe’s most elite sporting event. In this case, the CAS hit a brick wall in the sense that the evidence produced was not conclusive. Due to inconclusive evidence and a time barred clause, UEFA could not provide the panel at CAS with a watertight case which ultimately resulted in letting Manchester City off the hook with a $10mn penalty which if put with the club’s spending was but a blade of grass on a lush soccer field.
As often happens with every issue and verdicts on significant developments, the decision to reinstate Manchester City’s status quo in the Champions League was met with heaved sighs of relief in one camp while the other faction fervently believed that the procedure or judgement was not free of malice and that either the authorities or the organisations involved delivered their findings or verdict with not so positive “incentives” from the club’s bosses.
It is a seldom sight that clubs which aren’t a part of the conglomerate of traditional “big” clubs winning the competition or even coming close to them because of their brand value and generations of fans thronging to rally behind the team in every match day making inroads in the Europe’s most spectacular sporting event. When these clubs aimed at sitting on the same table as the traditional powerhouses albeit with enormous investments that even when Manchester City was formally cleared to participate in the competition, it sparked an outrage amongst many who cried foul, even accusing European football’s governing body of corruption and collusion while the plain truth in sight remained that MCFC was given the clearance owing to a mere time barred technicality present in UEFA’s rules itself. European football’s decision body have been subverted intensely by this confrontation with City. However, the UEFA just has itself to fault.
ANALYZING THE CAS VERDICT
The crux of the case is whether City’s state-owned sponsors swelled their instalments to the club with direct instalments from Abu Dhabi’s decision-making family. The CAS panel of three found by a majority of 2-1, that there is no doubt the club’s main sponsor, Ethiad, “fully complied” with its agreed payments to City, its sponsorship was “fair value” and there is no evidence its payments actually came from City’s parent company. Also, similar allegations relating to another of City’s sponsors, Etisalat, were not addressed mainly because they were “time-barred”. City were found guilty of not cooperating with UEFA and thereby contravening Article 56 of the UEFA Club Licensing and FFP Regulations.
UEFA at first requested the chain of messages connected with the supposed breaks yet did not catch up with more demands when the correspondences were not conveyed by the club. This brought about the panel declaring, “As a consequence, since UEFA did not pursue its request to be provided with the runs of emails of which the Leaked Emails formed part, the majority of the Panel finds that no adverse inferences can be drawn from the fact that MCFC did not provide such information.”
Essentially, the two payments on which UEFA concentrated much of its case were governed to fall outside of the five-year limit on bringing charges. These happened in June 2012 and January 2013 respectively – and keeping in mind that Manchester City and UEFA differed precisely when prosecution began – these dates fell outside the five-year window on either estimation. CAS dismissed UEFA’s contention that these instalments could in any case be prosecuted on the premise that they were accounted for again in later years that fell inside the five-year timespan.
The CAS judgment additionally contains an extraordinary disclosure that the Chairman of the Panel, Rui Botica Santos who is a Portuguese lawyer was suggested by MCFC while the CAS rules for appeals clearly state that each party selects one arbitrator, then the chairman is chosen by CAS’ own appeals division chairman. No clarification has yet been given for why City proposed the Chairman for this case, although the judgment takes note of the fact that UEFA did not protest.
CAS acknowledged that City without a doubt had an obligation to reply, holding that the leaked emails provided prima facie proof of masked value financing. They included that UEFA had no genuine decision however to open another examination on the disclosures contained in the messages. They likewise acknowledged that the plans talked about in the messages, whenever executed, would have added up to breach of the FFP regulations. UEFA’s issue was establishing that the plans were ever executed. The correspondences neglected to show the cooperation of the sponsors that would have been important to make masked instalments.
All through the procedure, City had accused UEFA and its leaders of prejudice against the club, saying they ignored “irrefutable facts” but the allegations of deception by UEFA, based on part truths and innuendo, were not ultimately substantiated. FFP as a policy initiative may be refined as a result of the outcomes and it may also give rise to a refinement of the rules or the resources put into monitoring and compliances.
Even though Manchester City managed to overturn their European ban, nevertheless, the written judgment reveals the club’s inconsistencies with their claims, Manchester City’s hierarchy also kept criticizing investigatory chamber (IC) chairman Yves Leterme of bad faith and “a basic lack of due process” .The full judgement refutes the claim that the club provided “a comprehensive body of irrefutable evidence” the club refused demands for evidence and witnesses and hindered inquiry. Criticizing City for that, the judgment even states that the club itself accepted grounds for the charges
Although overturning the Adjudicatory Chamber’s decision by a majority, the panel did not find the City’s alleged financial irregularities were “absolutely fraudulent.” They found a key finding of the AC “time-barred”. The verdict in this case clearly indicates that one of the major giants of European Football got off the hook owing to technicalities. This case served as a litmus test of UEFA’s FFP rules and was an indicator of a long due overhaul needed in the implementation of these regulations and mending the loopholes which will prevent the wrongdoers from getting off scot free in the future.
Hence Manchester City’s hierarchy won the war they waged furiously against UEFA, but the reality of victory doesn’t match the claims they made during their long campaign.
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PREFFERED CITATION – Shubh Kavi & Swaraj Kariya, Eloquent Loophole Exploitation or Latent Jeer at the FFP Rules: Analyzing the Altercation Between UEFA and Manchester City, SLPRR, <https://sportslawandpolicyreviewreporter.com/2020/09/22/eloquent-loophole-exploitation-or-latent-jeer-at-the-ffp-rules-analyzing-the-altercation-between-uefa-and-manchester-city/> September 22nd, 2020.
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