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Mon 13 Jul 2020 12:35 PM

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Manchester City's two-year European ban quashed on appeal

At stake was a potential 100m euros a season in revenue and the ability to hang onto top players who want to compete at the highest level

Manchester City's two-year European ban quashed on appeal

Since being acquired by Abu Dhabi in 2008, Manchester City has grown to become the world’s sixth-biggest soccer club with annual revenue of more than 600 million pounds, according to Deloitte’s Money League.

Manchester City won its appeal against a ban from the Champions League, in a victory for the club’s owners, Abu Dhabi’s royal family and US private equity firm Silver Lake.

Football governing body UEFA had barred the English Premier League team from Europe’s most prestigious competition for two seasons and fined it 30 million euros ($34 million) for overstating sponsorship revenue between 2012 and 2016.

The independent Court of Arbitration for Sport in Switzerland said Manchester City did not hide equity funding as sponsorship contributions, but did fail to cooperate with UEFA authorities. The fine was also reduced to 10 million euros.

At stake was a potential 100 million euros a season in revenue, the ability to hang onto top players who want to compete at the highest level and pride in one of the world’s most famous football clubs. No team from any of the big five leagues in Europe has ever been banned from the Champions League for breaching its financial fair play rules.

Since being acquired by Abu Dhabi in 2008, Manchester City has grown to become the world’s sixth-biggest football club with annual revenue of more than 600 million pounds, according to Deloitte’s Money League. Last year it won the Premier League, the world’s richest football competition. Silver Lake owns around 10% of Manchester City, valuing it at about 5 billion pounds.

Under the financial fair play rules introduced in 2011, teams have to balance their spending within revenues and are prevented from accumulating debt. Rivals say that breaches of the regulations allow the offending teams to spend more on top players, distorting competition.

The CAS decision has implications for this season’s race to qualify for next season’s Champions League tournament. Chelsea, Leicester City, Manchester United, and Wolverhampton Wanderers are all competing to join Liverpool, but now only two of them will qualify, instead of three had City been banned.

The threat of being banned from the Champions League for overspending has been widely acknowledged as having helped to improve the profitability of Europe’s football clubs. In 2011, according to UEFA, the region’s 900 or so teams in top divisions went from a combined 1.7 billion euro-loss in 2011, to a 140-million-euro profit in 2018, according to UEFA.

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