Manchester City FC v UEFA – Financial Fair Play


The Court of Arbitration for Sport (CAS) has recently released its full 93-page judgement of CAS2020/A/6785 Manchester City Football Club v UEFA.

You may recall that earlier this year Manchester City were handed a 30 million euro fine and a ban from competing in UEFA’s club competitions for 2-years (in other words, a ban from participating in either the Champions League or the Europa League). This was due to alleged “serious breaches” of Club Licencing and Financial Fair Play (FFP) Regulations by UEFA’s Club Financial Control Body (CFCB). It was alleged that Manchester City’s owners injected €2.7bn into the club over 7-years through its shareholders & over-valued sponsorship contracts which infringe FFP regulations.

What are the Club Licencing and Financial Fair Play Regulations?

FFP was a regulation introduced by UEFA to prevent clubs that qualified for its competitions from spending beyond their means and, therefore, to eradicate “financial doping”. In other words, they must balance their football-related expenditure i.e. transfer fees and wages with television and ticket income, plus revenues raised by their commercial departments. However, money spent on stadiums, training facilities, youth development or community projects is exempt. The role of the CFCB is to essentially oversee and police the system to ensure that all clubs participating in UEFA’s club competitions are adhering to the rules.

The rules essentially allow a club to spend up to 5 million euros more than they earn per assessment period. However, under a monitoring period, total losses of 45 million euros were permitted so long as the club had owners who could cover such amounts. The figure of 45 million has been gradually reduced since the 2014/15 season. The Regulations also mean that clubs are always obliged to meet all transfer and employee payment commitments.

City immediately sought to appeal the decision of the CFCB. It was feared that if the punishment were to be upheld and not challenged, City would lose key players and possibly their manager who may want to pursue other employers who could guarantee Champions League football. City asserted that the evidence which was based on thousands of leaked emails was an organised attempt to smear the club and, as such, was inadmissible.

The decision

In summary, the appeal found that City had failed to cooperate with UEFA authorities but nonetheless the CAS lifted the ban and reduced City’s fine. On procedure, the CAS found that there were no due process (bias) breaches by UEFA. Therefore, City’s allegation of bias was unfounded, and the leaked emails did, in fact, constitute admissible evidence.

Prior to the release of the full judgement, it was widely reported in the media that one of the key failings of UEFA’s case was that they brought proceedings outside of the limitation period. The limitation period being the period within which legal proceedings can be issued. Proceedings issued outside the period cannot be brought before the courts and are effectively barred. However, the CAS judgement suggests that both parties were wrong on the statute of limitations. The CAS found that the relevant clause in the UEFA Regulations was too ambiguous to be applied with any certainty. That said, the key charge in relation to disguised equity was not subject to limitation and the CAS still considered the charge in full.

The charges in respect of dishonest concealment of equity funding were ruled as being a far more serious violation than the charge in relation to the obstruction to the CFCBs investigations. The CAS also noted that “it was not appropriate to impose a ban on participating in UEFA’s club competitions for failure to co-operate with the CFCB’s investigation alone”. However, on the charge of dishonest concealment, the CAS made out that the charge was not made out to the ‘comfortable satisfaction’ of the panel.

‘Comfortable satisfaction’ being the standard of proof required to succeed in a claim before the CAS. This standard of proof is quite different from the standards commonly used in the English and Welsh legal system. The reality is that it lies somewhere between ‘beyond all reasonable doubt’ (criminal law standard) and ‘on the balance of probabilities’ (the civil law standard).

On the secondary charge, in relation to obstruction, the CAS panel found that there was a clear failure to co-operate with the investigation on City’s part and, therefore, they were liable for this particular breach. However, this breach does not warrant a ban from European competition but does carry a fine. City was ultimately fined 10 million euros – mere pocket money to a club as wealthy as City and certainly nothing more than a ‘slap on the wrist’.

Either party could still appeal the CAS decision, but this would require a finding that the CAS made a significant error in their procedural and decision-making process. An appeal would be made to the Swiss Federal Court; however, CAS decisions are rarely appealed and even where they have been appealed, the decision of the CAS has been rarely reversed.

The decision does not appear to suggest that FFP is dead. However, it does highlight flaws with UEFA’s Regulations and the CFBCs investigation. Perhaps it will serve as an important lesson to UEFA that they cannot be responsible for the investigation, prosecution, and judgement of breaches to its Regulations and that some form of independent body is required.

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