Manchester City, the reigning Premier League champion, has been barred from the Champions League for the next two seasons for “serious breaches” of European soccer’s financial regulations. The club has also been fined 30 million euros ($32.5 million).
Manchester City had sought to short circuit the investigation by financial regulators at UEFA — and preserve its place in the Champions League, European soccer’s richest competition and the trophy the club covets most — by appealing to the Court of Arbitration for Sport. But in November the court rejected the appeal, in which City had tried to end the investigation on procedural grounds, by ruling that it could not hear the case until the club had exhausted the disciplinary process at UEFA.
Shortly after UEFA’s ruling, City issued a statement indicating it would appeal the decision.
“Manchester City is disappointed but not surprised by today’s announcement by the UEFA Adjudicatory Chamber,” the statement said. “The Club has always anticipated the ultimate need to seek out an independent body and process to impartially consider the comprehensive body of irrefutable evidence in support of its position.”
The earlier decision at CAS was not, its officials noted at the time, a verdict on whether Manchester City did or did not breach financial regulations, a charge that English soccer authorities and officials at UEFA had been investigating for months.
Manchester City has vigorously denied wrongdoing, and its officials have warned UEFA that they would mount an aggressive response to any effort to bar the club from the competition. “The accusation of financial irregularities are entirely false,” City said in a statement earlier this year.
Critics feared that City’s ability to avoid punishment would be a death blow for UEFA’s ability to impose financial limits on its clubs. Those rules, in place since 2011, were designed to impose a measure of financial fairness within the European soccer economy, but powerful clubs — including City, as well as Paris St.-Germain, A.C. Milan and others — have routinely avoided serious punishment for breaking them.
Manchester City has assembled one of the best, and most expensive, teams in the world through the backing and financial might of the club’s owner: Sheik Mansour bin Zayed al-Nahyan, the brother of the ruler of the United Arab Emirates. Sheik Mansour has invested hundreds of millions of dollars over the past two decades — on players, coaches, facilities and the team’s operations — to transform Manchester City, which played in England’s second tier as recently as 2002, into one of soccer’s biggest and most successful clubs.
Many of the allegations of financial impropriety against Manchester City came to light after they were reported by news media outlets with access to the so-called Football Leaks files. The files are said to include emails and internal club documents showing efforts by City to get around UEFA’s financial fair-play regulations. The scheme involved funneling millions of dollars from a United Arab Emirates state-backed investment company through inflated sponsorship agreements with entities including the U.A.E.’s national airline, Etihad.
UEFA’s rules permit sponsorships from companies linked to a club’s owners, provided the agreements are struck at prices that reflect the market rate. The Etihad deals allowed the club to report tens of millions of dollars in income that was used to offset spending on new players.
Manchester City dismissed the initial reports of financial impropriety as “an organized and clear attempt” to smear the club’s reputation, and complained that any club documents had been obtained illegally.
According to the people with knowledge of the investigation who requested anonymity because the verdict had not yet been announced, City’s punishment was to be linked to an accusation that it provided misleading statements in resolving an earlier case in which the club had paid a fine for violating UEFA’s financial controls, as well as false statements to licensing authorities in England.