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By Tony Attwood
- So what exactly is Manc’s plan to show that they have not broken any rules?
- If Man City win their case then the whole of English football will be shaken
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Perhaps the worst decision that Manchester City could have made, after getting themselves in a bit of a pickle over their finances was for them to claim that they have done nothing wrong, during an international break. For it left to football journalists, and old timers like me who have some time on our hands, to ruminate and consider. ͏
Others of course have gone into enormous detail – and if you have time I would strongly recommend How Manchester City Hid $1 Billion In Plain Sight as a good a way as any to relax at the weekend.
For we have to remember that the Premier League didn’t just swoop in and say, “this all looks a bit dubious” – the League went through all the bank record and all the emails and then concluded that ManC had been inflating its annual revenue which means it has broken the rules.
And because that accusation is so simple, it encouraged the ManC owners to make the point, over and over again, of how stupid and negligent the League had been in its inquiries. So the Mancs say, “of course we can spend this much on players, look at how much we have earned.” And having patiently waited for the club’s owners to make that basic mistake, the League replies, “no, it doesn’t mean that at all.”
For the authorities argue that the revenue of ManC (on which the whole case depends) was artificially inflated both via make-believe contracts with companies in Abu Dhabi, and via impossibly large contracts for player image rights.
In essence the club signed commercial arrangements with organisations like Etihad Airlines who dutifully issued invoices for the agreed amount. But it is now suggested the sponsor would only pay a tiny percentage of that sum, while the owners of the Mancs would pay the rest. So the enormous sponsorship money was paid, that is true, but it is suggested, a lot of it was paid by the owner of the club paying the club, and that can’t count as sponsorship money.
The allegation is false accounting for the source of this extra money is said to be the Abu Dhabi United Group, who also own the club. And there is nothing wrong with this, as long as the club doesn’t claim this is “revenue”; it must be show as “investment” by the owner. Nothing wrong with that either, if it is shown as owner investment – except that amount of money is strictly limited. And that’s a problem especially as it is also suggested that the players’ salaries were paid by an organisation outside the club.
Of course I can’t prove any of this; I am just a guy in England who reads the newspapers and website reports. All I am saying is that it is being suggested that the club didn’t pay all the salaries itself. And that causes a problem. For although players can receive money from elsewhere for the use of their name, that should be done via the club.
Now it appears from the report cited above that something like 12 years ago the club sold or gave those player related right to another company meaning that the image rights income that should have come to the club went elsewhere before reaching the players. So none of this appeared on the company’s books at all but actually reduced the amount of money the club had to spend on players, which in turn made their accounts comply more readily with the rules.
The player didn’t mind as he still got his cash, and I imagine that the Inland Revenue didn’t look at it because it took the money to be foreign earnings, which would not be taxed until they came to the UK – which these wouldn’t. So there was nothing illegal here – except it made it look as if ManC was spending less on players than it was.
This explains how the money that is reported in the article I’m citing,͏ was moved around. I can’t prove this of course, but as the source says, “This effectively meant Manchester City could pay a player $10 million per year, but if $5 million was structured as salary and the other $5 million as an image-rights payment, only $5 million in expenses would hit the club’s books.”
This means the club would be able to move around £100m a year without it appearing on the club’s records.
Now I need to be very clear – I am just trying to explain why ManC say nothing untoward has happened and the League feel that is wrong. I am not saying this specifically happened but rather saying there are methods by which a club can generate sponsorship money where it is not always club what the source of the money actually is.
Now some reports seem to imply that some of its sponsors got government financing to pay for the sponsorship deal. And although it is not concrete proof, we can note that when “Rui Pinto”, ran the “Football Leaks” website this was the approach that he revealed. And interestingly the only major Premier League club reported to be involved in that scheme was Manchester City.
Now it is most important to remember that I am basing all this on the data I have found on line, that I am not an investigative journalist, and ManC has said it is appealing, so there may be lots more I don’t know. But my point here is that even if I have got some of the details here wrong, and missed other details, there has been more gong on in this story than some sources are revealing.
And there is one interesting snippet I would like to add. It is reported ManC don’t include relegation clauses in their contracts, which say that if ManC is relegated other clubs can buy their players at a discount. Without such clauses some of the Manc players could be stuck playing in a lower league if ManC are found guilty of any misdemeanors.
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