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Yet more Man City allegations, Etihad financial problems, La Liga puts complaint to EU

by Tony Attwood

The latest round of suggestions of wrong doing by Manchester City takes us into an area that not only concerns Uefa and Financial Fair Play but also that rather tenacious leg biting dog: Revenue and Customs – the British tax collector – and a complaint from Spain to the EU.  It’s all getting a bit messy.

Because it is now being said in the leaks pouring out of Germany that Manchester City followed the Spanish model of setting up a separate company which handled the image rights of players, in order to avoid the club and I suspect the players, paying out money in tax, and allowing the loss making airline to feed yet more money into the club.

And it is alleged the plan goes way beyond the odd fix here and the bit of slipping money into the club without it going through the official books.   Rather, in a memo from the chief executive of the club Ferran Soriano it was decided deliberately to fight financial fair play “in a way that is not visible, or we will be pointed out as the global enemies of football”.  That apparently is an exact quote from a memo.

That of course puts Manchester City on a collision course with Uefa, if Uefa can be bothered about such trivial matters as rule breaking (although the clubs in Spain are going to insist).  But much more to the point, when money enters a club in a hidden manner, it means it by passes all tax regulations, and so is quite likely to mean that no tax was paid on some money received (which is a British matter).

If money is given to a business by its owner to help it survive there is no tax implication of course, but if that money come in from outside the country, all sorts of other rules apply, and the money must be fully declared.

And so Der Spiegel tells us we have Project Longbow.   The longbow being famous in English history as the weapon that helped the English win the battle of Agincourt”.  This battle between the English and the French took place on 25 October 1415 as part of the 100 Years War – and thus suggests that Manchester City were seeing Platini as the enemy.

It’s not a very good image in relation to football.

Anyway, we are told that rather than pay players directly for the right to sell their images to commercial organisations, as virtually every club does, Fordham Sports Management was set up by Manchester City to pay players for the right to use a player’s picture in an advertisement – and the right to sell the chance to use the players’ images to other companies.

Then it is alleged although of course I can’t prove, the owner of Manchester City paid Fordham Sports Management an annual fee which counted as earned income (if it was declared to Revenue and Customs), or was not declared at all.  The money then helped Manchester City to have ever higher income from its owner without it being seen.  And this would be in addition to the declared sponsorship deal.

Meanwhile while the official sponsor of Manchester City is the Etihad airline, and it is being alleged that a lot of money was moving directly from the holding company of Sheikh Mansour to the club without going via the airline at all.

And what makes this all the more interesting is the financial state of Etihad airlines, which celebrated last year the fact that it had reduced its annual losses to just $1.52 billion (from $1.95 billion the year before).  And I would like to pause for a moment here to consider the source of all Manchester City’s sponsorship (and perhaps other) income.

Etihad Airways was planned as a rival to Emirates and Qatar Airways.  But the plan went horribly wrong when two other airlines Etihad had invested in (Air Berlin and Alitalia), collapsed in 2017.   They wrote off $808m in those two decisions alone.

More than 4,000 employees people have been sacked by the airline as a result.

And this is where it gets very interesting because the airline’s failure appears to come from seeing what Emirates and Dubai’s airlines had done and saying “we can do that” without proper planning.  But the market had changed and their model was hopelessly wrong.  Worse, in many trade reports you will also find phrases like “Etihad was defeated by a well-organised unionised labour force.”  In short they didn’t understand the market and didn’t understand the work force, but just thought they could do anything.

I think it is the problems that the airline itself has had which reveal a poor level of understanding of not just their industry but the way people outside of the one-family-state actually behave.

Now the clubs in Spain are getting concerned, and the Times has reported that a La Liga said, “Uefa should now take action and apply the rules that exist and any sanctions that are necessary.   Uefa should do its job in terms of enforcing FFP because, as we have said before, both Manchester City and Paris Saint-Germain are not complying with FFP rules.”

What has annoyed many clubs across Europe was the fact that although Manchester City were fined £49m in 2014 they were given back £33.4m three years later after allegedly meeting the rules.  But it is now said that Gianni Infantino, (now Fifa president), did a deal with Man City in secret, perhaps in return for a payment personally (I can’t confirm that of course and it might be wrong)  so they could keep on doing what they do.

Now even Pep Guardiola has started to step backwards saying, “We want to follow the rules, but I’m a manager, I don’t know what happened.   All I know is that we are not the only club to spend a lot of money, if you want to achieve another level that is what you have to do. When I was in Spain and Germany you would always hear that Manchester City was just about money, now I am on the inside I know something different. Everyone here is very professional and they try to do things in the right way.”

You can believe that or not, as you wish.

La Liga is now about to put in a formal complaint with the European Union competition authorities about Manchester  City. “The Football Leaks documents appear to confirm what we have been saying for years,” said a La Liga spokesman.

The Premier League has not commented.  I wonder why.

16 comments to Yet more Man City allegations, Etihad financial problems, La Liga puts complaint to EU

  • insideright

    It’s interesting that Pep’s ‘defence’ is that City were not the only club to spend money to achieve success. That isn’t what the complaints are about. They concern the receipt of money and the sources of that revenue. His defence is a red herring.

  • mm

    I wouldn’t think the Spaniards would want to complain to the EU Competition Authorities as FFP is totally anti competition. It was made up by the G14 clubs to keep everybody else out of their trough.
    Insideright, why would Pep need to defend City? He wasn’t even at the club at the time.

  • mm – no reason why you would have read our enquiries into this in the past, but yours is a point that was raised at the time FFP was brought in and indeed many times before that. To summarise, the EU acknowledged early on that sport could not be treated as other commercial activities because by its very nature it tended to end up with one winner, and with limited access (as for example a league) and thus the normal competition rules that are at the heart of the EU apply. A series of court cases which we reported at the time then verified the validity of this approach, and FFP was accepted as part of it by the EU.
    As for why Pep needs to defend City I don’t think it will do his cv much good if it is found that some of his achievements have been with a club that has been found to be at the heart of a lot of corruption – and he didn’t actually notice.

  • JimB

    mm is absolutely correct, of course. The initial justification for FFP was that it would help to prevent clubs going under as a consequence of spending beyond their means. But it was always, in actuality, a means by which the G14 hoped to maintain the status quo.

    And yes, Tony, you are also correct that it is sad that football is no longer (to the extent that it has ever been) a pure sporting contest. But, for all that the emergence of the likes of Chelsea, City and PSG as football superpowers alongside the established elite has made footballing success even more about money than sport, they didn’t start the fire. It was initially sparked by the formation of the Premier League before the oxygen hit of the Champions League transformed it into a raging inferno. And the formation of the Champions League was very much driven by the greed of the established elite clubs (who are up to their same dirty tricks again). In fact, I would go so far as to say that the subsequent massive financial chasm that grew between the established elite clubs and the rest is precisely what made the sustained intervention of wealthy benefactors almost the only way that the rest could ever hope to compete at the top again.

    If City and PSG are monsters, then the established elite are Dr. Frankenstein.

  • Blimey Jim. You are saying Manchester United, Liverpool and Arsenal created Manchester City in its current format… wow that’s a thought that is going to take me a while to contemplate.

  • Andy Mack

    FFP wasn’t a way to maintain the status quo. It was a way to make sure that only a well run club could make the step up and poorly run clubs didn’t abuse their supporters.
    There were far too many clubs across Europe spending money they didn’t have with the aim of paying it back after they’d made that step.
    We’ve seen plenty of ‘iffy’ owners in the football league that mortgage their club to the hilt an then run away when it went wrong, leaving the fans to dig the club out of the smelly stuff.
    I hate saying positive stuff about our nomadic neighbours, so I won’t use them as an example (their lack of recent silverware helps not using them, although it’s on par with Liverpoo! in recent times), but there are plenty of clubs who have moved up through the divisions due to sound management, team building and business practices.
    So it didn’t stop teams improving dramatically, but meant they couldn’t do it overnight.

  • Ferg

    Jim.
    Are you contending then that football clubs have evolved unnaturally? I understand that they are not Organic btw
    As an analogy, does that make the genetics AND coaching programs etc that created Carl Lewis, dr Frankenstein ,to the Monstrous drug cheats?
    As I’m writing this, I’m already answering .Yes. For elite clubs that is true. They’ve all had they’re own Steroids over the years . Sky money etc, being the Salbutamol. What can be wrong in it??

    If only we had an ounce of faith that an investigation would dig deep enough without drowning in filth, to bring back a playing field. Levellish would do.

  • GoingGoingGooner

    With regards to Pep’s comments. I would suggest that what he says is irrelevant. They are just speculation. The machinations, if they occurred, took place way above his pay grade. Of course, he benefits much as Ferguson benefitted from ManU’s financial position, but I can’t see him having a clue about where the money is being shifted.

  • Gord

    Run across this note about an investigation in Switzerland Tony?

    https://www.swissinfo.ch/eng/football-leaks_prosecutor-to-investigate-fifa-president-s-ties-to-valais-attorney/44526258

    On another corruption thread, it seems the owner of Monaco has been picked up by police investigating corruption.

    Quite a few “domestic” (to England) sources to that Monaco story.

  • Ferg

    @GGG
    Is he like a spoilt child who gets whatever his whim ,as his daddy will get it for him?
    I don’t think he’s in any way involved in the ‘books’, but a plea of ignorance requires that we believe he is a bit dim. That I don’t buy.
    If he’d landed from Mars, maybe, but he’s been in the inner circles for a while now.

  • GoingGoingGooner

    @Ferg…you are right in the sense that he and that chap at Old Trafford are drawn to money like moths to a flame. He ought to have suspicions about the provenance of the money. He was clever but cynical as a player…it would be unlike him to lose those qualities as a manager.

    But yes, I do think he is a spoiled child. He is a bit better at concealing it than his fellow traveler at ManU, though.

  • WalterBroeckx

    What disgusted me from Man City was when JL Dehaene died. JL Dehaene was a former prime minister from Belgium who was chair of the first committee that wanted to punish the likes of City. Now to make it clear JL Dehaene was a prime minister I really disliked a lot. So I have no sympathy at all for him. But when he died Man City send a mail to someone with the words: “one down, six to go” and enjoying the fact he died.
    Now I have suffered under JL Dehaene as I live in Belgium so I was happy he left the political stage at the time and then he went to UEFA FFP committee. But I don’t want people dead, not even him. I didn’t feel any joy when he died as I always think that everybody has family and friends who will be sad about a persons death. So seeing the message from Man City enjoying the death of a person is somewhat sickening.

  • Andy Mack

    Ferg,
    Off topic, but Salbutamol is not a steroid (as far as I can see).
    As I understand it, It allows the body to function closer to it’s max capability level (possibly closer than someone without asthma?), whereas a steroid generally increases the bodies max capability level.
    So it is a medicine rather than purely a performance enhancer.

  • Ferg

    AndyMack. You are correct, but that was part of the topic..
    Steroids equate to all hated ffp transgressions, legal or illegal.
    Sky money is deemed as acceptable income,like salbutamol is used as a Bonafide medicine, although unless you are suffering from asthma attack why have huge doses of it?? And like the sky payments that go reward the already successful, so the salbutamol and other clever drugs,only gets used by the already elite.

  • WalterBroeckx

    I wonder how much ref Victor Kassai was offered for giving the most ridiculous penalty to City tonight. And how on earth not one of the refs corrected him. Money talks one could say. And no Sterling is no diver. LOL. If you see how he runs he is trying to find a leg to run up against with his own leg. And when he doesn’t find it he just kicks himself in the ground. If Sterling would be honest he would have informed the ref he kicked in the turf. But it now seems that Sterling is on the same wave length as his cheating club.

  • Brickfields Gunners

    What a crap decision by the referee . The commentators agreed while it was a bad call by the ref , Sterling was of course was never at fault .He just happened to kick the ground , and fell over .

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