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.
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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.
“Both Paris St-Germain and Manchester City are cheating and should be sanctioned. That continues to be our position. We certainly hope Uefa will take the right decisions and enforce Financial Fair Play rules, but we don’t have full confidence that they will. Should Uefa fail to act, we will do what we have said before: launch a complaint with EU competition authorities. Today we are stopping short of asking for a new investigation or reopening the old one, we don’t rule out doing so later.”
The Premier League has not commented. I wonder why.