MANCHESTER City are on course for a summer-long battle with European governing body Uefa over their proposed punishment for breaking new financial fair play (FFP) rules.
Uefa have offered City a settlement comprising a €60m (£49m) fine and a restriction on the size of squad they can use in next season’s Champions League – but only if they accept their rule breach.
City are understood to be arguing their case and, should they fail to reach a deal this week, face being served with a tougher punishment by Uefa’s Club Financial Control Body (CFCB).
Yet that would likely prompt the Premier League title favourites to appeal the sanctions at the Court of Arbitration for Sport (CAS), whose decision may come as late as mid-August.
“Many will believe that settlement gives clubs their best chance of reducing the effect of any potential sanction,” said leading sports lawyer Daniel Geey of Field Fisher Waterhouse, co-author of a recent report on FFP with accountants BDO.
“This is because Uefa will have tried to entice clubs to admit the breach with the incentive of reduced sanctions. The clubs in question, however, may believe that any settlement proposals put forward by Uefa are unrealistic and that taking on the CFCB decision at CAS may be the most pragmatic option.”
City’s proposed punishment includes two restrictions on their Champions League squad: a reduction from 25 to 21 players, and a ban on increasing the total wage bill of those players.
FFP rules prohibit clubs from making losses exceeding £37m during 2011-13 and are being implemented for the first time. City posted total losses of £149m for that spell, though much of that can be discounted as Uefa does not count spending in certain areas, such as stadium improvements. Uefa has vowed to closely scrutinise related-party transactions as part of FFP, and is believed to have told French champions Paris Saint-Germain that their €600m four-year deal with the Qatar Tourism Authority does not represent market value. City have faced questions over their own smaller £35m-per-season contract with Etihad Airways, which is also Abu Dhabi-owned, as well as £22.5m in intellectual property sales to related parties and £24.5m in image rights sales, though it is not known whether Uefa has raised objections to these deals.
THE DEALS UNDER SCRUTINY
Etihad Airways - value: £35m pa
Lucrative and wide-ranging 10-year deal including naming rights not only for City’s stadium but also for their new training ground and sports science centre, plus primary shirt sponsorship
Questions raised over whether it represents fair market value, as Uefa is wary of related-party deals (City and Etihad are both owned by Abu Dhabi) being used to artificially subsidise clubs
Sale of image rights - value £24.5m
City has taken the unprecedented step of selling image rights of players to a third party
Club has not disclosed identity of buyer but has said that the company is not a related party
Image rights typically split between club, which retains majority, and players, who enjoy tax benefits
Sale of intellectual property - value £22.5m
City sold non-specific intellectual property to unspecified related parties during 2012-13, deals that helped to halve annual losses to around £50m
Deals thought to be linked to set up of affiliate teams Manchester City Ladies and New York City FC. Melbourne Heart joined the group in late 2013