Manchester City: The rug may be pulled away, but it could be a very long game

THE NEWS that the Premier League has charged Manchester City with breaching financial rules over 100 times was generally well received by the football community, with schadenfreude the dominant theme along with a sense of relief that common sense was at last prevailing. Ever since football clubs started benefitting from financial steroids (call it what you will), the rest of the game has longed to catch out clubs like City, Chelsea and Paris Saint-Germain. All around the football stadiums of Britain, the cry of “gotcha” could vaguely be heard.

There’s no great wave of sympathy for City at the moment, firstly because everyone knows they have the financial clout to employ the best lawyers for the duration and fight out a war of attrition, and secondly, because you get the impression City are no mugs. Nevertheless, people want justice to be done. Henry Winter in The Times commented that it is “time to lawyer up” and “If Manchester City are guilty, the league must make an example of them”. That is exactly what the Premier League will do, but they must be prepared for the long game.

The Guardian’s Barney Ronay believes that if City have broken so many rules, they have betrayed football as a spectacle. “If they are found guilty, and this is a long way off, pegged between appeals, arbitration and the distant, dazzling prospect of a trip to the high court, then the punishment must be commensurately harsh.”

Manchester City’s performances – 2009 to 2018


Unsurprisingly, City’s “big six” rivals, who have been denied success by the club’s dominance, are among the loudest voices calling for punishment. “The matter will not be referred to an independent commission, but it is reported that many of English football’s top teams are eager to see City pay the price,” reported The Daily Mail

Talk of relegation, points deduction and even ceremonial cancelling of honours is premature, although it makes good headlines in newspapers and on TV and radio. Should City be forced to hand back the prizes they won between 2009-10 and 2017-18 (the period in question), then there will be significant collateral damage: “Nothing erodes the legitimacy of a sporting competition like titles being stripped and that prospect could come at a point when the Premier League is in an unprecedented position of power in the sport, when virtually everyone is concerned with keeping that going,” reported Miguel Delaney of the Independent.

Reputations will be soiled and the immediate repercussions on football could be significant – this is, after all, the most successful, heavily marketed competition in the game. Little wonder people are talking about doomsday scenarios such as Pep Guardiola leaving City along with star players. Indeed, Rory Smith of the New York Times, described the roll call of breaches like a “doom scroll of letters and numbers” that resembled a list of artificial colourings and preservatives.

Transfer activity 2009-10 to 2017-18

 Transfer spend (€m)Transfer income (€m)Net spend (€m)
Manchester City1,440380(1,063)
Manchester United1,010385(621)
Source: Transfermarkt

Of course, City have been here before when UEFA tried to charge them on overstating sponsorship, among other things, but the Court of Arbritration for Sport (CAS) cleared them of financial irregularities. This time, they cannot call on CAS.

Kieran Maguire, speaking to the Manchester Evening News, said the allegations are so powerful the outcome could be transformational for City, the FA and the Premier League. “If you look at the charges as an overall body of work, the Premier League have effectively said that Manchester City have systematically misrepresented their finances for a period of at least nine years in order to gain an advantage.”

Manchester City key financials 2009-10 to 2017-18

 Revenues £mP&L pre-tax £mWages£mWage to income Ratio %
Source: Manchester City financial statements

For the Premier League, the City case could be a defining moment. If they succeed, in an age when elite clubs are trying to form a super league, it could present them as having some pretty sharp teeth. On the other hand, humiliation for City may possibly boost the drive for that very breakaway competition – not forgetting that super league advocates Juventus have also been in trouble. Henry Winter pointed out that “the Premier League has struggled to cope with City’s delaying tactics, alleged tactical fouling outside the witness box”. He also added that a prolonged saga will damage the Premier, English football and build greater tension between fan groups. 

Everyone bar the lawyers (who always emerge as winners) will be hoping for a swift (and face-saving) conclusion, but don’t bank on it.

The sustainability index is welcome but does anyone consider risk factors?

IN A challenging season for the city of Liverpool’s clubs, there must be some consolation for the fans that both Liverpool and Everton are among the most sustainable institutions in the top two levels of English football.

Fair Game’s Sustainability Index ranks Liverpool at the top of the list, with an overall score of over 70. Southampton are number two, with a score of 69.75 and Everton (64.79) are in the top six alongside Arsenal, Spurs and Manchester United.

The index uses four different classifications to determine the most sustainable clubs: financial solvency; governance; fan engagement; and equality.

Financial solvency accounts for 40% of the score, underlining the importance of a sensible approach to financial management. While the amount of income Premier clubs earn allows them to be liberal with their outgoings, the Championship continues to live beyond its means.

The solvency aspect of the index is calculated by taking into account current assets and liabilities, short-term loans, loans repayable within one year as a percentage of income, and wages as a percentage of revenue. The club with the most sustainable financial model appears to be Arsenal, with Southampton, Aston Villa, Tottenham, Manchester United and Liverpool close behind.

One aspect that may need considering in the future is the risk management around revenue streams – for example, the Premier is very dependent on broadcasting and if that was to suddenly dry-up, it would surely cast doubt on the existence of some clubs. Is there not an element of concentration risk to consider here? Perhaps there should also be some sort of ratio analysis of the type of income clubs receive?

Interestingly, despite both clubs being owned by middle eastern states, the ranking of Manchester City and Newcastle United is very different. City are ninth, while Newcastle are 18th. Brentford, who are held up as a good example of how best to run a small-to-medium club, are 11th.

The Championship looks very worrying; 11 of the clubs have a financial sustainability score of 10 or below and there is a big gap between these clubs and the rest of the division. Queens Park Rangers, for example, have a score of just 1. The division has long been paying out more money than it earns, with wage bills of over 100%.

While Fair Game’s call for clubs to be rewarded for showing good governance has noble and practical intentions, it does seem strange to hand-out prizes for companies who follow best practice, something that should be embedded in their everyday processes.

Overall, the index paints something of a gloomy picture as barely half the clubs are following a “good path” in the Premier and the Championship looks very vulnerable. Reports like Fair Game’s Sustainability Index can keep the subject in the public eye, but ultimately, clubs have to want to run themselves properly by factoring in every eventuality.