Key Highlights
- Manchester City sponsorship agreements from 2009-10 to 2017-18 generated £949.94 million in reported commercial income.
- The ruling said £830.69 million of that total came from tagged sums paid by the club’s owners, rather than sponsors.
- The panel rejected Manchester City’s explanation of the agreements as “untrue” and said the scheme helped address a £9.9 million UEFA financial shortfall in 2013.
How Manchester City’s alleged disguised funding scheme worked
Manchester City began taking steps in early 2010 to secure additional funding for the club through sponsorship agreements that were recorded at amounts described as significantly above fair market value. The arrangement is referred to as the ‘disguised funding scheme’ in the ruling.
According to the ruling, each sponsorship deal was divided into two components: a base fee and a tagged sum. The sponsors paid the base fee, while Manchester City’s owners paid the tagged sum. As a result, the sponsors did not have to fund the full value of their contracts, with the club’s owners covering the vast majority of the payments and enabling Manchester City to invest in players.
The document said the arrangement “gave the misleading impression to third parties (including regulators and its auditors) in its financial statements and any required FFP returns that its commercial revenues from sponsorship agreements were far, far greater than was in fact the case”.
Reported sponsorship revenue and the panel’s findings
The ruling said Manchester City’s commercial income from sponsors totaled £949.94 million across the seasons from 2009-10 to 2017-18. Of that amount, £119.25 million represented base fees, while £830.69 million represented tagged sums paid by the club’s owners.
Manchester City denied the claims and argued that the Premier League had misunderstood the sponsorship agreements. The panel, however, said it “rejected that explanation as untrue”. It also said the explanation was “concocted well after the event in an attempt to obscure and conceal the realities of the disguised funding scheme”.
How the arrangement was allegedly adjusted
The ruling said Manchester City knew the arrangement needed to be adapted periodically. From time to time, the disguised funding scheme was changed to “assist with continued concealment” and “reduce the likelihood of difficult questions being asked”.
One example cited in the ruling involved an unexpected shortfall in May 2013. Less than a week before the end of the 2012-13 financial year, Manchester City knew it was £9.9 million short of complying with UEFA’s financial rules.
Within days, and without sponsors being approached, several modified sponsorship agreements were generated. These agreements increased the recorded sponsorship fees to cover bonuses for events that had already taken place and to pay for a tour of the United States. The ruling said the anticipated UEFA FFP shortfall was thereby “plugged”.
Why This Matters
The figures in the ruling describe a significant difference between the sponsorship revenue reported by Manchester City and the amounts that sponsors were said to have paid directly. The case also highlights how the structure and later modification of sponsorship agreements were linked to financial reporting, regulatory scrutiny and UEFA financial rules.
The ruling’s findings are based on the panel’s assessment of the sponsorship arrangements and Manchester City’s explanation of them. Manchester City denied the claims, while the panel rejected the club’s account as untrue.
Frequently Asked Questions
What was the alleged disguised funding scheme?
The scheme involved sponsorship agreements being split between a base fee paid by sponsors and a tagged sum paid by Manchester City’s owners. The ruling said this made the club’s commercial sponsorship income appear substantially higher than the amount actually paid by sponsors.
How much of Manchester City’s reported sponsorship income came from tagged sums?
The ruling said Manchester City reported £949.94 million in commercial income from sponsors between the 2009-10 and 2017-18 seasons. It said £830.69 million of that total represented tagged sums paid by the club’s owners.
What happened in May 2013?
Less than a week before the end of the 2012-13 financial year, Manchester City was aware of a £9.9 million shortfall in meeting UEFA’s financial rules. The ruling said modified sponsorship agreements were created within days to increase recorded fees and cover previously completed events and a US tour.
