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The Manchester City Financial Fair Play Situation Explained

The Manchester City Financial Fair Play Situation Explained

The Premier League's recent decision to dock 10 points from Everton in response to a breach of financial rules sent shockwaves across the world of English football. Toffees fans mounted fierce protests at home and away matches, and the hierarchy of the club announced their decision to mount an appeal process immediately. Away from Merseyside, many football fans have been questioning what the wider implications are, with one question on many people's lips being: if Everton are deducted 10 points for this one major breach, what will happen to clubs such as Manchester City, who are facing numerous charges of their own?

Like Chelsea, the financial fair play situation at Manchester City is a complex one, and there are lots of factors to take into consideration when discussing this matter. In this article, we'll be attempting to do just that, providing an in-depth guide to the charges that are currently being brought against Manchester City, and what the future holds for the current Premier League champions. 

We'll explain what City have been charged with and what the potential punishment could be, as well as delving into what people inside the club (such as head coach Pep Guardiola) have said about the recent controversy. But first, we'll set the scene by providing a bit of background on what financial rules are in place to keep Premier League clubs such as Manchester City in check.

What is Financial Fair Play?

The rapid financial growth of European football clubs in the last thirty years has caused the sport's governing bodies to start devising ways of striving for greater fairness and equality. The biggest change that has taken place as a result of this development is the introduction of Financial Fair Play rules.

Financial Fair Play (FFP) is a UEFA scheme designed to ensure that the clubs it presides over are not operating in a financially irresponsible way. FFP prevents clubs from over-spending heavily and encourages them to act responsibly with their money, ultimately reducing the risk of clubs recording heavy losses or entering into administration. 

First introduced in 2009, FFP came around after UEFA discovered half the clubs it oversaw suffered losses during the previous year, and around 20% of investigated clubs were in financial danger. To combat these issues, FFP rules state that clubs can only incur losses of €60m over three years, while Club Licensing and Financial Sustainability regulations monitor solvency, stability and cost control, ensuring that clubs don't lose more than they are able to make up in revenue. FFP is also due to change slightly to include a spending cap on wages, transfers and agents’ fees to 70% of a club’s total revenue by 2025/2026.

However, it's important to note that the Premier League has its own set of financial regulations in place that are separate to UEFA's FFP rules (the term Financial Fair Play is often still used as an umbrella term to describe domestic rules such as the Premier League's as well). These regulations are called the Profit and Sustainability Rules (PSR).

Premier League Profit and Sustainability Rules Explained

The Premier League brought in their own set of Profit and Sustainability Rules (PSR) in 2013. PSR demands that each season, every Premier League club submits a set of accounts for the current season and the accounts for the two previous seasons. According to the rules, those accounts must "be based on the latest information available to the club and be, to the best of the club's knowledge and belief, an accurate estimate as at the time of preparation of future financial performance." 

The Premier League uses these accounts to judge whether a club has incurred excessive losses during a three-year time period. Ensuring that member clubs do not incur significant losses over this timeframe is the primary function of the PSR right now (Everton's breach of this key rule is what has landed them in hot water in recent months).

Premier League Profit and Sustainability Rules also require clubs to pay transfer fees, salaries and tax bills on time, and disclose any payments they make to agents. The major difference between the Premier League's rules and UEFA's rules is a UEFA statute of limitations that limits the availability of evidence to five years. Meanwhile, the English Premier League has no statute of limitations in place. 

The Manchester City FFP Situation Explained

Most fans of European football know that Manchester City are currently battling against some pretty serious allegations. However, the exact nature of the rule breaks the club has been charged with isn’t clear to everyone. So let's break it down.

Essentially, Man City have been charged by the Premier League for breaking Profit and Sustainability Rules on 115 occasions over a nine-year period stretching from 2009 (the year after Sheikh Mansur took them over) to 2018 (the year they completed their famous Centurions season). As well as the 2017/18 triumph, the club also won another two Premier League titles during this period.

The Premier League claims that Manchester City failed to provide accurate financial information during this time, and also that the club failed to fully disclose the financial remunerations that were made to one of their managers over a four-year period. This detail suggests that one manager was getting paid significantly more than officially stated due to a supposed secret contract being in place. A five-year probe into City's accounts led to these charges being brought against City, and the matter is set to go to trial in late 2024.

According to the Premier League, Manchester City have failed to fully cooperate with the league’s investigation into these charges, and they have also failed to comply with UEFA FFP rules over a five-year period. This alleged non-compliance could potentially make the situation even worse for City. 

How Will Manchester City Be Punished?

The alleged financial breaches are still hanging over Manchester City and the situation looks unlikely to be fully resolved any time soon, with the trial against the club currently due to take place in autumn 2024. It’s unclear at this point what the punishment will be if Manchester City are found guilty.

But that hasn’t stopped people from speculating about the end result. According to Premier League rules, a points deduction could be one possible consequence, and the recent 10-point deduction faced by Everton indicates that the EPL is happy to dole out such a punishment if necessary. Expulsion from the league is also an option, although this would be a very extreme option that would come as a shock to most fans and pundits.  

The Everton case certainly seems to complicate things; the docking of 10 points from the Merseyside club for just one breach of PSR rules is potentially ominous for Man City, because if they are found guilty of anywhere near the 115 charges they face, the points deduction they’re hit with could be enormous. Football finance expert Keiran Maguire recently commented that a 30-point deduction for Man City could be a feasible outcome; however, it's ultimately all speculation at this point.

This isn't the first time Manchester City have faced such serious allegations — in February 2020, they were banned by UEFA from European competition for two seasons and also fined €30m (£26.8m) due to alleged financial irregularities. After taking their case to the Court of Arbitration for Sport, the ban was overturned and the fine reduced to €10m (£8.9m), largely due to timings, with many of the charges happening too long ago for UEFA to do anything (this came down to UEFA's statute of limitations). Here, City's defiant response gives a good indication of their position in regard to the new charges; read on for more information on how the club has responded to the latest allegations.

How has the club responded to the allegations?

The legal process currently underway regarding Man City's alleged FFP breaches means the club is limited in what it can say at this point; however, City have still been pretty bullish in their response to recent events. According to Sky Sports, Pep Guardiola reacted to the news of the charges by saying: "What I would like is for the Premier League, or the judges, to make [a decision] as soon as possible…We would love it tomorrow. Hopefully they are not so busy, and judges can see it and listen to both sides, and at the end decide what is best." You can understand his impatience to get a result; however, underneath this pressure for a decision, there seems to be a fair degree of confidence from the club. 

"Maybe we did something wrong, everyone will know it, and if we are like we believe we are, like we have done as a club for many years in the right way, then the people stop talking about that," added Guardiola. "In the end, I know firmly that what we won on the pitch we deserve it, I don't have any doubts."

Guardiola's comments have been reinforced by club chairman Khaldoon Al Mubarak, who said "It's very frustrating because it takes so much from the great work that's happening at this club and it's happening not just on the football pitch. The club as a whole is very well run." Mubarak has refrained from commenting in detail because of the legal situation; however, he added "These are proceedings that take whatever time they take and when we're done, we'll have a conversation. I'll give you my very blunt views, I promise you that. I have very strong views on that."

We'll have to wait a little while before we can find out for sure whether City's recent success has taken place against a backdrop of questionable financial dealings. However, if you'd like to find out more about Manchester City's broader investments during this time — which have catapulted the club to the top of European football — check out our in-depth guide to their state-of-the-art training ground the Etihad Campus.