By Matt Slater, The Athletic
Two and a half years is a long time in football. Turn the clock back that far and you will find Bournemouth in the top half of the Premier League, Frank Lampard’s Derby County vying for promotion from the Championship and Southend United mid-table in League One. Time can be cruel.
But as Lord Justice Males noted in a ruling published this week, time is relative — two and a half years is plenty for some things to happen but not nearly enough for others.
Referring to the Premier League’s probe into allegations that Manchester City may have disguised investment from owner Sheikh Mansour as sponsorship revenue — allegations the club’s chief executive Ferran Soriano strongly denied — the judge wrote: “This is an investigation which commenced in December 2018. It is surprising, and a matter of legitimate public concern, that so little progress has been made after two and a half years — during which, it may be noted, the club has twice been crowned Premier League champions.”
During the same period, City have also been found guilty of cheating on their Financial Fair Play (FFP) returns by UEFA and thrown out of European football, only to overturn that verdict at the Court of Arbitration for Sport (CAS). Furthermore, they have won an FA Cup and three League Cups, lost a Champions League final and their parent company has bought stakes in four more clubs in four different countries to bring the City Football Group family to 10.
They have used their time profitably… well, they actually lost £125 million in 2019-20, but they certainly packed a lot in.
The Premier League’s investigation into those FFP claims? Not so much, although we have just received a progress report of sorts, which brings us back to Lord Justice Males and a ruling that does not tell us much more about Manchester City vs the Premier League but speaks volumes about football’s view on how much the public should know about its disputes.
The short answer to that is “as little as possible”. The good news is the Court of Appeal disagrees, to an extent, but before we get into a debate about the balance between maintaining faith in the English judicial system and the desire to settle disputes quickly, quietly and cheaply, let us wind back three Christmases…
Why is the league investigating Manchester City?
In November 2018, Der Spiegel published a series of incendiary stories based on emails stolen by the Portuguese whistleblower Rui “Football Leaks” Pinto.
Over a week, the German outlet claimed City’s majority owner Sheikh Mansour, a member of the Abu Dhabi royal family and deputy prime minister of the UAE, had secretly been topping up the club’s revenues via inflated deals with Emirati sponsors. Der Spiegel claimed he would then reimburse these sponsors, all of whom have close links to the Emirati government, out of his own pocket.
Sheikh Mansour did this, it wrote, to keep free-spending City from breaching UEFA’s limit for permitted losses between 2012 and 2016. Several sponsorship deals were cited and there were also claims about elaborate ruses the club used to hide costs, such as some of manager Roberto Mancini’s salary and the players’ image rights payments.
Describing the emails as “criminally obtained”, the club has always denied any wrongdoing and claimed the hacks are part of a deliberate attempt to smear City’s reputation.
UEFA announced it would look into the allegations almost immediately and opened a formal investigation into possible FFP breaches on March 7, 2019. The Premier League has slightly different FFP rules to the European body — clubs are allowed to lose significantly more money, for example — but the same principles apply. It issued a statement the following day to say it was investigating the matter, too.
When the case reached the adjudicatory chamber of UEFA’s Club Financial Control Body in February 2020, City’s lawyers said Der Spiegel had redacted some of the emails and quoted them all out of context. The chamber disagreed and found City guilty of misstating their accounts to the tune of more than £200 million and failing to cooperate with European football’s financial watchdogs. It banned City from European competition for two years and fined them €30 million.
But five months later, in July, a three-man CAS panel cleared City of the most serious charge — overstating revenues — by a majority verdict and lifted the two-year ban.
This panel decided some of UEFA’s case against the Premier League side was “time-barred”, in that the events happened outside the governing body’s own five-year statute of limitations, and the rest was simply “not established”.
In short, sport’s highest court believed City when it said the schemes that appeared to be outlined in the emails were not carried out. And while City did not really try to prove their case to the UEFA panel, they threw everything they had at CAS: numerous witnesses, audits, a forensic accountant and sworn testimony from Sheikh Mansour.
UEFA, on the other hand, was left with half a dozen seemingly incriminating emails but no conclusive proof that the scams they described actually occurred. The club, however, was found guilty of not cooperating with the investigation. As that was considered a lesser offence, the fine was reduced to €10 million.
What about the Premier League investigation?
Until this week, we had no clue what was happening with it. In fact, some wondered if the league had quietly dropped it.
But then four judgments appeared on the British and Irish Legal Institute’s website and we suddenly know quite a lot.
How much? This much:
- In August 2019, the league issued a disciplinary complaint against the club and asked City to release documents; the club refused
- In October 2019, the league set up an arbitration tribunal to enforce that request; the club challenged the tribunal’s jurisdiction and impartiality
- In February 2020, the league changed its rules to ensure impartiality and the tribunal restated the demand for disclosure
- In June 2020, the tribunal rejected a fresh challenge from the club, who then filed an arbitration claim at Companies Court
- In July and November 2020, the tribunal again rejected arguments from the club and issued a final demand for disclosure but the order was stayed pending court proceedings
- In March 2021, Justice Moulder rejected the club’s arguments about the league tribunal, denied it permission to appeal and informed City she intended to publish these decisions; she did, however, give City permission to apply for an appeal on the publication issue, which City accepted
- In April 2021, Lord Justice Males accepted the appeal, and it was heard on June 30 by him, Sir John Flaux, the Chancellor of the High Court, and Sir Geoffrey Vos, the Master of the Rolls
- And on Tuesday, July 20, their rejection of City’s appeal was published, along with Justice Moulder’s rulings from March
Blimey, they didn’t drop it, then… but what does it mean?
Most of the above is about whether the league can compel City to release documents for its investigation and then take the matter to an arbitration tribunal, as per its rule book, with the more recent court action being about how transparent this process should be. And it is that last argument that gives this saga its real and much wider significance.
The cynical amongst you could be forgiven for thinking, “Why should I care about the rich owners of Manchester City choosing to spend their money on an attritional legal battle with the league when everyone thinks this process will end up with the club getting another fine for non-cooperation?”
But what if we told you there is a plot twist: the league supported the appeal against the publication of Justice Moulder’s findings.
Just let that sink in.
City spent a year stalling on a request to supply documents and information for an FFP investigation and then took the league to court, claiming the league’s procedures were biased and illegal. The league changed the process for selecting arbitrators for its tribunals — so that each party in a dispute could choose one member from a list of experts and those two would then select a third member to chair the tribunal — but contested, and won, every other argument.
When City asked the Court of Appeal to keep all this secret, however, the league agreed, with one condition: City let the league tell any other club it was intending to take to arbitration that Companies Court had already backed its approach, so appealing to them was a waste of time and money.
Sir Julian Flaux described this as the Premier League trying to have “the best of both worlds” — preserving the confidentiality of the arbitration process but being able to break that confidentiality to scare future litigants off — and added it was “commercially understandable”.
Understandable but bloody cheeky, sunshine.
“The fact the PL supports the club’s appeal so that both parties to the arbitration are opposed to publication is of some weight but should lead to the court being careful not simply to accept the parties’ wishes without scrutiny,” wrote Sir Flaux.
“As Sir Christopher Staughton said… ‘when both sides agreed that information should be kept from the public, that was when the court had to be most vigilant’.”
Lord Justice Males added: “If the judgment is to be available as a potentially important precedent, it must be available to all.”
But why wouldn’t the league want this ruling to be published?
Newcastle United fans might have an opinion on this and it is interesting that one of the first lawyers to comment publicly was Nick De Marco QC, the man who is currently acting for Newcastle in their dispute with the league over the stalled Saudi takeover.
In two tweets, De Marco noted that the Court of Appeal cited a recent ruling which backed publication of a judgment in the Newcastle case as a precedent for doing so here:https://platform.twitter.com/embed/Tweet.html?dnt=true&embedId=twitter-widget-0&features=eyJ0ZndfZXhwZXJpbWVudHNfY29va2llX2V4cGlyYXRpb24iOnsiYnVja2V0IjoxMjA5NjAwLCJ2ZXJzaW9uIjpudWxsfSwidGZ3X2hvcml6b25fdHdlZXRfZW1iZWRfOTU1NSI6eyJidWNrZXQiOiJodGUiLCJ2ZXJzaW9uIjpudWxsfSwidGZ3X3NwYWNlX2NhcmQiOnsiYnVja2V0Ijoib2ZmIiwidmVyc2lvbiI6bnVsbH19&frame=false&hideCard=false&hideThread=false&id=1418086372095692803&lang=en&origin=https%3A%2F%2Ftwitter.com%2F&sessionId=558f05bc054bb3cec6fb05c71f43eab5c3212949&theme=light&widgetsVersion=82e1070%3A1619632193066&width=550px
That there is public interest in these disputes is, well, indisputable: Manchester City v UEFA; the English Football League v Derby, Sheffield Wednesday and others; and Newcastle v the Premier League have been among the biggest stories The Athletic has covered over the past two years.
The lack of transparency in the Newcastle saga alone has sparked complaints from local politicians and a protest outside the Houses of Parliament.
As former sports minister Tracey Crouch MP put it in her Fan-Led Review update this week: “It is absolutely evident from our sessions that the football authorities have lost the trust and confidence of the fans as have, in a number of cases, clubs themselves.”
So what is the league playing at? Is it scared of the clubs?
There is no doubt that the league is frightened of being dragged through the courts. After all, one of its biggest crises occurred when Sheffield United tried to sue it for not deducting points from West Ham over the Carlos Tevez affair in 2007.
Given the fact that one of Der Spiegel’s hacked Manchester City emails was from the club lawyer saying his chief executive “would rather spend £30 million on the 50 best lawyers in the world to sue them for the next 10 years” than settle with UEFA, it is not an unreasonable fear for the Premier League or any other competition organiser to have.
And City have taken the league to court yet still the league preferred secrecy.
The more charitable assessment of why this is the case is that the league, and every other sports body, strongly believes arbitration is better than litigation. The latter involves going to court, where a court-appointed judge, or judges, will decide who wins. It is expensive, slow and, except in special circumstances, public. Both parties can also appeal court rulings, which adds to the duration and costs.
Arbitration, on the other hand, is a non-judicial process in which the parties choose the panel and venue. It is quicker, cheaper and there is no automatic right of appeal. It is also confidential.
The Premier League would appear to take a fairly absolutist approach to that last point, believing its disciplinary rules hinge on the clubs having total faith in them, which means trusting that their dirty laundry never sees the light of day, or should only be made public at the end of a process via the publication of a carefully-worded judgment.
To be fair, that is a widely-shared view of how arbitration should work. The EFL, for example, does not want any of its hearings held in public but it has got into the good habit of publishing every judgment, whether it wins or loses.
It is also what the courts believe should happen. Justice Moulder in the City v Premier League case and His Honour Judge Pelling in the Newcastle v Premier League case were both happy to maintain the cloak of confidentiality for their court hearings but were adamant neither City nor the league would be allowed to bind their hands in terms of publication.
As Justice Moulder put it: “The public interest in ensuring appropriate standards of fairness in the conduct of arbitrations militates in favour of a public judgment… the desirability of public scrutiny as a means by which confidence in the courts can be maintained and the administration of justice made transparent applies here as in other areas of court activity.”
She gave short shrift to the arguments of City’s superstar barrister Lord Pannick QC that publication would lead to the disclosure of “significant confidential information” or damage the club’s reputation, hindering its ability to sign new commercial deals, because the league had already announced it was investigating the club, this had been reported by the media, a reasonable reader would infer that an investigation probably does involve requesting information and the existence of this dispute with the league would come up in any potential commercial partner’s due diligence.
On these points, Justice Moulder was strongly backed by the Court of Appeal judges, who described Pannick’s arguments as “fanciful” and “unconvincing”.
But before Newcastle fans start booking tickets and time off for their next arbitration hearing — should that ever happen — it is important to note that these judges are not saying arbitration should be as transparent as litigation.
On the contrary, as Lord Justice Males put it when discussing the possibility that publishing judgments might lead to the “business community” losing faith in arbitration: “Commercial Court judges can be trusted to ensure that genuinely confidential information is not published… (and) publication of such judgments will confirm the pro-arbitration stance consistently taken by the English courts.”
What next then for the City investigation?
Ah, having briefly popped above the surface to tell us it is still out there, that particular submarine has gone dark again.
As the judges pointed out, there really was very little actual information about the state of the investigation in their judgments, beyond City’s steadfast refusal to hand over documents, the league accusing City’s procedural challenges as “tactical” (about which Justice Moulder added she had not made any judgment) and a reference to City saying publication would be detrimental as they were in talks over a commercial deal earlier this year but that was no longer the case by late June.
What we can say is the league should not run into the same “time-barred” issues as UEFA, as it has no five-year rule, and it also has the benefit of the additional emails Der Spiegel published after City were cleared by CAS last summer.
Those emails appeared to add more weight to the suggestion that City’s main sponsor, Etihad, was substantially reimbursed for its generous support of the club by Sheikh Mansour. It is a suggestion the club has flatly rejected and UEFA has not revisited.
There are fresh allegations surrounding the topped-up sponsorships trick in this weekend’s Mail on Sunday. Many may feel they have seen this film before.
It is also the case that the Premier League’s allowable losses limit — £105 million over three years — is about four times as generous as UEFA’s and City, once all the permitted deductions are made, might not break that ceiling even if the most serious of Der Spiegel’s allegations are proven.
What is more likely is that City might eventually be charged with a charge akin to misleading the league or simply failing to cooperate with an FFP inquiry.
But as Lord Justice Males noted: “The Club has been anxious to emphasise before us that ‘the arbitral proceedings relate to an ongoing and confidential investigatory and disciplinary process which is still in its early stages’, and that it may be that no charges will ever be brought against it.”
But there will be many fans, who see that City are already odds-on to win a fourth Premier League title in five years and might be about to sign England’s best player, wondering why the champions are so reluctant to let the Premier League have the documents that should clear all this confusion up.