The European Commission has confirmed it is assessing claims that Manchester City have distorted the football market, with one legal expert telling The i Paper the fresh allegations against the Premier League side do not “get any more serious”.
La Liga, the Spanish top-flight league, reported Manchester City to the EU Commission in 2023, alleging the club have used other companies within the same Abu Dhabi ownership group to circumvent rules.
City declined to comment but strongly deny the fresh claims.
An EU Commission spokesperson told The i Paper: “We can confirm receipt of La Liga’s submission. The Commission may examine information regarding any alleged foreign subsidies distorting the internal market, in any economic sector, including sports. However, the Commission cannot comment on ongoing assessments.”
In extraordinary claims, made at the Financial Times Business of Football Summit, La Liga president Javier Tebas compared City’s alleged actions to the Enron financial scandal, when the American company diverted losses into separate companies.
“City have a lot of companies in their group which lie outside the City Football Group structure, extra companies where they put their expenses,” Tebas said.
“These other companies lose the money but not the club itself. We have reported Manchester City to the EU. We have the facts and figures.
“We asked for City to be checked. It’s very important that all clubs are subject to the same transparency rules and governance on both the sporting and financial side.
“The City case is one where we believe they have put the losses on the companies that are not officially part of City Football Group.”
City manager Pep Guardiola refused to answer questions about Tebas’s comments at a press conference on Friday.
He did, however, give an answer as to whether he feels the club are being unfairly targeted.
“I don’t know. It happened in the past with Uefa and in a few weeks it’ll happen in the Premier League, the sentence [to the 115 alleged charges], right?” he said. “We wait, and after we talk. I don’t know [if it has anything to do with success].”
Tebas is urging the EU to act under its Foreign Subsidies Regulations, introduced in July 2023, which allows the EU to investigate if a foreign state provided financial support to a European company that unfairly distorted markets.
As an English club, City fall outside the EU, but the fact City Football Group, the conglomerate through which City’s owners run a network of clubs around the world, own Spanish side Girona brings them under the EU Commission’s remit.
The EU Commission has powers to ask for financial information, including the valuations of sponsorship deals and contracts, and internal communications.
“Tebas is not just saying City have received above fair market subsidies,” Stefan Borson, a corporate lawyer and former financial advisor to Manchester City, told The i Paper.
“He’s saying there’s a whole network of third-party companies that are artificially funding football clubs. It doesn’t get any more serious than alleging the City Football Group are a conspiracy akin to Enron.
“Enron is one of the biggest financial fraud cases in history.”
Borson believes the EU Commission’s actions will, however, be linked to the outcome of the Premier League’s financial breach charges.
“It feels unlikely that the EC would take action unless the 115 case was proven but it is worth noting one of the initial FSR cases coincidentally involved one of City’s sponsors, e& (formerly known as Etisalat) in its recent acquisition of a European telco,” he said.
La Liga reported City after the club had its Uefa sanction reduced at the Court of Arbitration for Sport (CAS). Following a Uefa investigation into breaching financial rules, the governing body banned City from the Champions League for two years and fined them €30m, in 2020.
City appealed to CAS, however, and the ban was dismissed and the fine reduced to €10m.
“I can’t speak to any sanctions for Manchester City on this matter yet,” Tebas said.
“All I can say is when a company in Europe, in general, is seen to have distorted the market, they often have to return funds. We want Manchester City to be sanctioned.”
At the same time, City await the decision of an independent commission into the 115 charges for alleged financial breaches brought separately by the Premier League.
The verdict is expected by the end of March but could take longer. Sanctions – if there are any – could include heavy fines, points deductions, being stripped of titles and even expulsion from the Premier League.
City have always denied any wrongdoing.
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