City face CL ban as new leaks reveal how they ‘got around UEFA rules’

The prospect of Manchester City facing a ban from the Champions League moved a step closer on Saturday night as a new tranche of leaked emails from German magazine Der Spiegel provided more details of how they allegedly circumnavigated UEFA’s Financial Fair Play rules.

In addition, City look as though they are facing another FA inquiry, after it was alleged that they misled the FA over the third-party ownership of a player, Bruno Zuculini. 

But the most serious outcome for City would be a Champions League ban, which would affect their ability to recruit players and to balance their books without additional funding from their owner, Sheik Mansour, which is not allowed by UEFA rules.

City are already being investigated by UEFA after leaked emails last November appeared to show how they used direct funding from Abu Dhabi United Group, the investment fund owned by Sheik Mansour to supplement sponsorship deals.

UEFA’s rules place a strict limit on the cash an owner can inject directly into a club to prevent over-inflation in the football market.

Yves Leterme, the chairman and chief investigator of the UEFA Club Financial Control Body, said in January that City face ‘the heaviest punishment’ if the allegations are proven, which would mean exclusion from the Champions League.

Now the further raft of emails provides further evidence of how City have made it appear as though their record income in recent years came through increased sponsorship deals rather than simply funding from Sheik Mansour.

In one email dated April 2010 City director Simon Pearce is writing to an executive of City’s sponsors, Aabar, an Abu Dhabi investment firm. Pearce wrote: ‘As we discussed the annual direct obligation for Aabar is £3 million. The remaining £12m required will come from His Highness.’

UEFA’s rules place a strict limit on the cash an owner can inject directly into a club 

An internal City document seems to indicate that up until 2012 the ‘supplement to Abu Dhabi partnership deals’ amounted to £149.5m.

That appears to refer to the funding Abu Dhabi United Group (ADUG) was allegedly giving to sponsors. However, the money should come direct from the sponsors, so UEFA knew that it was genuine sponsorship money. The November email leak revealed that ADUG channelled cash into the sponsors’ bank accounts so it could then be paid direct to Manchester City.

And in the latest tranche of leaked emails, Graham Wallace, who was then City’s chief operating officer and who was writing in September 2012, explained why this was necessary. 

Referring to the ‘direct equity funding,’ which is Sheik Mansour’s funding of the clubs, he wrote: ‘What we therefore need is that monies we are attributing to [City’s sponsors] Etisalat, ADTA, Aabar and Etihad … are physically remitted to us by those businesses … to avoid any related party influence/control considerations.’

Further emails between chief financial officer Jorge Chumillas and Pearce speak of ‘additional sponsorship flowing through ADUG’ and lists the amounts that should be paid.

In January 2013, in an email discussing Etihad’s sponsorship of the club, £57m is listed as the ‘ADUG contribution to the 13/14 sponsorship fee.’ These all appear to be breaches of UEFA’S rules.

Ban would affect their ability to sign players without additional funding from Sheik Mansour (L)

City are vulnerable to severe punishment by UEFA because, in 2014, they promised to abide by the regulations in future in return for a lesser punishment for the breaches they had incurred. But UEFA didn’t know then about the funding of sponsorship deals.

A fresh FA probe is also now likely after Zuculini was signed by City in 2014 and loaned out to Valencia, though he was then still part-owned by a company, MPI. 

That in itself was not against the rules. However, according to Der Spiegel, when the FA asked who was behind MPI, City did not disclose that Mangrove was funded by a €30m cash injection which had been organised by City chief executive Ferran Soriano.

An FA spokesperson said: ‘We are aware of the allegations and will consider them.’

City are already facing an FA investigation into a £200,000 payment to the agent of Jadon Sancho when he transferred to the club at the age of 14.

City issued a statement on Saturday night saying: ‘We will not be providing any comment on out-of-context materials purported to have been hacked or stolen from City Football Group and City personnel and associated people. The attempt to damage the club’s reputation is clear.’