At the beginning of 2010, Manchester City started arranging additional investment for the club.
City entered into sponsorship contracts worth record sums that were reportedly far higher than their fair market value.
The arrangement has been described as a “concealed funding plan”.
According to the ruling, the arrangement operated in the following way.
Each sponsorship contract was divided into two elements: a standard fee and an additional designated amount.
The sponsors were responsible for paying the standard fee.
The club’s owners covered the additional designated amount.
As a result, sponsors did not need to fund the contract’s entire value. Most of the money came from the club’s owners, allowing further investment in players.
The document states that this created a false impression for outside parties, including regulators and auditors, because the club’s financial statements and financial fair play submissions presented sponsorship revenue as substantially higher than it actually was.
The club was also aware that the arrangement needed to remain flexible.
The concealed funding plan was occasionally adjusted to keep it hidden and make challenging questions less likely.
The financial impact was significant.
Sponsorship-related commercial revenue reached £949.94m across the seasons from 2009-10 through 2017-18.
According to the ruling, only £119.25m of that total came from standard fees.
The remaining £830.69m consisted of designated amounts reportedly supplied by the club’s owners.
Manchester City have rejected the allegations, arguing that the Premier League misinterpreted the sponsorship arrangements.
The panel, however, dismissed the club’s account as false.
It concluded that the explanation had been created long after the events in an effort to hide the true nature of the concealed funding plan.
One example concerned efforts to cover an unforeseen financial deficit in May 2013.
With less than a week remaining in the 2012-13 financial year, the club knew it was £9.9m short of meeting Uefa’s financial requirements.
Within days, and before sponsors had even been contacted, several revised sponsorship contracts were produced. These increased the recorded fees by including bonus payments for events that had already occurred and funding for a tour of the United States.
This additional recorded income eliminated the anticipated deficit under Uefa’s financial fair play rules.
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