Manchester City’s Champions League Ban Is Overturned

LONDON — Almost as soon as it was accused of breaking European soccer’s cost control rules, Manchester City dug in and began the fight to clear its name.

It criticized the hackers who leaked private club documents and the media organizations that reported on them. It railed against the accusations (“entirely false”) and the process (“unfair”) and, most of all, the punishment: a two-year ban from the Champions League.

City officials vowed to do “everything that can be done” to fight the ban. Bankrolled by one of the world’s richest men, they seemed prepared to spend any sum to prevail.

What few knew was that City’s salvation was there in plain sight the whole time: a handful of words in a section of the rules of UEFA, European soccer’s governing body. Those rules set a five-year time limit on the infractions eligible for punishment and, in effect, barred investigators from ruling on some of the most serious accusations against City.

They also allowed a three-member panel at the Court of Arbitration for Sport to rule Monday to overturn the Champions League ban, imposed last year for what UEFA had called “serious breaches” of cost control regulations. In announcing its decision, the panel cited UEFA’s rules, which it said meant many of the most serious findings against City — whether true or not — were inadmissible.

The decision was not only a triumph of a technicality. CAS also found, and UEFA agreed, that there was “insufficient conclusive evidence” to uphold all of the conclusions that had resulted in the Champions League ban.

A fine of 30 million euros (about $34 million) was reduced to 10 million ($11.3 million), an acknowledgment that City had in fact breached some regulations by failing to cooperate with the investigation. But on the most important issues, City’s victory was complete.

“The club welcomes the implications of today’s ruling as a validation of the club’s position and the body of evidence that it was able to present,” Manchester City said in a brief statement.

The lifting of the Champions League ban, which had hung over Manchester City for more than a year and raised questions about the club’s finances and its credibility, will have significant consequences for both the team and UEFA.

Manchester City officials had vehemently, and repeatedly, denied any accusations of wrongdoing, and the prospect of being barred from the Champions League risked upending one of the most ambitious projects in global sports.

For UEFA, the latest high-profile reversal of its effort to uphold its so-called financial fair-play regulations — and the second time its own rules have been at the root of its defeat — has created new doubts about the future of its efforts to police overspending by its biggest clubs, and its ability and willingness to police its members’ actions.

The CAS panel said in a statement posted on the court’s website that the most serious breaches found by UEFA were either “not established” or no longer relevant (in the court’s words, “time-barred”).

Manchester City remains in contention to win the Champions League this year; it won the first leg of its round-of-16 tie against Real Madrid in March before the coronavirus pandemic forced a temporary halt to the event. UEFA is scheduled to resume the competition this summer.

Since being acquired in 2008 by Sheikh Mansour bin Zayed al-Nahyan, the billionaire brother of the ruler of the United Arab Emirates, Manchester City has risen from relative obscurity to become one of soccer’s most valuable and successful brands. It fields one of the best teams in the world and is led by Pep Guardiola, the Spanish coach who oversaw its collecting every available trophy in English soccer last season.

Monday’s ruling means the team will continue to perform on one of sports’ biggest stages, and one of its most lucrative. City had stood to lose about $200 million in Champions League payments from a two-year ban, but it would also have been costly in terms of damage to City’s carefully cultivated reputation and its ability to attract top players and coaches. Now it will remain among the favorites to win the competition year after year.

Instead, it will be UEFA that faces new scrutiny. It is the second time UEFA has been judged to have fallen afoul of its own statutes of limitations. In a previous case, involving another wealthy Gulf-owned team, Paris St.-Germain, CAS agreed with P.S.G. that the adjudicatory arm of UEFA’s financial control body had not acted in time.

UEFA on Monday acknowledged in a statement that the panel found that many of the breaches attributed to City “were time-barred due to the five-year time period foreseen in the UEFA regulations,” but it appeared eager to put the case behind it. “UEFA will be making no further comments on the matter,” it said.

But UEFA’s ability and willingness to police its regulations sustained a blow. Financial investigators in the City case had sought advice from UEFA’s in-house legal team before starting work on the case, and had asked about the statute of limitations, according to a person familiar with the organization’s discussions.

The rules were created in 2009 as several top European clubs teetered on the brink of bankruptcy and have largely proved to be successful, though they have worked against clubs like City, P.S.G. and others as their wealthy owners have sought to supplant more established powers.

Lawyers for City and UEFA presented their arguments to the panel during a video hearing in early June. City had said it would spare no resource to defend itself. It contended that the UEFA process was one-sided and that an impartial body like CAS would overturn the ruling, which came after damaging leaks in 2018 that suggested the team had engaged in illegal accounting tactics to get around UEFA’s cost control rules.

Citing internal documents and emails, those reports suggested City had disguised millions of dollars of direct investment by its owner, Sheikh Mansour, as sponsorship income. One document, published by the German weekly Der Spiegel, appeared to show that the team’s main sponsor, the Abu Dhabi-based Etihad Airways, had paid only a fraction of an $85 million sponsorship agreement.

City had denounced the publication of stolen documents as “out-of-context materials purportedly hacked or stolen,” contending that the leaks were part of an “organized and clear attempt to damage the club’s reputation.”

Its rivals had demanded serious punishment, though, leaving UEFA and its president, Aleksander Ceferin, squeezed by powerful, and wealthy, forces on both sides. Ceferin said he had no role in UEFA’s investigation, which was handled independently by a group responsible for scrutinizing clubs’ adherence to fiscal rules. That group, known as the Club Financial Control Body, ruled against City, adding the fine of 30 million euros on top of the ban.

The rules had not stopped City from winning. It captured two straight Premier League titles, in 2018 and 2019, and had won everything but the Champions League title, the crown its owners covet most. It has another chance to win it in August, when the event is set to conclude with a knockout tournament in Lisbon featuring eight quarterfinalists.

Manchester City’s appeal of its ban was being closely watched by other teams, though, including several that stood to gain had City’s original punishment been upheld. Others in European soccer had felt the stakes were even higher, raising doubts about the authority of soccer bodies to police clubs now owned by powerful state interests.

“Hard to see how UEFA’s FFP rules can survive this,” Gary Lineker, a former England player and now a popular broadcaster, wrote on Twitter. “In fact, can UEFA survive the ramifications?”

Ultimately, City was able to declare victory. Apart from its legal costs, the club’s failure to cooperate with UEFA’s investigators cost it only 10 million euros, far less than City routinely pays for a new player to join its roster.