Man City to argue in appeal that some sponsorship funds came from government, proving no violation

According to the Daily Mail, Manchester City will argue in their appeal that the sponsorship deals deemed "sham transactions" were partially funded by the Abu Dhabi government, not the club's owners, thereby proving the club did not violate regulations.

In a shocking ruling, the Premier League's independent commission found that Manchester City had illicitly injected over £900 million to circumvent financial rules, with the main portion being £830.69 million from the club's owners to top up commercial sponsorship payments.

The commission determined that this "disguised funding" allowed Manchester City to illegally acquire a number of players, ushering in the team's era of success at the Etihad Stadium. However, sources familiar with the matter revealed that Manchester City's defense will argue that these funds were actually paid by the Abu Dhabi government, which owns the relevant sponsors, rather than by the club's owners, Abu Dhabi United Group (ADUG). The latter is a private company owned by Mansour. Manchester City believes that because the funds came from the government, not the club's owners, the club did not violate any rules.

Sponsorship agreements with state-funded enterprises are common in the Premier League, especially with airlines, and such partnerships are not prohibited. Manchester City is likely to present this argument to the new appeal committee, supported by what the club calls "irrefutable evidence," including bank statements and witness testimonies. This major ruling could lead to Manchester City being expelled from the Premier League and stripped of previously won titles.

Although the case involved over 700 pages of witness testimonies and the commission took nearly two years to reach a verdict after hearings in London, Manchester City will argue that this pivotal case, which could overturn the club's achievements from 2009 to 2018, ultimately boils down to a simple question: did the funds used to pay for the relevant sponsorship agreements come from the sponsors, the sponsors' owner—the Abu Dhabi government—or the club's owners?

A series of emails sent by Manchester City executives were obtained by hackers, and these emails are considered key evidence held by the Premier League. In these emails, which appear highly damaging to Manchester City, relevant executives discussed the flow of funds from Abu Dhabi United Group to Manchester City via sponsors. One email was sent in 2013. Jorge Chumillas, then Manchester City's Chief Financial Officer, asked Simon Pearce how the funding mechanism for the agreement with long-term main sponsor Etihad Airways worked.

Chumillas stated in the email: "I need to understand the mechanism by which the additional sponsorship funds flow through ADUG. Is it 'ADUG shareholders → ADUG → Etihad Airways → Manchester City,' or 'ADUG shareholders → Etihad Airways → Manchester City'?"

Other emails mentioned that funds would be "repaid" via sponsors. During the period in question, £8 million of the Etihad Airways sponsorship agreement was borne by the airline itself, while the remaining £59.5 million came from Abu Dhabi United Group. An email from April 2010 regarding a sponsorship agreement with Aabar, based in Abu Dhabi, specified that £2 million would be provided by Aabar, and "the remaining £12 million will come from other sources of funds provided by His Highness." However, Manchester City still insists that the Abu Dhabi government, as the main shareholder of the aforementioned companies, covered these differences, and the funds did not come from the club's owners.

Manchester City is also expected to emphasize that these emails reflect erroneous assumptions made by employees working in Manchester. The "irrefutable evidence" repeatedly mentioned by the club throughout the proceedings refers specifically to government bank statements and witness testimonies submitted at the hearing. These materials show that funds were transferred from government accounts to sponsor accounts, and then used by the sponsors to pay Manchester City.

These materials seemingly did not persuade the original committee hearing the case. In its ruling, the committee stated: "This explanation was concocted long after the event to disguise and conceal the true nature of the disguised funding arrangements."

The amount of the sponsorship agreements themselves is not at issue in this case, as rules requiring agreements to undergo "fair market value" assessments only came into effect in 2021. Manchester City's deadline to file an appeal is Friday. Although the public ruling content is redacted, it is understood that the committee also found that Mansour, a member of the UAE royal family, was unaware of this series of agreements which the committee called "sham transactions."

In the appeal, Manchester City may argue that the assertion that Mansour was unaware of the use of approximately £830 million in personal funds is difficult to sustain. The use of the term "sham" is also expected to be part of Manchester City's appeal argument. The club may contend that this term is not merely descriptive of something suspicious, but a legal term that was incorrectly applied in this case.

Manchester City's senior legal team may also question the time taken by the committee to render its decision. They will argue that such cases should be decided within three months of the hearing, not 20 months, so that judges can accurately recall the evidence when writing the ruling. Due to the excessive delay, they will assert that the ruling is "unreliable."

Manchester City will also emphasize that the club provided no fewer than 24 witnesses at the hearing, while the Premier League failed to provide any witnesses who could confirm the existence of the alleged conspiracy. Manchester City declined to comment. It is also understood that the new appeal committee is expected to be composed of retired judges with extensive experience in appeal cases.

According to legal experts, Lord David Pannick QC, a barrister on Manchester City's defense team, specializes in appellate law. After the ruling was announced, Manchester City CEO Ferran Soriano sent a message to club employees, hinting at the club's future course of action.

Soriano stated: "The Premier League's entire case against us is based on a false accusation—that the owner's personal funds somehow flowed secretly into the club via several sponsors in Abu Dhabi. This is simply not true. We have submitted irrefutable evidence to the Premier League commission proving that such a situation could not and did not happen. This evidence includes bank statements, records of fund transfers, witnesses, and all necessary materials clearly demonstrating that the funds did not come from the owner."

Meanwhile, another development disclosed last night revealed that Etihad Airways is considering legal action against the Premier League. In a statement, Etihad Airways said it "firmly rejects" the conclusions of the Premier League commission. In its strongly worded statement, Etihad Airways said the Premier League "never" communicated with it throughout the process, and the company was neither given the right to respond nor the opportunity to "provide relevant information."

A spokesperson stated that the ruling "has adversely affected Etihad Airways," and the Premier League "must bear responsibility for the consequences arising from how these conclusions were presented."

British Prime Minister Keir Starmer also commented on the matter. However, it was Andy Burnham, the Mayor of Greater Manchester, who expressed concern, saying he would be "very concerned" if Manchester City lost its current owners, who have invested heavily in transforming the area of east Manchester near the club's stadium.

The independent football regulator has the power to require owners deemed unsuitable to leave their clubs. The regulator stated yesterday that the commission's ruling "raises serious questions." The agency also reiterated its authority to "assess the suitability of owners, directors, and executives" and will "exercise these powers where appropriate." The Premier League declined to comment.

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