In a new piece by Mediapart, documents pertaining to this new wave of Football Leaks puts forward another claim that indicates that Premier League club Manchester City’s sponsorship agreements are allegedly paid for by the club’s owner, in what would be in conflict of FFP regulations.
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This particular story begins in May 2013, when Roberto Mancini, title-winning manager in the previous year, is sacked. In order to do that, Mancini was owed severance pay, a handy sum of £9.9m, which the club’s Finance Director Jorge Chumillas understood needed to be filled in order not to infringe upon FFP requirements: “The only solution we have is to receive an additional contribution from AD (Abu Dhabi) in terms of revenue to fill that gap,” Chumillas is alleged to have suggested.
Mediapart claim that the guiding principle at Manchester City is to spend money first, then ask for it from sponsors afterwards. Normally for football clubs, it is the opposite. Director General Ferran Soriano is alleged to have said the following in email correspondence: “I have an idea: even though we have lost the English Cup, we should demand a bonus from our sponsors anyway.” Asking for payment for a victory when you lost is certainly quite an innovative approach.
Simon Pearce, a non-executive director at Manchester City, allegedly had another idea: “We could do a backdated contract for the next two years,” worth £5m a year, which “could be paid immediately”. Essentially modifying contracts.
How would the sponsors react to this? Pearce was apparently not worried: “the ones that I have real control over are Abu Dhabi Tourism Authority (ADTA) and Aabar… We can do what we want.”
Shortly thereafter, ADTA’s sponsorship fee goes up by £5.5m, Ethiad’s fee by £1.5m and Aabar’s by £500k. Chumillas writes: “We have decided with Simon Pearce to modify the terms of certain sponsorship contracts with AD (Abu Dhabi).”
An audit that was undertaken at the demand of UEFA in 2014 concluded that the value of the contracts with Manchester City’s four Abu Dhabi sponsors, which made them €140m a year, were worth half according to market value. The sponsors don’t care, according to Mediapart, as it is Sheikh Mansour who is secretly funding them. Already in 2010, Pearce had planned for a £15m contribution from Aabar, before reassuring the firm: “We have discussed it, the yearly contribution of Aabar will be £3m. The £12m remaining will come from another source procured by His Highness.”
Essentially, the Sheikh was paying 80% of the bill for his club’s own sponsors, which was a practice that City have previously denied. According to an internal club document acquired by Football Leaks, Sheikh Mansour financed Manchester City sponsors in May 2012 to the tune of £127.5m.
With Ethiad, the airline company run by Sheikh Mansour’s brother, the scheme is allegedly the same. In December 2013, Pearce writes: “The direct contribution from Etihad remains constant at £8m.” But the contract stipulates a £35m payment. Another sponsor, telecommunications company Etisalat only paid £1.5m, when their contract indicated a £15m sum.
How did the system work? Mediapart claim that the Emirates sponsors waited for ADUG, Sheikh Mansour’s holding company, to transfer them money, then the sponsors would pay the club. The risks associated with Manchester City’s scheme being uncovered were big – and the club’s representatives were warned in September 2015 that if more than 30% of their revenues are coming from parties that are “linked”, then UEFA can launch an investigation.
According to City’s accounts, in 2015, that ratio hit 34% with the sponsorship deals with Aabar, ADTA, Etihad and Etisalat combined, who could have been perceived as “linked parties” owing to the fact that they are not totally independent from the club.
All of the relevant parties were contacted by Mediapart and did not launch a direct denial of these allegations, but defended their roles and respective firms.