LONDON — Manchester City, the English soccer team that is on the cusp of winning the Premier League for the third time in four seasons, is involved in a secret legal battle with the league over whether it complied with financial rules as it surged to become one of the sport’s dominant forces.
The Premier League has been tight lipped since confirming in 2019 that it was looking into City’s finances a few months after German news weekly Der Spiegel, citing internal club information, said the club had disguised direct investment by its owner, Sheikh Mansour, as sponsorship income. City has always insisted it has not broken any regulations and denounced the stolen documents as “out-of-context materials” that were published as part of an “organized and clear attempt to damage the club’s reputation.”
City has spent millions of dollars defending itself since the allegations first emerged. Its lawyers are fighting against the league’s arbitration process, arguing that the club will not get a fair hearing, according to documents. City and the league did not immediately reply to a request for comment.
City is challenging the Premier League in Britain’s civil courts, where hearings have been held behind closed doors, and where publication of material related to the case has been kept confidential despite intense public interest in the case. It is not known what action the Premier League would take if it found City to have breached its rules. Penalties in its rule book include points deductions and fines.
City, backed by the billionaire brother of the crown prince of Abu Dhabi, one of the richest men in the world, waged a successful battle in 2020 when it won an appeal against a two-year ban from the Champions League after being found to have breached separate cost control rules by European soccer governing body UEFA. City won its case at the Switzerland-based Court of Arbitration after convincing judges that a time limit had elapsed on the evidence against it. The Premier League’s rules do not have similar deadlines.
City requires just one more victory to be sure of the English championship. It is also on a charge toward securing its first Champions League crown. It holds a 2-1 advantage over Paris Saint-Germain, another Gulf-controlled club, before Tuesday night’s decisive second semifinal game at its own stadium.
The case is taking place against the backdrop of major scrutiny of owners in English soccer. A protest by fans of City’s crosstown rival Manchester United led to its game against Liverpool being postponed on Sunday after the two clubs joined City and three other English teams in signing up to a planned breakaway European competition. The plans were abandoned within 48 hours after a torrent of criticism and the threat of government action.
Still, City won plaudits after becoming the first of the rebel English clubs to announce it had backed away from the project.
City’s battle against the Premier League bears the hallmarks of its approach in the UEFA case. Before finding salvation through a technicality in the rules that set a five year time limit on the infractions eligible for punishment, the club tried to have the case thrown out at the CAS before UEFA had even ruled.
City’s stance in the Premier League case is a second major recent assault on the league’s governance structures. The owner of Newcastle United started legal action last fall against the league after it failed to clear a sale to Saudi Arabia’s Public Investment Fund.
City’s relationship with UEFA has strengthened significantly since it successfully appealed the Champions League ban. UEFA resisted appealing the CAS judgment even after Der Spiegel published new revelations that appeared to cast doubt on some of the evidence a senior City official provided to the court.
UEFA told The New York Times in a statement that it had sought legal opinion on the chance of appealing the CAS decision after Der Spiegel published new emails. “The clear view was that such an appeal would stand little chance of success in forcing CAS to rehear the case and on the slim chance it did, the chance of success at a second hearing was also limited. A similar view was also taken on the possible success of a prosecution under the UEFA disciplinary framework,” said UEFA.
Its president, Aleksander Ceferin, praised City personally, issuing a statement minutes after the team last month became the first to withdraw from the proposed breakaway competition.
While the superleague proposals continue to attract widespread criticism, those involved in the negotiations insist part of the rationale behind them was to cool rampant spending that has imperiled the futures of some of the elite clubs as they seek to keep up with teams backed by wealthy benefactors, particularly those controlled by the Gulf nation states.
Documents reviewed by The New York Times showed each team would have had to submit detailed financial information to financial auditors, as well as agree to rules forbidding owners from artificially inflating teams’ balance sheets. Penalties for breaches included a suspension or ban from the competition, as well as millions of dollars in fines.
City’s backers say existing rules have been designed to keep historically dominant clubs from facing competition from up and coming teams. Sheikh Mansour has plowed more than $1 billion into turning City into the dominant force in English soccer over much of the past decade. His largess has been spent on acquiring top executives, players and Pep Guardiola, the pre-eminent manager of his generation.
City has also spent millions on rejuvenating the deprived Manchester neighborhood where it plays its home games, building new facilities and creating jobs in an area that had suffered from high unemployment.