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⚖️ Man City's guilty verdict (and the law firms involved)

⚖️ Man City's guilty verdict (and the law firms involved)

Ahad Rahim & Idin Sabahipour
September 30, 2026

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Yesterday, an independent commission found that Manchester City broke the Premier League's rules on how much money a club can lose, even though its latest accounts showed about £174 million in the bank.

The rules measure losses, and when an owner buys new shares the club gets cash to pay its bills but the loss stays the same size, while real income like sponsorship makes it smaller.

So in football finance, where the money comes from matters more than how much a club has – and the commission found City had dressed up its owner's money as sponsorship to make its losses look smaller.

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⚖️ Man City's guilty verdict explained (and the law firms involved)

What’s going on here?

Yesterday, an independent football commission found that Manchester City – one of England’s most successful football clubs – broke the Premier League’s financial rules for nine seasons, upholding almost all of the 115 charges against the club. City says it’s innocent and will appeal the decision.

Its punishment will be decided at a separate hearing. Under the Premier League Rules, City could be fined, docked points or even kicked out of the League. Rivals like Arsenal and Liverpool could also claim compensation.

How does a football commission’s decision have legal force?

To compete in the Premier League, football clubs must agree to its rules.

The Premier League Rules cover everything from signing players to reporting finances. Under Rule B.14, clubs also sign up to football’s wider rules, including those of UEFA (which runs European football and has its own financial rules).

Signing up creates a contract between the League and each club, and between the clubs themselves. Clubs also agree that an independent commission can decide whether they’ve broken the rules and what happens next, with a right to appeal.

So breaking the rules can also be a breach of contract, which can lead to a fine.

🤔 What if Manchester City refuses to pay a fine or compensation?

If City is fined, or ordered to pay compensation to a rival club, the commission can’t send bailiffs to collect the money. But by signing up to the rules, City has promised to pay whatever the commission properly orders.

Courts enforce that kind of promise. In Owen Pell Ltd v Bindi (London) Ltd, a builder and its client agreed to let an expert settle their dispute. When the client refused to pay, the court forced it to.

Football’s rules go further. Rule W.70 says fines and compensation can be recovered as “civil debts”. So if City refused to pay once any appeal was over, the League or the rival club could ask a court to make it.

One of the rules City broke caps how much money a club can lose over a few seasons. But City’s latest published accounts showed about £174 million in cash at 30 June 2025. So you might be wondering why the club’s losses were even a problem.

What are football’s financial rules trying to prevent?

Football gives clubs a reason to spend heavily. More spending means better players, who can bring better results – and better results can bring more prize money, sponsorship and income. So a club might spend now, expecting future success to cover the cost.

But that success is never guaranteed. So the financial rules address two connected problems.

🏦 Clubs could run out of money. A club might sign players on expensive, long contracts while its owner is willing to cover the losses. If that support stops, or expected income never arrives, the wages still need paying. The club could struggle to pay its employees, suppliers and other clubs it owes transfer fees to. Capping clubs’ losses helps reduce that risk.

⚖️ Breaking the rules could give one club an unfair advantage. One club might not buy an expensive player to stay within the rules. Another club might break the rules and sign them. That can give the second club an advantage over its rivals that respected the limits. So enforcing the rules helps protect fair competition.

For City’s charges, the two relevant sets of financial rules were UEFA’s Club Licensing and Financial Fair Play Regulations and the Premier League’s Profitability and Sustainability Rules.

Both compare a club’s income with its costs over a set period. Income includes money earned from things like ticket sales and TV rights. If costs are higher than income, the difference is a loss.

Each set of rules decides its own loss limit and what it counts as income and costs. The commission found that, once City’s accounts were corrected, the club had broken both the Premier League’s and UEFA’s limits “by a very substantial amount” in every season charged.

So how can a club with money in the bank break these rules? Well, there’s a difference between “making a loss” and having the cash to cover a loss.

Suppose a club earns £100 million and has £130 million in costs, all counted under the rules. It has made a £30 million loss.

If it then gets some more money, what happens next depends on where that money comes from.

	💰 Equity investment	🎟️ Business income
What happens?	The owner puts in £30 million in exchange for shares. This is an equity investment.	The club earns another £20 million from a sponsorship deal, with no extra costs.
Does the club earn more?	No. The owner has provided money to fund the business. Its income stays at £100 million.	Yes. The club has earned money from selling sponsorship rights. Its income rises to £120 million.
What happens to the loss?	It stays at £30 million. The investment gives the club cash to pay its bills, but doesn’t make the loss disappear.	It falls to £10 million (£120 million in income minus £130 million in costs).
How do the financial rules treat it?	An owner paying money for shares can raise the loss a club is allowed to make, but only up to a cap. Putting in more money doesn’t keep raising it.	Extra income reduces the loss counted under the rules, helping the club stay within the permitted limit.

City’s owner, Sheikh Mansour, put about £190 million into the club in 2012/13, yet City still reported a £52 million loss that year.

🤔 Could an owner’s company just pay more for sponsorship?

Say a club’s owner also owns an airline, and the airline pays the club £50 million to put its name on the shirts. If that deal should really only be worth £10 million, the extra £40 million is the owner’s money dressed up as sponsorship, and the club’s losses look smaller than they are.

UEFA’s financial fair play rules tackle this in two ways. Clubs must disclose deals with connected businesses, called related-party transactions. And income from those deals only counts up to its fair value, meaning what an independent business would pay. So only £10 million would count.

So a club that records owner money as sponsorship income can look like it’s within the limit when it isn’t.

That’s what the commission found City did. It found that City’s deals with several sponsors were “shams”. The sponsors paid only part of each fee, and Sheikh Mansour’s Abu Dhabi United Group, which owned Manchester City, secretly paid the rest. City recorded the full amount as sponsorship income, so the club looked much less reliant on its owner’s money than it really was. The League says these schemes inflated City’s revenue and cut its costs by more than £900 million.

What else did the commission find?

Alongside breaking UEFA and Premier League financial rules, the commission found that City did the following.

Breach	What the commission found
Giving misleading financial information	City’s accounts didn’t give an accurate picture of its finances in any of the nine seasons from 2009/10 to 2017/18. They overstated its income by more than £830 million and didn’t disclose its deals with businesses linked to its owner.
Leaving out details of player and manager pay	City left some payments to its manager and a player out of their contracts. Its owner paid the money through side deals that the commission found were shams, so City’s costs looked lower than they were.
Failing to cooperate with the investigation	The commission found City “made concerted efforts to stop and frustrate” the League’s investigation, which began in December 2018.

What will happen next?

The decision doesn’t settle City’s punishment, its appeal or what it might owe rival clubs. Three questions remain:

⚖️ What punishment fits the breach? The commission now has to decide City’s punishment (lawyers call it the “sanction”) at a private hearing. Rule W.64 lets it fine a club, deduct points or recommend expulsion from the League. There’s no fixed punishment per charge. The punishment has to be proportionate, meaning tough enough to uphold the rules but no tougher than it needs to be.

🔄 Will City appeal? City says it will. It has until this Friday (2 October) to take the findings to an independent Appeal Board, and it can appeal any punishment later too. City would need to show the commission got something wrong – that could work. In November 2023, Everton was docked 10 points for losing £19.5 million more than the rules allowed. On appeal, that was cut to 6, partly because the commission had ignored the punishment guidelines used in the English Football League (the divisions below the Premier League).

💷 Could rival clubs claim compensation? Rule W.64.5 lets a commission order City to pay rival clubs compensation. But each rival would need to prove that City’s rule-breaking cost it money, and how much. Burnley managed this against Everton. Burnley was relegated in 2022, meaning it dropped out of the Premier League into the division below. Using expert evidence, it persuaded a commission that without Everton’s overspending, it would probably have stayed up, and it was awarded £26 million plus interest in June 2026. Everton is appealing.

Which law firms are involved?

Clifford Chance is advising Manchester City in the Premier League’s historic financial-rules case. Bird & Bird is advising the Premier League.

How can you use this in your applications?

Insight	How to use it in your applications
Football is a growing business with costly legal risks	Premier League clubs generated £6.8 billion in revenue in 2024/25. Fines, compensation claims and lost competition income put millions of pounds at stake, creating work for lawyers advising on compliance and disputes. Firms with a ranked sports practice include Bird & Bird, Northridge, Lewis Silkin, Clifford Chance, CMS and DLA Piper. If you’re applying to one, you could talk about how football is now a multibillion-pound business, and how the City case shows rule breaches can put points, titles and millions in compensation at stake. Mention that you’d like to advise clients where the legal and commercial stakes are that closely linked.
Disputes can arise under private rulebooks, with courts helping enforce the outcome	Clubs agree by contract to follow the League’s rules and let a commission decide alleged breaches. If a club won’t pay what it owes, the courts can make it. Working out who has the authority to decide a dispute, which rules apply and how the decision can be challenged or enforced is a big part of disputes work. These questions arise in court proceedings, arbitration and specialist processes such as football commissions. In a disputes interview, you could talk about the role that lawyers play. Say something like: “What interested me about the Manchester City case is how much of the fight was about process, like whether the League could bring the charges at all and how the decision can be challenged. Those questions can shape a dispute before anyone even begins arguing about the facts.”
Who a company trades with can change what its profits mean	Businesses can be connected because one owns the other, or because the same person controls both. For example, a supermarket chain and the delivery company it owns, or two restaurants with the same owner. Deals between them are called related-party transactions, like loans, property rentals or payments for services. City had sponsorship deals with companies that were linked to its owner – and they were exactly this kind of deal. The commission found City broke the rules by not disclosing them properly. Companies file annual accounts with Companies House (here are City’s), and accounting rules like IAS 24 make them explain these relationships. That way, anyone relying on the accounts, like an investor, a lender or a buyer, can see where a connection may have affected the numbers. The same issue comes up outside football. If you’re a lawyer advising someone who’s buying a company, those disclosures are the starting point for spotting arrangements that could change after the sale. Here’s how that could come up in a case study. Your client wants to buy a chain of shops owned by a bigger group (which makes the chain a “subsidiary”). The group lets the chain use its buildings at cheap rent and lends it staff for free, so the chain’s profits look healthy. But after the sale, those favours stop (because the group no longer owns the chain). The chain has to pay full rent and hire its own staff, so its costs go up and its profits go down. If your client pays a price based on today’s profits, it could overpay. So ask whether these arrangements will continue after the sale, and raise it as something to settle in the negotiation.

Insight

How to use it in your applications

Football is a growing business with costly legal risks

Premier League clubs generated £6.8 billion in revenue in 2024/25. Fines, compensation claims and lost competition income put millions of pounds at stake, creating work for lawyers advising on compliance and disputes.

Firms with a ranked sports practice include Bird & Bird, Northridge, Lewis Silkin, Clifford Chance, CMS and DLA Piper. If you’re applying to one, you could talk about how football is now a multibillion-pound business, and how the City case shows rule breaches can put points, titles and millions in compensation at stake.

Mention that you’d like to advise clients where the legal and commercial stakes are that closely linked.

Disputes can arise under private rulebooks, with courts helping enforce the outcome

Clubs agree by contract to follow the League’s rules and let a commission decide alleged breaches. If a club won’t pay what it owes, the courts can make it.

Working out who has the authority to decide a dispute, which rules apply and how the decision can be challenged or enforced is a big part of disputes work. These questions arise in court proceedings, arbitration and specialist processes such as football commissions.

In a disputes interview, you could talk about the role that lawyers play.

Say something like: “What interested me about the Manchester City case is how much of the fight was about process, like whether the League could bring the charges at all and how the decision can be challenged. Those questions can shape a dispute before anyone even begins arguing about the facts.”

Who a company trades with can change what its profits mean

Businesses can be connected because one owns the other, or because the same person controls both. For example, a supermarket chain and the delivery company it owns, or two restaurants with the same owner.

Deals between them are called related-party transactions, like loans, property rentals or payments for services. City had sponsorship deals with companies that were linked to its owner – and they were exactly this kind of deal.

The commission found City broke the rules by not disclosing them properly. Companies file annual accounts with Companies House (here are City’s), and accounting rules like IAS 24 make them explain these relationships. That way, anyone relying on the accounts, like an investor, a lender or a buyer, can see where a connection may have affected the numbers. The same issue comes up outside football. If you’re a lawyer advising someone who’s buying a company, those disclosures are the starting point for spotting arrangements that could change after the sale.

Here’s how that could come up in a case study. Your client wants to buy a chain of shops owned by a bigger group (which makes the chain a “subsidiary”). The group lets the chain use its buildings at cheap rent and lends it staff for free, so the chain’s profits look healthy. But after the sale, those favours stop (because the group no longer owns the chain).

The chain has to pay full rent and hire its own staff, so its costs go up and its profits go down. If your client pays a price based on today’s profits, it could overpay. So ask whether these arrangements will continue after the sale, and raise it as something to settle in the negotiation.

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