Tuesday 13 November 2018

Leaked documents reveal how Man City and PSG clashed with rules on financial fair

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Stock photo

Cassell Bryan-Low and Tom Bergin

One of the most powerful men in soccer, Gianni Infantino, has long championed fairness in the world’s most popular sport.

In public, the sports administrator has promoted rules intended to reduce debts and prevent top clubs with super-rich owners from using their wealth to dominate the game.

In private, he has sometimes taken a gentler line.

An examination of thousands of documents relating to the affairs of leading clubs shows that Infantino was involved in negotiations that led to two of the richest agreeing favourable settlements when they ran into problems over rules governing finances. Those settlements with the Club Financial Control Body of Europe’s governing authority for soccer, the Union of European Football Associations (UEFA), enabled Manchester City of Britain and Paris St. Germain of France to avoid the toughest sanctions, including potentially being banned from competitions.

Infantino, 48, is currently president of the Federation Internationale de Football Association, or FIFA, the global governing body for soccer. Until 2016, he was general secretary of UEFA. Since 2014, UEFA’s regulators have accepted that Paris St. Germain and Man City could value sponsorship deals at levels far above those recommended by independent experts hired by UEFA’s investigators. In the case of Paris St. Germain this involved hundreds of millions of euros, and for Man City tens of millions of euros, the documents show.

The “Football Leaks” documents, which include emails, contracts and presentations relating to the clubs, were obtained by the German publication Der Spiegel and reviewed by Reuters in partnership with European Investigative Collaborations, a consortium of international media. The cache, which spans much of the past 10 years, includes previously undisclosed details of UEFA’s investigation of the two clubs’ financial affairs, the settlement terms and Infantino’s involvement in the negotiations.

Man City is part of City Football Group, which is majority owned by Sheikh Mansour bin Zayed Al Nahyan, half-brother of the ruler of Abu Dhabi. The sheikh is a deputy prime minister of the United Arab Emirates and has a soccer empire that also includes clubs in the United States, Australia and Uruguay.

Paris St. Germain is owned by Qatar Sports Investments, a state-backed body founded by the emir of Qatar, Sheikh Tamim bin Hamad Al Thani. His country is currently spending billions of dollars in preparation for hosting the next FIFA World Cup in 2022.

Under UEFA’s “Financial Fair Play” rules, clubs must be transparent about revenues and broadly balance them against expenditure. The rules are designed to encourage clubs to live within their means and prevent the sport’s richest owners from crushing their rivals, killing the vibrant competition that pulls in fans. The regulations include a limit on the losses clubs can incur. They are intended, among other things, to prevent clubs running up big debts or receiving unlimited amounts of money through inflated sponsorship deals with organisations related to the owners. In short, related-party sponsors should not pay more than the market rate to support a club.

In the cases of Man City and Paris St. Germain, UEFA’s Club Financial Control Body (CFCB), which oversees Financial Fair Play rules, accepted that the clubs could receive income from Emirati and Qatari sponsors that was far in excess of the market value estimated by independent experts hired by UEFA to assess the deals, according to investigatory reports, settlement agreements and other documents. UEFA’s investigators concluded that key sponsors were related to the club owners, the documents show.

With Paris St. Germain, UEFA’s Club Financial Control Body allowed the club to value its sponsorship deal with the Qatar Tourism Authority, a government agency, at 100 million euros a year. Yet independent experts advising the CFCB told it the market value of the QTA sponsorship was only a few million euros a year or less, the documents show.

With Man City, UEFA’s control body allowed the club to book three times more income from some Abu Dhabi sponsors than independent experts deemed the sponsorship deals were worth – about an extra 20 million pounds a year.

These arrangements helped to boost the clubs’ income, enabling them to comply with UEFA rules that limit the losses clubs are allowed to incur. That, in turn, helped the clubs to spend tens of millions more on players than they otherwise would have been able to do.

Reuters

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