After Frank Lampard debacle, are these just more mistakes from Manchester City? UEFA probe accuracy of their club accounts
Manchester City forced to admit they misled fans over Frank Lampard
UEFA are now scrutinising their accounts to to see if they've been mislead
Club were found guilty of breaching Financial Fair Play rules last season
By NICK HARRIS FOR THE MAIL ON SUNDAY
Manchester City, reeling after being forced to admit they and their sister club in New York misled fans on both sides of the Atlantic over Frank Lampard, are having their financial accounts scrutinised by UEFA to assess whether an attempt has been made to mislead the European governing body over the full extent of the club’s financial losses in 2013-14.
The Mail on Sunday can reveal UEFA are examining whether the creation of a set of subsidiary companies by City’s ‘parent’ company, City Football Group (CFG), allowed City to under-report the club’s losses for 2013-14.
Two particular subsidiary companies alone had costs, including wages, of £36.7million in the year to the end of May 2014, and posted combined losses of £25.9m in that period. Most of their business was done effectively on behalf of Manchester City FC in that period.
Manchester City have admitted that they have misled fans and New York City over Frank Lampard
City’s club accounts for 2013-14, revealed last month, showed City had halved their own losses from a year earlier to post an annual deficit of ‘only’ £23m.
But UEFA could judge City’s accounts should more accurately have included more of the subsidiary companies’ losses, in which case City would be in danger of breaching UEFA’s FFP regulations for a second year running.
UEFA have confirmed checks are being made ‘of all relevant accounts and related-party activities as part of [the] Financial Fair Play (FFP) investigations’.
For breaching FFP rules the first time, City were hit with a £49m fine (two-thirds of it suspended), have a reduced 21-man squad for this season’s Champions League and had a spending limit imposed on summer and January transfer activity.
City have strenuously insisted throughout that they have done nothing wrong, their accounts are in order and that they expect to pass all FFP requirements. City sources say they will co-operate fully with any UEFA inquiry.
The rule breach last time stemmed from sales of ‘intellectual property’ by City to two companies owned by CFG in deals that UEFA ruled artificially inflated City’s income in 2012-13. When the deals were not allowed, City’s losses without them meant a breach of FFP.
Lampard smiles during his press conference after it was announced he would be joining the MLS club
The Mail on Sunday can reveal the same two subsidiaries are involved in the new scrutiny.
One is City Football Marketing Limited (CFML), self-described in their own financial accounts as providers of ‘commercial and marketing services to professional sports clubs and organising bodies’. Their main client in 2013-14 was Manchester City FC. Their minor clients were City’s sister clubs in New York and Melbourne.
The other relevant subsidiary to UEFA’s probe is City Football Services Limited (CFSL), described in their own accounts as providing ‘scouting services, performance analysis and other sporting advice to professional sports clubs and organising bodies’.
Their main client in 2013-14 was Manchester City FC. Their minor client was City’s sister club in New York, NYCFC.
Although MCFC in Manchester paid a total £10.1m combined to CFML and CFSL in 2013-14 for ‘services’, the key issue will be how much of the smaller firms’ costs of £36.7m were incurred on MCFC business.
One of the quirks of City’s accounts for 2013-14 was that they apparently shed 135 staff in a year but, in fact, most of them simply became employees of the subsidiaries.
UEFA will ask City and parent company GFG to clarify details of various company accounts in the group. Certainly there appear to be some errors, inadvertent or not.
Manuel Pellegrini was reduced to a 21-man squad in the Champions League this season
One example is MCFC reporting a different value for intellectual property sold to CFML, whose own accounts have a slightly smaller value on what they paid MCFC for the same item.
Another example is CFG and MCFC’s accounts both saying former midfielder Javi Garcia was sold last summer to Shakhtar Donetsk in Ukraine, whereas in fact he was sold to Zenit St Petersburg in Russia — notwithstanding a strange move that has remained hitherto secret.
The most logical explanation for these anomalies and others, City sources say, is simple mistakes, also cited by the club on Friday as the reason for multiple misleading statements on Lampard.
City’s various entities were forced into an embarrassing admission that Lampard had never signed for NYCFC, as claimed last summer, when that occasion was used to sell season tickets and shirts; nor that he had ever been on loan at City.
Even in ‘clarifying’ the situation, City at first claimed Lampard had had a contract at City only until December. Under pressure from the Premier League, they then confirmed he signed ‘permanently’ last summer on a year’s deal.
More worrying for City’s owner Sheik Mansour, it has damaged the credibility of City and NYCFC
The Lampard episode has caused outrage in the US among NYCFC’s fans, many of whom feel duped.
More worrying for City’s owner Sheik Mansour, it has damaged the credibility of City and NYCFC — his flagship sports ventures — and called into question the integrity of his whole organisation.
There is no specific timeframe to when City might discover whether they are in the clear over the latest accounts.
A UEFA spokesman told The Mail on Sunday: ‘Manchester City, like all clubs which have signed settlement agreements [after breaching FFP previously], are subject to ongoing monitoring, and any case of non-compliance with the terms of their agreement will be automatically referred to the Club Financial Control Body (CFCB) Adjudicatory Chamber as per Article 15 (4) of the Procedural Rules governing the CFCB.
‘UEFA undertakes thorough checks of all relevant accounts and related-party activities as part of its Financial Fair Play investigations.’
