Man City's title win could be their last for years as they decide whether to battle UEFA sanction for breaking FFP rules
Manchester City’s expected title win may be their last for a few years as the club face a massive decision on Sunday as to whether to fight UEFA over their punishments for breaching Financial Fair Play rules.
City face an invidious choice today; either to appeal against the fine and squad restrictions that are being placed upon them and risk being thrown out of the Champions League next season; or to accept a punishment which would disrupt their summer recruitment programme and see them having to sell players to balance the books over the next three years.
Given the risks involved in appealing, it looks as though they will be massively restricted over the next few years, with their model of signing up the biggest and best players due an urgent rethink.
And the planned £40million signings of defender Eliaquim Mangala and midfielder Fernando from Porto, which are in their final stages, could be the first casualties.
If City want to go ahead they will have to sell off other key players such as Stevan Jovetic, Aleksandar Kolarov and Alvaro Negredo to balance the books.
Crucially, English players who they might have sold, such as Jack Rodwell, Micah Richards and Scott Sinclair, may have to stay because the Champions League restrictions mean City need English players rather than foreigners to bolster their European squad.
Whatever City decide, it looks as though it will have a negative impact on their potential to challenge for titles at the same level.
UEFA have ruled that City have committed a massive breach of the FFP rules, equivalent to the over-spending of Paris Saint-Germain, with The Mail on Sunday calculating they could have missed the target by more than £100m.
If City accept the punishment, they will pay a £16m fine in each of the next three years and must accept a limit of 21 players rather than the usual 25 in their Champions League squad, which would also be subject to a wage cap.
Of the 21-man squad, eight players would still have to be home-grown, which means only 13 of their current 15 foreign stars will be able to play Champions League football. If Mangala and Fernando were to sign, City would face the embarrassment of telling four foreign players that they cannot play in Europe’s elite tournament next year.
City’s transfer strategy will also have to change massively if they agree to the punishment. Effectively they have three years to put their house in order and bring down losses to around £25m spread over that three-year period. That will only be achieved by enormous cost cutting.
It will almost inevitably lead to the sale of players to raise funds, which is a policy Chelsea adopted to meet the rules, evident in the £37m sale of Juan Mata to Manchester United in January.
Players not central to the City first team, such as Jovetic, Kolarov and Negredo, may have to go as City attempt to balance the books and it will also limit the amount of spending they can do this summer, with City likely to be more restricted in the transfer market than before.
City’s problem with UEFA has not been caused by their £350m Etihad sponsorship deal, as widely thought. They failed to meet UEFA’s requirements because the governing body have ruled that their recorded loss last season of £51.6m was artificially decreased.
Within that set of accounts, City said they had sold intellectual property rights to a third party for £24.5m and another set of intellectual property rights to a related company for £22.45m.
Those deals covered assets such as players’ image rights and scouting databases. Without those deals their real loss would have been almost £99m.
Crucially, UEFA rules allow clubs an exemption for players’ contracts signed before 2010 — but that only applies if you meet the rules. Given that City were deemed to have failed by such a large margin, they do not qualify for that exemption.
It seems City were relying on that exemption and the intellectual property rights deals to get them over the line. Now they cannot write off those contracts signed before 2010, even allowing for other exemptions that they can make for investing in youth football and their stadium, their breach of the rules over the past two years could be as much as £100m more than the £37m which UEFA permits.
That is why they face severe punishments. Going forward, they must work towards balancing the books by 2017, which can only be achieved by massive cost cutting.
