UEFA FFP investigation - CAS decision to be announced Monday, 13th July 9.30am BST

[PannickAtTheDisco]

Here are some dry and dull thoughts on a technical point that I have been pondering. I don't think it changes my conclusions overall because so much of my view on merits relies on my perception that the club remain confident. It does increase the likelihood that CAS will be forced to give a view on substantive matters of accounting. This, in turn, may explain why expert witnesses were called.

Looking at the PAE case it occurred to me how UEFA will likely argue the 5 year limitation point if City do press it. As a reminder City argued at CAS 1 that "all breaches alleged against MCFC more than five years prior to the communication of the Referral Decision to the AC are time barred by virtue of Article 37 of the Procedural Rules, which prohibits prosecution of any breach that took place more than five years ago." (https://www.uefa.com/MultimediaFiles/Download/Tech/uefaorg/General/01/85/85/25/1858525_DOWNLOAD.pdf). Article 37 says "Prosecution is barred after five years for all breaches of the UEFA Club Licensing and Financial Fair Play Regulations."

So when does the "breach" takes place for which the 5 year clock starts running?

In short, UEFA will likely say that the breach occurred not when the actual contract or "suspect" transaction took place (my original thought) but when City presented what UEFA now consider the false or incomplete financial information. City's submission of the allegedly "false" information (and not the transaction itself), UEFA will say, was a breach of a rule (I can't see which - maybe Article 47 of the FFP Rules themselves). This, UEFA will say, gives UEFA 5 years to claim a breach from the date of that submission. So, lets say City sent UEFA a 3 year appraisal/submission for the years 2013/14, 2014/15 and 2015/16 on 1 January 2017 saying "we passed", at that point City commit a potential breach and UEFA then has until 1 January 2022 to prosecute it. So, in extremis, that could mean UEFA has an opportunity to prosecute transactions that took place in July 2013 even in 2022.

UEFA's issue remains the settlement and the settlement regime which closed in April 2017 but if it is deemed that those are not conclusive or final (despite the express wording that they are "final and binding" decisions of the AC), City could well struggle to knock out the case on the limitation point as anything presented to UEFA after March 2014 (it could be May 2014 but lets say March 2014) could be said to have given rise to a breach AND be within the limitation period. UEFA could say that this includes information presented after March 2014 but which relates to periods before that period eg City's accounts for the years ended 30 June 2012 and 30 June 2013 - hence UEFA's announcement that City breached by overspending "between 2012 and 2016."

In the announcement UEFA made they say:
“The Adjudicatory Chamber, having considered all the evidence, has found that Manchester City Football Club committed serious breaches of the UEFA Club Licensing and Financial Fair Play Regulations by overstating its sponsorship revenue in its accounts and in the break-even information submitted to UEFA between 2012 and 2016.”

So UEFA will be trying to show the transactions themselves are not the relevant breaches, rather that City's "false" submissions are the breaches. This buys UEFA more time to get round limitation. I can't find any other examples of this occurring but I think that is how they will argue it and could see it succeeding.

It means that UEFA's announcement is slightly misleading but nobody will care about that.

Can you retrospectively claim breaches on something you've approved and closed? Surely the breach is defined as what UEFA decided upon review was the breach, anything they didn't pick up is their failure of due diligence during the initial investigation and they've since closed?

Akin to someone being found not guilty in court but the police botched parts of the investigation, and later more revealing details are revealed but the outcome has already been established. Given UEFA's limitations, it seems a stretch to change what the breaches actually were after you've settled the period.

Just offering a counter argument.

 

[slbsn]

Can you retrospectively claim breaches on something you've approved and closed? Surely the breach is defined as what UEFA decided upon review was the breach, anything they didn't pick up is their failure of due diligence during the initial investigation and they've since closed?

Akin to someone being found not guilty in court but the police botched parts of the investigation, and later more revealing details are revealed but the outcome has already been established. Given UEFA's limitations, it seems a stretch to change what the breaches actually were after you've settled the period.

Just offering a counter argument.

In a nutshell, it seems one of City's arguments is just that - the settlement regime was closed finally in April 2017 and that is that. Your argument re failure to check is unlikely to work if UEFA didn't know and City concealed information UNLESS the settlement is specifically said to be final even if new information comes out.

 

[Citizen Green]

Stefan, if only you knew how much you play with my emotions on a daily basis. Time to knock this thread on the head till the announcement!

 

[slbsn]

Stefan, if only you knew how much you play with my emotions on a daily basis. Time to knock this thread on the head till the announcement!

None of this should change your confidence. All it is trying to understand what the sides may have been considering in their arguments. I wrote this one because I think UEFA have more leeway than I originally wrote, arguing its case like this but that the hurdle of proving City's audits were false is still very high.

 

[iwasthere1968]

I'm guilty of not understanding all of your recent musings although the jist of it seems to be " that UEFA would argue that City have misrepresented submissìons " . I can't understand if ( a big if ) the books of account prove that we have acted correctly , how those facts are overruled by the " misrepresentation".
I assume the signed of audited accounts are regarded as fact.

 

[The Future’s Blue!]

City KNOW. Remember City will have seen UEFA's written submissions before the hearing itself.

I'm merely speculating. That's why I say it changes nothing about my confidence but just clarified in my own mind so thought some people may wish to read it.

Not seen how confident you are, what is your educated percentage base?

 

[PannickAtTheDisco]

In a nutshell, it seems one of City's arguments is just that - the settlement regime was closed finally in April 2017 and that is that. Your argument re failure to check is unlikely to work if UEFA didn't know and City concealed information UNLESS the settlement is specifically said to be final even if new information comes out.

Isn't it UEFA's responsibility to conduct a full and proper investigation in the first place? It's sticky ground for them to say we've wilfully misled them. If we've provided a level of evidence they've deemed satisfactory and then the settlement is closed, further details which change their interpretation don't really seem sufficient cause (I'm not a lawyer though).

I'm thinking more they ask for X, we provide the surface level detail which is deemed sufficient, case settled. Then B is hacked which adds detail behind the surface level outcome which is then used retrospectively to move the goal posts, even though the surface level detail is the outcome of B and was signed off by all parties.

I just honestly doubt we'd go this far if we had pulled a fast one and covered this up to UEFA. I would be misjudging people like Khaldoon if they were prepared to be so gung-ho in the face of such, in that instance, blatant wrongdoing. Hence, I think UEFA probably have enough to make a half decent argument based on what they had, but I feel overall with all the details it can't honestly stack up, it can only be made to look to stack up if presenting part of the evidence.

 

[slbsn]

Not seen how confident you are, what is your educated percentage base?

No legal case is more than 70% likely to win but City must be very confident or they would have settled because the stakes are very high so say, 60%-70% confident City win. But I must stress this is based largely on the fact we haven't settled rather than the substantive arguments.

 

[slbsn]

Isn't it UEFA's responsibility to conduct a full and proper investigation in the first place? It's sticky ground for them to say we've wilfully misled them. If we've provided a level of evidence they've deemed satisfactory and then the settlement is closed, further details which change their interpretation don't really seem sufficient cause (I'm not a lawyer though).

I'm thinking more they ask for X, we provide the surface level detail which is deemed sufficient, case settled. Then B is hacked which adds detail behind the surface level outcome which is then used retrospectively to move the goal posts, even though the surface level detail is the outcome of B and was signed off by all parties.

I just honestly doubt we'd go this far if we had pulled a fast one and covered this up to UEFA. I would be misjudging people like Khaldoon if they were prepared to be so gung-ho in the face of such, in that instance, blatant wrongdoing. Hence, I think UEFA probably have enough to make a half decent argument based on what they had, but I feel overall with all the details it can't honestly stack up, it can only be made to look to stack up if presenting part of the evidence.

If it was as simple as City pulling a fast one and ickle UEFA being hoodwinked, that would be one thing. This is more complex - as I have said many times, PwC/UEFA simply never believed or agreed with City's workings on these sponsorship agreements and therefore there was a settlement.

 

[slbsn]

I'm guilty of not understanding all of your recent musings although the jist of it seems to be " that UEFA would argue that City have misrepresented submissìons " . I can't understand if ( a big if ) the books of account prove that we have acted correctly , how those facts are overruled by the " misrepresentation".
I assume the signed of audited accounts are regarded as fact.

A set of audited accounts should be very difficult for CAS to find against based on a short hearing and limited submissions. But it seems to me, that is what UEFA need to show to win.