Manchester City is a football club in legal trouble. The trouble it is in is serious, and it may get worse. And the aggressive approach the club has adopted in dealing with this trouble seems to be making it worse for itself. So aggressive and apparently counterproductive has been this approach, it raises the question as to why the club has not adopted a more cooperative and conciliatory strategy.
The legal trouble that Manchester City is in is set out in a 40-page decision of a disciplinary commission appointed by the Premier League. A redacted version of that decision was published by the league this week, together with the league’s statement. (The club’s statement in response, denying culpability, is here.) In essence, the club was found to have seriously breached the league’s financial rules and also to have failed to cooperate with the league’s investigation.
The 40-page document is a summary. The substance of the decision—that is, the relevant evidence, the factual findings, the legal rulings and the resulting assessments—are contained in several appendices that have not been published. This means we have only the headlines, but not the crucial workings-out. At this stage we can only take the published decision document at face value, for we have not (yet) seen what substantiates each conclusion.
But those conclusions are damning, and are about as serious as could be made against a leading football club. According to the disciplinary commission, Manchester City devised an overall scheme and also various methods to deliberately conceal and disguise its true financial position from the league. In doing this the club put in place a number of sham contracts.
This wrongdoing was committed over many seasons (from 2009-10 to 2017-18) and was in respect of considerable amounts of money (more than £800m). This was not thereby a one-off or trivial breach, but the very opposite. It was a sustained, substantial and systemic exercise. And from this exercise, the club derived great benefits. The club outspent its rivals and was the dominant English football club of the period. It is difficult to conceive a more significant finding of such culpability.
The disciplinary commission’s decision is not only damning, but it looks fairly appeal-proof. The commission has been careful to set that even if there was not wrongful intent in respect of many of the breaches, there would in the alternative have been breaches without any intention of wrongdoing. It will therefore not be enough for the club to knock out the findings of directed culpability. The club will also have to knock at the factual findings of non-compliance.
The commission has taken a long time to put together this decision—nearly two years—and although what has been published is in effect only a summary, the amount of time shows. The charges have dedicated appendices setting out the relevant evidence and how it was assessed. Even if the club is successful in appealing some of these findings, it will be an immense task to rebut them all, let alone refute them. The commissioners appear to have dug deep foundations for their determinations. Such legal spadework can make it very difficult for an appellate assault.
Manchester City seems to have until Friday this week (2nd October) to appeal. Given the findings of the commission, an appeal would not be a surprise. And if the appeal goes against the club, there is the option of going to the High Court on a point of law or procedure. It is likely that the club’s lawyers have already planned for these appeals and that they have litigated the case so far with one eye on appeal points. In this way a first instance decision is only the first half of the process.
There will be a further hearing on sanctions. Given the gravity of the commission’s findings, one can expect the sanctions to be onerous. If so, the considerable legal trouble of the club will mean serious practical consequences. If the breaches are not minor, then presumably the punishments cannot thereby be slight. It may thereby be sensible for Manchester City to concentrate more on the sanctions hearing, than on any perhaps remote chance of a successful appeal.
But there is little sign that Manchester City will adopt a sensible approach to further proceedings, as it has not adopted a sensible approach to contesting this matter to date. Indeed, the club has exacerbated its predicament by its strident conduct of its defence to these charges. This would not be the fault of the lawyers: it can be assumed that the club’s lawyers will have set out the risks of being aggressive. The club would have had this advice, and it would seem that it still decided to be aggressive.
The decision of the disciplinary commission not only sets out the deliberate financial irregularities of the club, but also that it made “concerted efforts to stop and frustrate” the league’s investigation. Note here the word “concerted”—these efforts were systemic and deliberate. Such an approach accords with published documents about how the club approaches litigation elsewhere. The club chairman is reported to have had the view that the club would “rather spend 30 million on the 50 best lawyers in the world to sue [Uefa] for the next 10 years” than accept a fine.
Paying “30 million on the 50 best lawyers in the world”, or even hiring a man with seven wives each with seven sacks of seven cats, is of no avail if the facts and the law are against you. Law is not magic, and lawyers are not magicians. Decisions tend to follow the evidence, and the documentary evidence available to the club would have pointed to the determination it in time received. Nothing in the findings this week will have been a surprise.
At an early stage in this matter, all 50 of the club’s expensive and experienced lawyers would have advised the club on the merits of the case. A damning commission decision would have been an entirely foreseeable outcome. The club would have then been advised of a range of approaches, from the most conciliatory to the most combative.
The direct and natural consequence of the aggressive approach which was adopted were the additional charges for a lack of cooperation, all but one of which were found proved by the disciplinary commission. These findings on conduct will have two effects. They will make any appeal more difficult. And they will inform the approach which will be taken to sanctions. The club has, by its own actions, made a bad situation far worse than it needed to be.
Here, there is also the problem for the club that the decision states bluntly and expressly that a number of the club’s witnesses were “dishonest”. The witnesses gave evidence “which they knew to be untrue”. This finding of dishonesty, coupled with the lack of cooperation, puts the club in a disadvantageous position in the litigation overall. If a contested case is a game of two halves, the club goes into the interval having scored a number of own goals.
What can explain such an aggressive and counterproductive approach? To an extent the answer may be in the facts and the evidence. Perhaps the view was that the only chance of getting out of this was to be unhelpful as well as robust. In respect of an earlier dispute with Uefa, an internal communication at the club apparently said “Uefa doesn't respond to anything other than aggression”. Maybe the view was taken that this would work here too. Maybe the club still thinks it will work in the end, with the league being pushed into settlement on appeal or at the doors of the High Court.
But this does not offer a total explanation. What may work with Uefa may not work with other adversaries. The structure of the league’s investigation and the disciplinary approach meant that aggression would not only be unhelpful, but would count heavily against the club. An appeal on the law or procedure at the High Court in this sort of case only has a remote chance of success. It can be assumed the club was warned of all this.
There is a phrase in football punditry that “the defending is diabolical”. Here diabolical is, of course, a synonym for dreadful. But in its more literal sense, diabolical means bedevilled with wrongful purpose. And the strategy adopted by Manchester City in contesting this matter is also in this sense diabolical. The club will have known that it was unlikely to work, and that it would make things harder, but the club decided to do it anyway.
