LONDON — Manchester City, a Premier League heavyweight and one of the world’s richest clubs, successfully overturned on Monday its two-season ban from European soccer’s top club competition, the Champions League.
The ban, imposed last year by European soccer’s governing body, UEFA, after City was accused of “serious breaches” of cost-control regulations, was overturned by a three-member panel at the Court of Arbitration for Sport in Switzerland.
The final decision on the Champions League ban, which had hung over Manchester City for more than a year amid questions about its finances and credibility, will have significant consequences for both the club and UEFA.
Manchester City officials had vehemently, and repeatedly, denied any accusations of wrongdoing, and the prospect of being barred from the Champions League risked upending one of the most ambitious projects in global sports.
For UEFA, the latest high-profile reversal of its effort to uphold financial regulations means that the governing body is likely to find itself under scrutiny, with its defeat creating new doubts about the future of its so-called financial fair-play regulations and its ability and willingness to enforce them.
The court said in a statement posted on its website that its panel found the most serious breaches found by UEFA were either “not established” or no longer relevant (in the court’s words, “time-barred”).
The club, the panel found, was guilty of failing to cooperate with UEFA’s investigations and fined the club 10 million euros, about $11.3 million, a reduction from the €20 million penalty UEFA had originally levied.
Since being acquired in 2008 by Sheikh Mansour bin Zayed al Nahyan, the billionaire brother of the ruler of the United Arab Emirates, Manchester City has risen from relative obscurity to become one of soccer’s most valuable and successful brands. It fields one of the best teams in the world and is led by Pep Guardiola, the Spanish coach who oversaw its collecting every available trophy in English soccer last season.
Manchester City remains in contention to win the Champions League this year; it won the first leg of its round-of-16 tie against Real Madrid in March before the coronavirus pandemic forced a temporary halt to the event. UEFA is scheduled to resume the competition this summer.
“The club welcomes the implications of today’s ruling as a validation of the club’s position and the body of evidence that it was able to present,” Manchester City said in a brief statement.
The ruling in City’s favor means that the team will continue to perform on one of sports biggest stages, and one of its most lucrative. A two-year absence from the Champions League would have been worth more than $200 million, but it also would have been costly in terms of damage to City’s carefully cultivated reputation, and to its ability to attract top players and coaches.
It is the second time UEFA has been judged to have fallen afoul of its own statute of limitation regulations. In a previous case involving another wealthy Gulf-owned team, Paris St.-Germain, CAS threw out an appeal by the adjudicatory arm of its financial control body, after determining UEFA had acted too late.
UEFA said in a statement that the panel found that many of the alleged breaches “were time barred due to the 5-year time period foreseen in the UEFA regulations.”
The investigators had sought advice from UEFA’s in-house legal team before starting work on the City case.
The rules were created in 2009 as several top European clubs teetered on the brink of bankruptcy and have largely proved to be successful, though they have worked against clubs like City and others. Wealthy teams have chafed at any efforts to limit their spending, and up-and-coming teams backed by wealthy owners have lamented the way the restrictions have prevented them from mounting challenges to the game’s more established powers.
Still, the rules had not stopped City from winning everything but the Champions League title, the crown its owners covet the most. It has another chance to win it in August, when the Champions League returns for a mini-knockout tournament in Lisbon featuring eight quarterfinalists.
But without the ban looming, City can approach the event with a sense of ease that might have been missing if it faced a ban — and the likely departures of players looking to compete for European trophies over the next two seasons.
Lawyers for City and UEFA presented their arguments to the panel during a video hearing in early June. City had said it would spare no resource to defend itself. It contended that the UEFA process was one-sided and that an impartial body like CAS would overturn the ruling, which came after damaging leaks in 2018 that suggested the team had engaged in illegal accounting tactics to get around UEFA’s cost control rules.
Citing internal documents and emails, those reports suggested City had disguised millions of dollars of direct investment by its owner, Sheikh Mansour, as sponsorship income. One document published by the German weekly Der Spiegel appeared to show that the team’s main sponsor, the Abu Dhabi-based Etihad Airways, had paid only a fraction of an $85 million sponsorship agreement.
City had denounced the publications as “out-of-context materials purportedly hacked or stolen,” contending that the leaks were part of an “organized and clear attempt to damage the club’s reputation.”
Its rivals had demanded serious punishment, though, leaving UEFA and its president, Aleksander Ceferin, squeezed by powerful, and wealthy, forces on both sides. Ceferin said he had no role in UEFA’s investigation, which was handled independently by a group responsible for scrutinizing clubs’ adherence to fiscal rules. That group, known as the Club Financial Control Body, ruled against City, adding a fine of €30 million on top of the ban.
The allegations led to tensions between UEFA and City, which in November last year attempted to short-circuit the case before CAS could render its ruling. That effort, in which City accused UEFA of leaking details of the case to the news media, failed on technical grounds. Two of the three judges involved in that decision were on the current three-arbitrator panel.
Indications of the animosity between City and the UEFA panel investigating it were made clear in November’s ruling, when UEFA’s statement confirming the ban stated that City “failed to cooperate in the investigation.”
The bitterness extended to many of the team’s supporters. Manchester City fans routinely jeer the Champions League anthem on match days, and others have taken to social media to criticize what they perceive as unfair treatment of their team by UEFA, which they accuse of siding with the Continent’s more established rivals.
On the day of the hearing, a group of City fans unveiled a large banner taking aim at UEFA, accusing it of having an agenda against their team. CAS, aware of the tensions, took the rare step of not publicly naming the three judge-panel that heard the appeal until after it had been concluded in June.
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