Manchester City have been cleared to play in the Champions League next season after the Court of Arbitration for Sport (Cas) overturned their two-year ban from European competitions.
On a day that will have far-reaching consequences for European football, governing body Uefa suffered a historic defeat which could irreparably damage the standing of their flagship Financial Fair Play policy.
In a statement, the Cas said that City “did not disguise equity funding as sponsorship contributions” and that the alleged breaches of FFP rules were “either not established or time-barred”.
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City will still pay a €10m (£11.4m) fine – down from an initial €30m – for failing to co-operate with Uefa’s investigation, but have otherwise overturned the heaviest punishment ever administered by Uefa for FFP breaches.
The Cas added: “As the charges with respect to any dishonest concealment of equity funding were clearly more significant violations than obstructing the CFCB’s investigations, it was not appropriate to impose a ban on participating in Uefa’s club competitions for MCFC’s failure to co-operate with the CFCB’s investigations alone.”
City were initially handed a two-year ban from European competition and fined in February after being found guilty of “serious breaches” of club licensing and FFP regulations.
Uefa’s club financial control body ruled that City had broken the rules by “overstating its sponsorship revenue in its accounts and in the break-even information submitted to UEFA between 2012 and 2016” and failing to co-operate with its subsequent investigation.
City denied any wrongdoing throughout the process, dismissing Uefa’s investigation as “flawed” and “prejudicial”, and insisted that they would be vindicated by the Cas panel.
In a statement reacting to Monday’s verdict, the club said: “Whilst Manchester City and its legal advisors are yet to review the full ruling by the Court of Arbitration for Sport, 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.
“The club wishes to thank the panel members for their diligence and the due process that they administered.”
The decision not only allows City to play in next season’s Champions League but also means they avoid an estimated £200m loss in earnings. Last season’s run to the Champions League quarter-finals generated approximately £100m – around a fifth of all revenues.
Monday’s verdict will also allay fears of a player exodus from the Etihad. The futures of key stars like Kevin De Bruyne and Raheem Sterling, as well as manager Pep Guardiola, had all previously come into question.
Anything other than a full overturn of the two-year ban would have been severely damaging for City. The Champions League is the only major trophy City are yet to win following their 2008 Abu Dhabi-led takeover, having spent more than £1bn over the course of the last 12 years.
Uefa are instead facing questions after having their disciplinary procedures and financial policy undermined. European football’s governing body acknowledged the Cas verdict in a statement on Monday but insisted that they “remain committed” to FFP.
“Uefa takes note of the decision taken by the Court of Arbitration for Sport to reduce the sanction imposed on Manchester City FC by Uefa’s independent Club Financial Control Body for alleged breaches of the Uefa Club Licensing and Financial Fair Play regulations,” a statement read.
“Uefa notes that the Cas panel found that there was insufficient conclusive evidence to uphold all of the CFCB’s conclusions in this specific case and that many of the alleged breaches were time-barred due to the five-year time period foreseen in the Uefa regulations.
“Over the last few years, Financial Fair Play has played a significant role in protecting clubs and helping them become financially sustainable and Uefa and ECA [European Club Association] remain committed to its principles.”
Uefa opened their investigation into City last year after purportedly hacked documents obtained by the whistleblowing website Football Leaks were published by German magazine Der Spiegel and led to allegations that the club was overstating sponsorship revenue.
City attempted to halt Uefa’s investigation before its conclusion at Cas last November. Their appeal was ruled inadmissable but the Cas panel admitted suggestions of leaks to the media from Uefa’s side were “worrisome”.
City’s success at the second Cas hearing means that the top four Premier League teams will qualify for next season’s Champions League as usual. If City’s ban had been upheld, the final qualifying spot would have been passed down to fifth place.