The Premier League has confirmed that an independent commission found Manchester City guilty of financial breaches spanning nine seasons. The ruling has placed one of world football's most successful clubs in serious legal trouble.
Financial regulations in English football exist to ensure clubs operate sustainably and avoid heavy financial losses. Understanding these rules explains why the recent findings carry such severe consequences.
How Profitability and Sustainability Rules Work
European governing body UEFA first created the framework for Financial Fair Play in 2009. The Premier League subsequently established its own specific regulations, known as Profitability and Sustainability Rules.
Under Premier League regulations, clubs cannot record losses exceeding £105 million across their combined accounts over a three-season period. Of that total, £90 million must be covered by secure funding provided by club owners.
A club is permitted to lose only £15 million of its own money over three years.
Certain expenditures are excluded when calculating financial compliance. Investments in infrastructure, training facilities, youth academies, and women's football do not count towards a club's loss limits.
Squad Cost Ratio is a financial regulation that limits Premier League clubs’ on-pitch spending to 85% of their football-related revenue and net profit/loss from player sales.
SCR focuses solely on spending that directly affects what happens on the pitch, allowing clubs greater commercial freedom to invest without restriction in off-pitch areas like stadium upgrades and fan experience.
The system brings the Premier League’s financial rules closer to UEFA’s, ensuring consistency for clubs competing in both domestic and European competitions.
What is included in the squad-related costs?
Squad costs cover player and head coach wages, agents’ fees and amortisation or impairment of transfer fees. Amortisation in football is the process of spreading a player’s transfer cost over the length of their contract, while impairment in this context means if the value of a player’s registration is less than what was originally paid for them due to a range of factors, such as injury, performance or relegation.
All contracted players and head coaches are included. Staff outside of the playing squad, such as administrative or commercial personnel, are excluded – as are assistant coaches and other coaching team members.
How is football-related revenue calculated
In relation to SCR, football-related revenue relates to a club’s total earnings from football operations. It encompasses both the income that clubs generate themselves and the revenues distributed by the League and other football competitions.
For example, club-generated revenues come from sources including commercial revenues, matchday revenues and net profits from non-football events hosted at their stadiums, such as concerts.
Revenues generated by the League and other football competitions include central payments to clubs (merit money), facility fees and income from domestic, European and international cup tournaments like the FA Cup, EFL Cup, UEFA Club Competitions and the FIFA Club World Cup.
Why Manchester City Are in Serious Trouble
The independent commission ruled against Manchester City following an investigation into nine seasons between 2009-10 and 2017-18.
According to the Premier League, Abu Dhabi United Group funded the remainder of these sponsorship fees to artificially inflate revenues and reduce costs.
The commission concluded that the club filed misstated accounts and concealed its true financial position from auditors and football regulators.
"The club knew that the annual accounts that it was submitting to the Premier League in each season did not provide a true and fair view of the club’s financial position,” the commission stated.
Premier League Chief Executive Richard Masters highlighted the gravity of the decision.
"The core decision establishes the facts of what happened at Manchester City during this period," said Richard Masters.
"It details how the club systematically broke Premier League Rules for nearly a decade. This disciplinary case, and this decision, are the most significant in Premier League history," added Masters.
Manchester City's Response and Appeal Deadline
Manchester City have staunchly denied all accusations made against them throughout the regulatory process.
"The Club is innocent of the accusations made by the Premier League and a comprehensive body of irrefutable evidence exists in support of all of its positions, relating to this case," stated Manchester City FC.
The club confirmed it will pursue appeal avenues before the official deadline on Friday 2 October.
