Money Game: How top clubs clashed with rules on financial fair play
One of the most powerful men in soccer, Gianni Infantino, has long championed fairness in the world’s most popular sport. In public, the sports administrator has promoted rules intended to reduce debts and prevent top clubs with super-rich owners from using their wealth to dominate the game.
In private, he has sometimes taken a gentler line.
An examination of thousands of documents relating to the affairs of leading clubs shows that Infantino was involved in negotiations that led to two of the richest agreeing favourable settlements when they ran into problems over rules governing finances. Those settlements with the Club Financial Control Body of Europe’s governing authority for soccer, the Union of European Football Associations (UEFA), enabled Manchester City of Britain and Paris St. Germain of France to avoid the toughest sanctions, including potentially being banned from competitions.
Infantino, 48, is currently president of the Federation Internationale de Football Association, or FIFA, the global governing body for soccer. Until 2016, he was general secretary of UEFA. Since 2014, UEFA’s regulators have accepted that Paris St. Germain and Man City could value sponsorship deals at levels far above those recommended by independent experts hired by UEFA’s investigators. In the case of Paris St. Germain this involved hundreds of millions of euros, and for Man City tens of millions of euros, the documents show.
The “Football Leaks” documents (see related story below), which include emails, contracts and presentations relating to the clubs, were obtained by the German publication Der Spiegel and reviewed by Reuters in partnership with European Investigative Collaborations, a consortium of international media. The cache, which spans much of the past 10 years, includes previously undisclosed details of UEFA’s investigation of the two clubs’ financial affairs, the settlement terms and Infantino’s involvement in the negotiations.
Man City is part of City Football Group, which is majority owned by Sheikh Mansour bin Zayed Al Nahyan, half-brother of the ruler of Abu Dhabi. The sheikh is a deputy prime minister of the United Arab Emirates and has a soccer empire that also includes clubs in the United States, Australia and Uruguay.
Paris St. Germain is owned by Qatar Sports Investments, a state-backed body founded by the emir of Qatar, Sheikh Tamim bin Hamad Al Thani. His country is currently spending billions of dollars in preparation for hosting the next FIFA World Cup in 2022.
Under UEFA’s “Financial Fair Play” rules, clubs must be transparent about revenues and broadly balance them against expenditure. The rules are designed to encourage clubs to live within their means and prevent the sport’s richest owners from crushing their rivals, killing the vibrant competition that pulls in fans. The regulations include a limit on the losses clubs can incur. They are intended, among other things, to prevent clubs running up big debts or receiving unlimited amounts of money through inflated sponsorship deals with organisations related to the owners. In short, related-party sponsors should not pay more than the market rate to support a club.
In the cases of Man City and Paris St. Germain, UEFA’s Club Financial Control Body (CFCB), which oversees Financial Fair Play rules, accepted that the clubs could receive income from Emirati and Qatari sponsors that was far in excess of the market value estimated by independent experts hired by UEFA to assess the deals, according to investigatory reports, settlement agreements and other documents. UEFA’s investigators concluded that key sponsors were related to the club owners, the documents show.
With Paris St. Germain, UEFA’s Club Financial Control Body allowed the club to value its sponsorship deal with the Qatar Tourism Authority, a government agency, at 100 million euros a year. Yet independent experts advising the CFCB told it the market value of the QTA sponsorship was only a few million euros a year or less, the documents show.
With Man City, UEFA’s control body allowed the club to book three times more income from some Abu Dhabi sponsors than independent experts deemed the sponsorship deals were worth – about an extra 20 million pounds a year.
These arrangements helped to boost the clubs’ income, enabling them to comply with UEFA rules that limit the losses clubs are allowed to incur. That, in turn, helped the clubs to spend tens of millions more on players than they otherwise would have been able to do.
Paris St. Germain said its compliance with the Financial Fair Play rules had been “exemplary.” The club’s deputy chief executive, Jean-Claude Blanc, also said the financial regulations were misused and have “become an instrument to prevent new entrants” from winning Europe’s top soccer tournament and “to prevent shareholders from investing freely in their business.”
In a statement Man City said: “We will not be providing any comment on out of context materials purported to have been hacked or stolen from City Football Group and Manchester City personnel and associated people. The attempt to damage the Club’s reputation is organised and clear.”
Neither Qatar’s emir nor Sheikh Mansour responded to requests for comment.
UEFA said in a statement that the organisation and its Financial Fair Play rules were there to “assist clubs to become financially sustainable and to live within their means and only to sanction them as a last resort.” Among the most important objectives, it said, was to ensure that “European club football is viable (as a whole).”
UEFA added that the Financial Fair Play rules are relatively new and that in the early cases the decisions and sanctions took both UEFA and the clubs into uncharted territory. It added: “UEFA is confident that any apparent inconsistencies that may seem evident to some, have been eliminated as the system has developed and become more familiar to all sides.”
FIFA, in response to questions addressed to Infantino, said the central purpose of the Financial Fair Play rules has been to “improve standards of financial management in European football, to reduce indebtedness, and to help clubs operate on the basis of their own resources, so they can be run as stable and sustainable businesses.” It said the rules have “been an economic success story for European football.”
According to the documents, Man City and Paris St. Germain rejected the assertions by UEFA’s control body that the sponsors from their owners’ home countries were related parties. The clubs also disputed that the sponsorship valuations were inflated. In an April 2014 response to UEFA’s investigators, Man City said an assessment by an external expert acting for UEFA’s control body that found the club was related to key sponsors contained “erroneous conclusions and assertions.”
The issues arose during UEFA’s routine monitoring of club finances. Settlements that UEFA’s control body agreed in 2014 with the two clubs state that neither club considered itself to be in breach of UEFA’s rules, and that both clubs agreed to settle disputes over their finances to avoid potential legal costs.
UEFA said in its statement: “In cases where clubs overspend and balance their books only thanks to money injections, a settlement agreement has always been the preferred solution. In such cases, the focus is on limiting the revenues coming from outside football.”
Infantino, who is a striking figure, tall, slim and bald, frequently interacted with the clubs in negotiations over their compliance with financial rules. In an April 2014 email to colleagues, Ferran Soriano, CEO of Man City, said he and Infantino had agreed to instruct Man City and UEFA lawyers “to negotiate a settlement that is more than a warning and can be seen as effective/dissuasive but does not affect dramatically MCFC (Manchester City Football Club) business.”
Soriano did not respond to requests for comment. FIFA, in responding to questions addressed to Infantino, did not comment on the exchange involving Soriano.
The Union of European Football Associations introduced rules intended to prevent clubs racking up big debts and rich owners dominating the sport. Above, UEFA headquarters in Nyon, Switzerland. REUTERS/Denis Balibouse
The documents provide remarkable insight into the business activities of powerful individuals and state-backed enterprises in the Gulf, where media scrutiny is limited, even as their investments are growing increasingly influential in Britain, Europe and beyond. The documents also provide evidence that could supercharge one of the biggest controversies in world soccer.
Rivals have alleged the two clubs have benefited unfairly from overvalued sponsor contracts and have urged UEFA to clamp down. The financial firepower of Man City and Paris St. Germain has helped to propel them to the top of the leagues in England and France, and to qualify for Europe’s top tournament, the UEFA Champions League.
The head of the Spanish football league, Javier Tebas, last year alleged that Man City and Paris St. Germain had received “state aid” that “distorts European competitions and creates an inflationary spiral that is irreparably harming the football industry.” Last month, Tebas reiterated to Reuters that sponsorship deals from state-backed entities that were above market values were detrimental to others. “It’s about the effect it has in distorting the market of footballers on a European level,” he said.
Man City and Paris St. Germain rejected such accusations when they arose last year, saying the clubs complied with the Financial Fair Play rules.
A person familiar with UEFA’s process confirmed that independent experts had told UEFA’s control body in 2014 that the market value of key sponsorships had been far below the value the clubs ascribed to them. Allowing some clubs to bend the rules, this person said, ultimately means that ordinary supporters, who pay what can be high prices for tickets, “get hurt.”
The global reach of soccer has turned the sport into a financial behemoth, with funds flooding in from TV rights as well as gate receipts and other sources. Revenues at European clubs have tripled since 2000, according to a UEFA report published in January, and reached 18.5 billion euros in 2016. That dwarfs America’s largest professional sport, the National Football League, which some analysts estimate has annual revenue of about $14 billion (11 billion euros). The European game’s popularity is increasing in the United States, which is due to co-host the 2026 FIFA World Cup.
But clubs also face huge outlays, particularly in acquiring star players, who can cost tens of millions of euros in transfer fees – the sum paid by one club to another to release a player from a contract so that they can change clubs. On top of their purchase cost, star players can command wages running to hundreds of thousands of euros a week.
With many clubs racking up hefty losses, UEFA introduced its Financial Fair Play rules in 2010 and began evaluating clubs in 2013. The rules broadly require club spending not to exceed revenue from television rights, gate receipts, competition prize money and sponsorship. Since 2015, clubs have been allowed to lose no more than 30 million euros over three seasons, on the grounds that they should not simply be funded by big debts or super-rich owners. Before that, when UEFA was phasing in the rules, clubs were allowed to lose up to 45 million euros over two years.
The aim is to sustain viable competition between a wide range of European clubs over the long term.
Infantino, who was born in Switzerland, speaks seven languages, including Arabic, and qualified as a lawyer. He became a key promoter of the new policy as it was being introduced. In early 2014, he told news media the rules were designed to save European soccer from “greed, reckless spending and financial insanity,” according to UEFA’s website. He also warned clubs that his organisation was “not afraid to take the necessary measures to protect the game and to maintain the integrity of its competitions.”
The rules required clubs wishing to participate in UEFA competitions to submit information about their finances for monitoring. In 2013, UEFA’s investigatory arm, part of its Club Financial Control Body, began to question elements of accounts submitted by Man City and Paris St. Germain.
With Paris St. Germain, the key issue was its relationship with the Qatar Tourism Authority, a state agency. According to the sponsorship contract between the authority and the club, the authority agreed to pay Paris St. Germain between 700 million euros and 1.125 billion euros over five years, depending on tournament performance.
Under Financial Fair Play rules, what mattered was whether the QTA was a “related party” to the club owner. If it was, then UEFA’s rules meant that the club could recognise only a market value for the contract in its assessment under the Financial Fair Play rules.
UEFA’s investigators concluded that the government tourism authority was a related party because the company that owned Paris St. Germain, Qatar Sports Investments, was majority owned by another arm of the Qatari state – the Ministry of Finance.
The investigators drew up a draft of a preliminary view report, dated April 16, 2014, prepared for the investigatory arm of the Club Financial Control Body. It said the QTA sponsorship deal appeared to be “massively inflated.” Reuters was unable to determine whether a final version was produced. The draft report said the sponsorship rights received were worth “a tiny fraction” of the 200 million euros the QTA spent on Paris St. Germain in the year to mid-2013.
The draft report cited external experts who valued the sponsorship deal at that time as worth 3 million euros or less per year. One of the expert advisers was Octagon, a sports marketing and sponsorship consultancy that is headquartered in the United States and has offices worldwide. In its report for UEFA investigators, Octagon noted that the QTA contract did not entitle the tourism authority to display its brand on the players’ shirts – a right for which companies usually pay the most money. Yet the QTA arrangement was “by far the most lucrative commercial agreement in European Football,” according to Octagon’s report.
Asked for comment, Octagon referred inquiries to UEFA. UEFA did not comment on Octagon’s report.
UEFA investigators’ view was that Paris St. Germain should not include all the QTA sponsor money when it was assessed under Financial Fair Play rules. But without that money, the club, referred to in the documents by the initials PSG, would make losses that risked it being banned from competition.
“The evidence demonstrates that the QTA-PSG Agreement aims to circumvent the objectives” of the Financial Fair Play rules, the draft report by UEFA investigators concluded. It added that while it “may have some characteristics of a sponsorship contract … the main objective of the QTA-PSG Agreement is, nevertheless, the supplementation of PSG’s financial means by QTA so that the Club can acquire players.”
According to the draft report, the sponsorship agreement appeared not to have been preceded “by any meaningful commercial negotiation (or, indeed, any negotiation at all).”
The club’s deputy chief executive, Blanc, said in response to questions last month that the valuation methodology of UEFA and Octagon did not apply because the contract with the QTA was a “nation branding” agreement to promote a country, rather than a traditional sponsorship deal.
The UEFA investigators’ draft report recommended that, if the investigators could not reach a settlement with the club, UEFA’s “Adjudicatory Chamber” should find Paris St. Germain in breach of the rules and impose disciplinary measures, “including the possibility of exclusion from future UEFA competitions.” Such a move would be akin in the United States to excluding one of the largest American football teams from the post-season playoffs and the Super Bowl.
By early 2014, Infantino had become involved, acting as an intermediary between the club and UEFA’s Club Financial Control Body.
Asked in September whether he might have taken a tougher line on clubs such as Paris St. Germain over Financial Fair Play, Infantino said he helped to introduce the rules but did not implement them. “I am happy that we introduced it,” he told Reuters. “I wasn’t ‘tough’ or ‘not tough’. We had bodies who were taking decisions … I was involved in the concept, the rules and so on.”
FIFA said in its statement that the UEFA administration – which at the time included Infantino as general secretary – can assist the Club Financial Control Body. “This may include discussions, meetings, assistance to help find solutions, and other interactions to assist the CFCB in its work,” FIFA said. It added: “Nonetheless, the CFCB is entirely responsible for their own decisions.”
UEFA also said its Club Financial Control Body was responsible for overseeing Financial Fair Play rules and was “an independent entity.” It said the UEFA administration provides the CFCB with staff, infrastructure and administrative support, and “acts as a go-between among the various parties,” but that settlement agreements are the outcome of negotiations between the CFCB’s investigators and the clubs concerned. The Club Financial Control Body said it could not comment on its deliberations for reasons of confidentiality.
In the final 2014 confidential settlement, UEFA’s Club Financial Control Body agreed that Paris St. Germain could include 100 million euros a year from the QTA deal in its Financial Fair Play assessment, if the contract terms were amended. Though that was less than the QTA contract had envisaged, it was still far more than the market value put on the contract by UEFA’s independent experts.
Those terms were not publicly disclosed by UEFA or the club. Instead, UEFA announced that the club had agreed to limit its spending on buying players and committed to reduce its losses in order to meet UEFA’s rules by the financial year ending in 2016. UEFA’s control body also imposed a fine on the club, but said most of it would be returned if the club met certain measures, including limits on making losses and buying players. In 2017, UEFA said that Paris St. Germain had complied with the requirements and met the objectives of the settlement agreement.
In the 2014 announcement, UEFA said that it had assigned the QTA contract a fair value “significantly below that submitted by the club.” But the announcement did not disclose a figure for that value. And it did not mention the extent to which independent experts had assessed the contract to be overvalued.
Support for the agreement wasn’t universal inside UEFA. In the weeks before the agreement was signed, acting chief investigator Brian Quinn, a former senior official at the Bank of England and former soccer club chairman, stepped down from his role. According to the person familiar with the process, Quinn told colleagues he wasn’t able to approve the Paris St. Germain settlement because he considered it “too lenient” given the size of the breach. Instead, the settlement was approved by a new acting chief investigator; Quinn remained a member of the investigatory chamber until mid-2015.
Abu Dhabi Funds
For many years, Manchester City played in the shadow of its more successful local rival, Manchester United, and struggled to stay in Britain’s top soccer league. Then, in 2008, Sheikh Mansour of the United Arab Emirates took control of Man City and began to transform it. With expensive new star players, the club went on to top the Premier League three times over the past decade.
After the Financial Fair Play rules came into effect, UEFA began routine monitoring of clubs’ finances. It chose to look more closely at Man City as well as Paris St. Germain.
According to the final preliminary view report by the investigatory chamber of UEFA’s Club Financial Control Body, Sheikh Mansour had “significant influence” over two of Man City’s Abu Dhabi sponsors. The report found that the amount being paid for those sponsorships was three times their market value.
UEFA’s investigatory arm determined that Man City had made losses of 233 million euros during the two-year period ended in May 31, 2013, when the club made adjustments the investigators required, including judging key sponsorship contracts at market values determined by the experts, according to the chief investigator’s report. That was 188 million of losses more than was allowable under UEFA’s rules, the report said.
As with Paris St. Germain, the report recommended that the Adjudicatory Chamber, a part of UEFA’s control body, should find Man City in breach of the rules and impose disciplinary measures, including a possible ban from competitions, unless the club reached a settlement with the investigators.
Man City told UEFA investigators it rejected the claims that Abu Dhabi sponsors were related parties or that those sponsors were paying over the odds. The club said in an April 2014 response to UEFA investigators that it had complied with the rules and “adopted a good faith and correct interpretation of the regulations.”
Infantino was involved in brokering a settlement. He arranged to meet the club’s CEO, Ferran Soriano, on May 8, 2014, for what Soriano described in an email as “a ‘secret’ meeting in London to try to agree the final deal.” Soriano did not respond to requests for comment.
It’s not clear exactly what ensued. But subsequently, UEFA’s Club Financial Control Body rejected a proposed deal for being too generous to Man City.
“Unfortunately I’ve been informed that the investigatory chamber has come to the conclusion that the positions are still too distant for them to agree on a settlement agreement. I regret this a lot,” Infantino wrote to Man City chairman Khaldoon Al Mubarak on May 12, 2014.
Nevertheless, four days later a deal was agreed. Man City did not get all it wanted. However, according to the final settlement agreement, UEFA’s Club Financial Control Body accepted that for 2014 and the following two years Man City could have sponsorship contracts with two Emirati sponsors at values totalling 26 million euros per year more than the “fair value” determined by the experts advising UEFA.
UEFA’s generous position towards Paris St. Germain has continued in recent years. In 2015, UEFA re-affirmed to the club that it could record 100 million euros a year in revenue from the Qatar Tourism Authority, according to the documents. The contract between the club and the tourist agency had expanded from fewer than 10 pages to more than 60, but Paris St. Germain still did not grant the QTA the right to have its name on players’ shirts. That kind of branding usually drives sponsorship of over 10 million euros a year, according to the views given to UEFA’s control body by independent experts.
Other clubs have not been so fortunate. Since 2015, UEFA’s control body has temporarily banned three smaller clubs for breaching its Financial Fair Play rules by reporting sizeable losses. One was Dynamo Moscow of Russia, which in 2015 was banned from the UEFA Champions League for a season for failing to meet the rules on breaking even.
The club’s controlling shareholder at the time was VTB, a Russian bank. UEFA’s investigators ruled that a sponsorship deal the club had with VTB was with a related party and therefore had to be assessed at market value, according to a ruling published by UEFA’s Club Financial Control Body. That market value was up to 80 million euros a year less than the face value of the sponsorship contract, an expert report said.
The Club Financial Control Body said the deal needed to be booked at market value to meet Financial Fair Play rules. The club complied. That meant the club reported losses far above the level permitted under the Financial Fair Play rules for the three years to 2014.
Dynamo Moscow didn’t respond to requests for comment.
Other clubs, including AS Roma and Inter Milan, have said in statements and media interviews that to comply with Financial Fair Play rules they took various measures, including selling players, that put their on-pitch performance at risk. AS Roma and Inter Milan didn’t respond to requests for comment.
Meanwhile, Paris St. Germain and Man City went on to acquire top talent at high prices, spending more than 1 billion euros in total on signing players since their settlements with UEFA’s control body, according to published UEFA figures. In 2017, Paris St. Germain embarked on a summer spending spree, including the signing of Brazilian striker Neymar for a record-breaking 222 million euros ($256 million).
That prompted some in the sport to complain, including Spain’s La Liga, which called on UEFA to investigate the French club again. In late 2017, UEFA announced it was opening a new investigation of Paris St. Germain as part of monitoring Financial Fair Play rules.
Money had continued to pour into Paris St. Germain from Qatari sponsors. Again, the sports consultancy Octagon, acting as an independent expert, concluded the Qatar Tourism Authority deal was valued far above the market rate. In a report in January 2018, Octagon said it “would suggest a value of €5,500,000 as the fair market value” for the QTA sponsorship for the year ended in mid-2017.
Octagon added: “Given the nature of the sponsorship assets, we would not suggest any higher valuation for the 2017/18 season.”
Yet the Qatar Tourism Authority had agreed to pay Paris St. Germain at least 145 million euros a year, according to the revised sponsorship contract.
On June 13, UEFA announced it had ended the probe. It said that following a review by the Club Financial Control Body’s investigatory panel the club had made “significant fair value adjustments” to several sponsorship contracts, but did not disclose what the adjustments were. As a result, UEFA said, Paris St. Germain’s financial results for the financial years ending in 2015, 2016 and 2017 had been within the rules.
Paris St. Germain said UEFA’s investigatory chamber required the club to reduce the revenues it booked from the QTA contract to between 50 million and 60 million euros for the years ending in mid-2017 and mid-2018, which forced the club to sell players in order to comply with the rules. The club also said that UEFA’s investigators ruled that Paris St. Germain wouldn’t be able to renew its QTA contract beyond mid-2019.
Then in early July, UEFA said the chairman of the investigative body asked UEFA’s Adjudicatory Chamber to review the decision to close the Paris St. Germain probe. And in mid September, UEFA announced that it had referred the case of Paris St. Germain back to its Club Financial Control Body for “further investigation.”
UEFA did not respond directly to questions about the latest probe. However, in its statement, it said that it was “very satisfied” with how the rules have been applied and the results they have achieved. It noted that since the Financial Fair Play rules had been introduced there had been an improvement in the finances of European soccer clubs – which have gone from recording record losses of 1.7 billion euros in fiscal year 2011 to profits of 600 million euros in 2017.
“No system is perfect but on the whole FFP has increasingly protected European football from financial difficulty since its introduction in 2010,” UEFA said.
By Cassell Bryan-Low and Tom Bergin