Manchester City Exposed Chapter 1: Bending the Rules to the Tune of Millions

For years now, the Manchester City football club has vehemently denied that its owner, the sheikh of Abu Dhabi, broke financial rules. But internal emails tell a different story, providing evidence of backdated contracts, illusory sponsoring payments and cavalier, "We can do what we want," business practices. By DER SPIEGEL Staff

Manchester City owner Sheikh Mansour bin Zayed Al Nahyan
Getty Images/ Benedikt Rugar/ DER SPIEGEL

Manchester City owner Sheikh Mansour bin Zayed Al Nahyan


Editor's Note: This is the first chapter of a four-part series on the Manchester City football team that will be published Monday through Thursday of this week.

Even as far back as 1880, when Anna Connell, the daughter of a vicar, founded a football club in Manchester to keep the unemployed and common laborers away from alcohol, the Al Nahyan family ruled Abu Dhabi. The clan of camel herders and pearl fishers lived in mudbrick homes beneath palm fronds -- and one can assume that for several ensuing decades, the idea of sky blue-clad football players was just as foreign to them as desert heat was to the Mancunians. But 128 years later, in September 2008, England's "Capital of the North" and the Al Nahyans, who had become a multibillion-dollar oil dynasty in the ensuing years, found their way to each other. And the consequences have been dramatic.

The once-mediocre club from East Manchester is currently the best team in the Premier League, a glitzy product that has become a fantastic advertisement for Abu Dhabi. Refined strategists like Kevin De Bruyne and Ilkay Gündogan play for the team, along with the electric Leroy Sané, all under the leadership of perhaps the best trainer in the world, Pep Guardiola. It's a one-of-a-kind success story.

Now, though, documents made available by the whistleblower platform Football Leaks expose the dirty tricks behind the team's success.

The club owners from Abu Dhabi have introduced a new era of Manchester Capitalism. The term originally refers to that period of the industrial revolution when companies were ruthless and accepted no regulations whatsoever. But it can also be applied to the world of football: Since its purchase by the sheikh of Abu Dhabi, Manchester City has managed to cheat its way into the top echelon of European football and create a global, immensely profitable football empire, ignoring rules along the way. The club's newfound glory is rooted in lies.

The true story of City's climb is one of political influence and economic callousness. And it affects everyone who wants to understand the business of modern-day football.

Chapter 1: The Cheating Sheikh

"Aguueeerrooooooo!" A name, a drawn-out shriek. An icon. Every Manchester City fan is intimately familiar with this scream, blurted out by announcer Martin Tyler on May 13, 2012. Every "Cityzen" knows where they were at that precise moment, 93 minutes and 20 seconds after the match had begun, during the final seconds of the game, the final seconds of the season. Man City needed a victory to win the Premier League for the first time in 44 years.

But their opponent, the relegation-candidate Queens Park Rangers, had taken the lead. It looked as though the season would end as so many had before, with Manchester City's crosstown rivals Manchester United once again winning the championship. Then Edin Dzeko headed in the ball after 91 minutes and 14 seconds, tying the match. Just two minutes later, Aguueeerrooooooo hammered the ball into the back of the net, delivering his team the championship.

Those 126 seconds of injury time are part of the club's emotional founding myth, a team owned by sheikhs from Abu Dhabi that was to no longer treat championships as the electrifying exception, but as a satisfyingly regular occurrence. For Man City fans, the championship was a football miracle, but for the club's critics, it was merely a matter of time. Those detractors have long felt that Mansour bin Zayed Al Nahyan's investment in the club, and the transfer-sum records that he has since pulverized, represents a distortion of the principles of competition. A state made rich by oil stands behind the team, they say, adding that its sponsoring contracts are nothing but a surreptitious path for Abu Dhabi money to flow into the club. Manchester City executives have consistently rejected such claims.

Man City plays in Etihad Stadium and the team's jerseys are likewise sponsored by Etihad. The Abu Dhabi airline is led by Mansour's half-brother. The Abu Dhabi telecommunications company Etisalat and the Abu Dhabi tourism authority also advertise with the club. So too does the Abu Dhabi investment firm Aabar, which owns stakes in UniCredit and Virgin Galactic.

English football has never seen investments of this size. And the true numbers in an internal analysis compiled by club leadership are explosive. They come from a document titled "Summary of Owner Investment" dated May 10, 2012, three days before Sergio Agüero's decisive goal. By this time, the management installed by Mansour had been with the club for just three years and eight months -- and they calculated that the owner from Abu Dhabi had already invested 1.1 billion pounds, around 1.3 billion euros, in the club. One section of the document is particularly consequential. It bears the heading: "Supplement to Abu Dhabi partnership deals."

"Supplement to Abu Dhabi partnership deals": This internal document lists how much money the club owner had invested in City in the period up to May 2012.

"Supplement to Abu Dhabi partnership deals": This internal document lists how much money the club owner had invested in City in the period up to May 2012.

To explain what that is, we have to return to "Aguueeerrooooooo," to the team's rebirth. In the stands, grown men shed tears, while the players on the field piled into a sky-blue heap. On the sideline, a 47-year-old man in a suit cheered along with them, later draping an Italian flag across his shoulders: trainer Roberto Mancini, who had won the Italian league championship three times, the Italian league cup four times and introduced four new multimillion-pound acquisitions into Manchester City's team at the start of the championship season. One of them was Agüero.

Mancini had brought City its first title in almost half a century. But he would soon fall victim to his boss' ambition: Just one year later, Mancini was fired because the team proved unable to defend its title. That, apparently, is the logic adhered to by the owner: If it doesn't work, it must be replaced. But there was also a new problem: the recently introduced Financial Fair Play (FFP) rules established by UEFA, a set of budgetary statutes that came into force just a few weeks after Mancini was shown the door. First and foremost, the European football association wanted to ensure clubs didn't take on too much debt and slide into bankruptcy. Secondly, UEFA was concerned about competition in the European football leagues. They wanted to forbid clubs from spending more than they brought in.

City, though, was in danger of violating exactly that stipulation. "We will have a shortfall of 9.9m pounds in order to comply with UEFA FFP this season," Man City's Chief Financial Officer Jorge Chumillas wrote in an internal email. "The deficit is due to RM (eds: a reference to Roberto Mancini) termination. I think that the only solution left would be an additional amount of AD (eds: Abu Dhabi) sponsorship revenues that covers this gap."

In that email, Chumillas essentially revealed that his club does business a bit differently than regular football clubs. Normally, the business of football looks like this: The players play successful football, attract a growing audience, the team's games are televised, and potential sponsors take an interest. These sponsors sign contracts with the team obligating them to pay a fixed amount for the privilege of advertising with the club. This money becomes part of the team's budget for the season and can be used to sign players, pay agent fees or maintain the grass on the pitch. When the team's planning is off, or it suddenly has to spend more than called for in the business plan, the club shows a loss at the end of the season and has to cut Costs.

But Manchester City is no normal club. Costs and debt? None of that matters. And should a shortfall emerge, sponsors from the owner's home country simply send more money over. Penalties are only for those who get caught. To dodge UEFA sanctions, Man City management came up with a few creative proposals. "We could do a backdated deal for the next two years (...) paid up front," suggested club executive Simon Pearce. CEO Ferran Soriano, meanwhile, suggested having sponsors pay the team the contractually obligated bonus for winning the FA cup -- even though Man City hadn't won.

Ten days after the end of the season, Chumillas presented the results of the deliberations and declared that the details of the sponsoring contracts would be adjusted -- for the just finished season! Etihad was to suddenly pay 1.5 million pounds more, Aabar 0.5 million extra and the tourism authority a surplus of fully 5.5 million pounds. And they were all supposed to act as though that had been the deal agreed to at the beginning of the season.

The club and its sponsors were manipulating their contracts. When Chumillas asked his colleague Simon Pearce if they could change the date of payment for the sponsors from Abu Dhabi, Pearce answered in the spirit of Manchester City's executives: "Of course, we can do what we want."

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These activities in spring 2013 raise doubts as to whether the Abu Dhabi-based companies are really the independent sponsors Man City representatives have consistently claimed them to be. As early as April 2010, when Pearce negotiated the sponsorship deal with Aabar, he wrote a telltale email to the firm's leadership. According to the contract, the investment company was to pay the club 15 million pounds annually. But that apparently isn't the full story. "As we discussed, the annual direct obligation for Aabar is GBP 3 million," Pearce wrote. "The remaining 12 million GBP requirement will come from alternative sources provided by His Highness." With just a single sentence, Pearce confirmed the accusations that his club had repeatedly, indignantly rejected: Namely, that His Highness, Sheikh Mansour, paid a portion of the sponsoring money himself!

That is of vital importance when it comes to UEFA's Financial Fair Play rules. If the club goes on a shopping spree with the sheikh's money, those expenditures must be declared, which quickly puts the balance sheet in the red. If, however, that money can be disguised as sponsoring money, it looks like revenues and Man City can afford larger expenditures without fear of UEFA sanctions.

Manchester City financial reports were a web of lies; the team walked all over the Financial Fair Play rules. Etihad Airways, one of the world's largest airlines, also plays along. "Etihad's direct contribution remains constant at 8m," wrote Simon Pearce in December 2013. At that time, Etihad's contractual sponsoring obligation was 35 million Pounds.

How does it work in practice? Apparently, companies like Etihad in Abu Dhabi wait for the Abu Dhabi United Group (ADUG), the holding company that belongs to Sheikh Mansour and which also owns Manchester City, to wire them money. That money is then "routed through the partners and they then forward onto us," wrote Finance Director Andrew Widdowson in an email. That, at least, is how things were done in 2015: At the time, the deal with Etihad was bringing in 67.5 million pounds annually. But Chief Financial Officer Chumillas emphasized in an email to Pearce: "Please note that out of those 67.5m pounds, 8m pounds should be funded directly by Etihad and 59.5 by ADUG."

When contacted for a response, Etihad said the financial obligations associated with the partnership with the club have always been and remain the airline's "sole liability and responsibility." The airline says it is proud it has been City's main sponsor since May 2009. Aabar and the Abu Dhabi tourism authority did not respond to the specifics of questions submitted by EIC journalists.

It is these "supplements to Abu Dhabi partnership deals," paid for by the sheikh and his "alternative sources," that are openly designed and discussed internally, but vehemently and aggressively denied in public. This is exactly what Bayern Munich President Uli Hoeness means when he complains that Abu Dhabi only has to open up the oil spigots to be able to afford expensive players. "There is almost a personification of the club with the values we hold as Abu Dhabi, as Sheikh Mansour," Khaldoon Al Mubarak said at one point after acquiring the club. Cheat until they notice?

The EIC research network asked Manchester City for a comment. The club stated that they would not respond to the questions. "The attempt to damage the Club's reputation is organized and clear", a spokesperson wrote.

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By the time Martin Tyler screamed "Aguueeerrooooooo!" into the microphone in May 2012, internal City calculations noted that 127.5 million pounds had already been pumped in as supplements to Abu Dhabi partnership deals. That is a competitive advantage that no club in the world can keep up with, except perhaps one -- Paris Saint-German, which is bankrolled by gas-rich Qatar.

Both PSG and Manchester City negotiated settlements with UEFA in 2014 to avoid possible exclusion from the Champions League due to rules violations. Such settlements should really be intended to sanction the clubs for their cavalier business practices and the grotesquely inflated sums flowing in from state-controlled sponsors. But that went awry on two counts. For one, UEFA ultimately succumbed to the threats issued by the two teams' Gulf state owners and signed weak settlements. For another, the football association wasn't even entirely aware of the degree to which it had been deceived. It could not have known, for example, that Manchester City had set up a secret project aimed at hiding costs.

It is a remarkable story involving discrete, multimillion-pound donors to the British governing party, an Icelandic bank that went bust during the financial crisis and club executives' fears that Manchester City could ultimately come to be seen as the "global enemies of football." This story will be told in Chapter 2: The Secret Project Longbow.

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