In a huge win for Manchester City, the Court of Arbitration for Sport (CAS) overturned club's two-year suspension from European football, allowing the team to compete in next season's Champions League.
CAS ruled that the club did not breach UEFA's Financial Fair Play (FFP) rules by disguising equity funding as sponsorship. Sport's highest court also reduced the fine for failing to cooperate with UEFA to 10 million euros ($11.30 million) from 30 million euros.
"Most of the alleged breaches reported by the (UEFA) Adjudicatory Chamber of the CFCB (Club Financial Control Body) were either not established or time-barred," CAS said in a statement.
Earlier in the year, UEFA had ruled that Manchester City had committed serious FFP breaches and failed to cooperate with its investigation. As a result, the team was banned for two years from European football and was also asked to pay a fine.
Manchester City are owned by Abu Dhabi United Group with Sheikh Mansour bin Zayed Al Nahyan of the Abu Dhabi ruling family being the founder of the company. The club had vehemently opposed the UEFA ruling and had filed an appeal with the top sports court.
CAS said its full legal ruling, with details of the case and the decision, would be published in the coming days.
Here's a look at the case history:
UEFA introduced Financial Fair Play regulations in 2011 as a major reform to regulate spending power of European football clubs. The aim was to discourage clubs from spending beyond their revenues, keeping the losses in check and thereby resulting in their long-term survival. Even if a football club has wealthy backers, FFP regulations ensure that the owners don't spend beyond a specific amount, which includes overall player wages and other expenses.
Failure to adhere to FFP regulations invite sanctions from UEFA in terms of fines and suspension from participating in European football.
The first period UEFA assessed clubs for FFP compliance was 2011-13, when owners were allowed to cover losses up to £45 million.
In November 2018, German magazine Der Spiegel, published a series of articles which accused City of not strictly following the FFP regulations. The articles cited leaked emails and documents that showed City owner Sheikh Mansour funding the majority of the £67.5 million annual sponsorship deal from Etihad. Specifically, the leaked emails appeared to show that Etihad is sponsoring only £8m while the rest was being bankrolled by Sheikh Mansour.
The club denied all the allegations, saying that the emails and documents were hacked and are published out of context. But in March 2019, UEFA launched an investigation on the alleged breaches. The very next day, Premier League also started their own probe into the matter.
UEFA's Club Financial Control Body (CFCB) took charge of the investigation while City approached CAS asking them to throw out the case. But the CAS refused to interfere into the UEFA's probe.
In February 2020, UEFA banned Manchester City from participating in European competitions for two years and fined them £25m for misleading the governing body and breaking FFP rules. UEFA found City guilty of falsely inflating the sponsorship revenues and not cooperating with the investigative body.
"The adjudicatory chamber, having considered all the evidence, has found that Manchester City Football Club committed serious breaches of the UEFA club licensing and financial fair play regulations by overstating its sponsorship revenue in its accounts and in the break-even information submitted to UEFA between 2012 and 2016," UEFA said in a statement.
"The adjudicatory chamber has also found that in breach of the regulations the club failed to cooperate in the investigation of this case."
After the suspension news came out, Manchester City said, "This is a case initiated by UEFA, prosecuted by UEFA and judged by UEFA. With this prejudicial process now over, the club will pursue an impartial judgement as quickly as possible and will therefore, in the first instance, commence proceedings with the Court of Arbitration for Sport at the earliest opportunity."
From 8 to 10 June, the court heard the appeal from City and on Monday, it overturned UEFA's suspension.
"Whilst Manchester City and its legal advisors are yet to review the full ruling by the Court of Arbitration for Sport (CAS), 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," City said in a statement after CAS' ruling.
"The club wishes to thank the panel members for their diligence and the due process that they administered," the club added.
UEFA released a statement and said they are committed to the FFP rules. "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 5-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."
Meanwhile, Premier League's investigation on Manchester City is still ongoing and there's no information yet on how long the probe will go on.
(With inputs from agencies)