La Liga president Javier Tebas has accused Manchester City of participating in a financial scandal reminiscent of the Enron case. He claims the current Premier League champions are hiding financial losses within various affiliated companies to artificially improve the club`s reported financial health.
Tebas disclosed that La Liga has formally complained about Manchester City to the European Commission, indicating the matter is currently under investigation. The Spanish league alleges that City has benefited from foreign subsidies from the United Arab Emirates, which have allowed them to significantly enhance their capabilities, recruit elite players and coaches, and establish themselves as a leading European club, notably winning six of the last seven Premier League titles.
“The City situation is one where we believe they have shifted losses onto companies not formally part of CFG (City Football Group),” Tebas stated. He drew a parallel: “Remember the Enron case in the USA? They moved losses into different companies. These cases share similarities.”
Enron collapsed in 2001 following a multi-billion pound accounting scandal – the largest bankruptcy reorganization in history at the time. This crisis was partly linked to their use of special purpose entities to obscure debts and inflate profits.
Speaking at the Financial Times Business of Football Summit, Tebas specifically highlighted “scouting and marketing companies” that “have very high expenses.” He added that these entities “invoice City for less money,” resulting in “City having lower costs than they would without this network of surrounding companies.”
A source close to Manchester City strongly refuted Tebas`s accusations, maintaining that the club`s financial records clearly demonstrate no wrongdoing.
La Liga filed its complaint in July 2023, following the implementation of the European Regulation on foreign subsidies that distort the internal market. This regulation addresses funding from state-controlled bodies that cause significant market distortion within the European Union. The rules are applicable even if the entities involved – both Manchester City and its owners – are based outside the EU.
Meetings between La Liga representatives and EU officials have taken place, with Tebas expressing his belief that the case has entered the investigation phase.
Tebas further elaborated: “City possesses numerous companies within their group structure that exist outside the main CFG framework, additional companies where expenses are allocated. These external companies incur the losses, not the club itself.”
“If these companies bear high expenses and lose money, City may eventually lose money, but structural costs are being covered by these satellite companies, used specifically to bypass financial regulations.”
“We have reported them to the EU, providing factual data and figures. While the UK is no longer in the EU, City conducts commercial activities in Europe. A July 2023 EU ruling clarified that they can investigate state-aided companies regardless of their location within or outside the EU.”
“Therefore, we requested that City be examined. It is critically important that all clubs adhere to the same standards of transparency and governance, covering both sporting and financial aspects.”
Regarding potential sanctions, Tebas commented: “Typically in Europe, the penalty for receiving state aid that distorts the market involves having to repay the public aid to the state, in addition to other penalties.”
“We submitted our complaint to the EU shortly after the ruling came into effect. It is currently in the investigation phase. While we haven`t received a direct response yet, it must be under investigation. The EU has a significant workload with many cases, not solely this one.”
Tebas has had previous disputes with Manchester City. Last year, after the Premier League issued 130 charges of rule breaches against the club in February 2023 (allegations City denies), Tebas remarked that the champions should “receive the sanction they deserve.”
