La Liga president Javier Tebas has alleged Manchester City are part of a financial scandal akin to that of Enron, claiming that losses made by the Premier League champions are being hidden in different companies to improve the club’s finances.
Tebas also revealed that LaLiga have submitted a complaint to the European Commission over the club, claiming that the matter was currently being investigated. They alleged that City had received foreign subsidies from the United Arab Emirates that allowed them to enhance their standing, signing top-tier players and coaches that have helped them to establish themselves as one of Europe’s preeminent clubs, winning six of the last seven Premier League titles.
“The City case is one where we believe they have put the losses on the companies that are not officially part of CFG (City Football Group),” Tebas said. “You remember the case in the USA, the Enron case. They put losses into different companies. These are similar cases.”
Enron collapsed in 2001 amid a multibillion-pound accounting scandal — the biggest bankruptcy reorganization in history — one that was partly related to their use of special purpose entities to hide their debts and increase their profits.
Speaking at the Financial Times Business of Football Summit, Tebas specifically made reference to “scouting and marketing companies” that “have very high expenses”, adding that “they invoice City for less money. City has costs that are less than if they didn’t have this circle of companies around them.”
A source close to City strongly refuted Tebas’ claims and insisted their accounts prove there has been no wrongdoing.
La Liga submitted a complaint in July 2023 following the implementation of the European Regulation on foreign subsidies that distort the internal market, which covers funds provided by state-controlled entities that cause a serious distortion to the European Union’s internal market. The rules apply even when the entities — both Manchester City and their owners — sit outside the EU.
Meetings have been held between La Liga and the EU with Tebas saying he believes the case is in the investigation phase.
“City have a lot of companies in their group which lie outside CFG structure, extra companies where they put their expenses,” said Tebas. “These other companies lose the money but not the club itself.
“If you have these high expenses and the companies lose money eventually City will lose money but they have structural costs that are being carried by the companies around them, which are used to avoid the regulations.
“We have reported them to the EU. We have the facts and figures. The UK might not be part of the EU but City have commercial activities in Europe and in July 2023 the EU ruling said that they could look at state-aided companies, whether they are based in the EU or not.
“So we asked for City to be checked. It’s very important that all clubs are subject to the same transparency rules and governance on both the sporting and financial side.
In terms of a potential sanction, Tebas added: “Normally in Europe, the competition sanction if you receive state aid that distorts the market is that you have to return the public aid to the state plus other sanctions.
“We presented our complaint to the EU soon after the ruling. It is in the investigation phase. We’ve not had a reply but it must be under investigation. The EU have lots of other cases, not just this one.”
Tebas has had several run-ins with City in recent years, claiming last year that the champions should “receive the sanction they deserve” following the 130 charges of rule breaches the Premier League made in February 2023. City deny any breach.
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