Manchester City's guilty verdict on 114 charges of breaking Premier League financial rules is a landmark moment in global sport.
City continues to assert their innocence and have signaled their intention to appeal before Friday's deadline. But the Independent Commission's verdict could hardly have been more damning, accusing the club of "sham" contracts involving its Abu Dhabi owners as part of a "disguised funding scheme" that contributed to inflating revenues and reducing costs by over £900 million. Witnesses in City's defense were accused of dishonesty, and the club was found to have "clearly intended to circumvent" Premier League rules.
The breaches relate specifically to a nine-year period (2009-18), but the shockwaves permeate far beyond. Pep Guardiola's trophy-laden legacy is in doubt. The Premier League's reputation and viability is in the balance. Rivals may seek retribution through compensation claims, triggering challenges that could last for years.
Meanwhile, City's punishment is yet to be determined. Under Section W, Rule 54 of the Premier League's Handbook, they are facing a punishment ranging from a reprimand to expulsion. There could be a fine, a points deduction and a transfer ban.
City's aggressive protestations of innocence only contribute to the widespread uncertainty and reduces the likelihood of all parties coming together to reach agreement on a settlement for the time being. Beyond that, the legal complexities are vast.
ESPN has spoken with one of the United Kingdom's leading law firms, Howard Kennedy, in pursuit of clarity. Partners Kyle Phillips and Lois Langton head the firm's sports group, with Phillips specializing in business crime and regulatory process. On Thursday, the pair talked with ESPN's James Olley to answer some basic questions and follow-ups about what this all means and what's next.
Editor's note: This interview has been edited for clarity and length.
How would you characterize the commission's findings?
Kyle Phillips: I think it's worse than many people expected. The words that were used by the commission in the findings report, caveated with the fact it's very difficult to read because a lot of it is redacted and there's no evidence or appendices that they keep referring to, but the language that they use is very strong.
"Sham" is one point. You've got the disguised payments, sorry -- the "disguised funding scheme," overstating commercial revenue, the amounts involved ... it is all quite shocking. And it is quite a strong statement to say that you find the witness evidence that was given to be "dishonest" -- a powerful word in any decision.
In any regulatory proceedings, it takes a lot for them to use that word.
How deliberate is this language? Are they effectively trying to preempt or dissuade an appeal?
Phillips: Although the panel's names are redacted, you'd expect them to be experienced lawyers. They would be quite cautious about their language and very deliberate in what they say. So you'd expect whatever they say to be thoroughly thought through. It's taken them three years to draft this and if they have come to that conclusion, to put it in this document...
The other angle is if they use such language and it's not supported by evidence, then it does open up grounds for appeal. There will be a fuller balanced judgment that we don't have sight of: that's the problem, so we can't assess the language that's used from that perspective. But you would think everything they said is supported somewhere by their evidential findings, and that they have got good grounds for making the points that they have.
Lois Langton: Every paragraph felt as though it'd been very carefully worded to try and limit the scope of any inevitable appeal. They must have recognized that Man City would want to do that.
And yet City continue to assert their innocence, citing their 'irrefutable evidence.' This requires a degree of speculation, but at what point are they going to produce this? There are suggestions they will argue that the Abu Dhabi government topped up the sponsorship and not the owners.
Phillips: I would expect that evidence to have already been presented, but reading between the lines -- and this is difficult without the full findings -- what they're arguing is the commission haven't understood it, or that they've misunderstood it and the complexities around the accounting.
This "irrefutable evidence" was what they would've based their arguments when they did the deal with UEFA. It is the same narrative and the same defense they've relied upon. You expect it to have been presented to the Premier League, but the commission rejected it.
Langton: The commission refers to witnesses in support of that evidence, but the witnesses are found in the main to give false and dishonest evidence.
Phillips: Yes, but we don't which witnesses are accused of that, do we?
Langton: Absolutely, we don't know, but they are generally referring to the witness evidence in addition to their irrefutable evidence. For the most part, you would imagine a witness dealing with City's irrefutable evidence would be one of their primary witnesses, but most of those accounts have been found by the commission to be false and dishonest.
Could the appeal be thrown out on grounds it is frivolous?
Phillips: You need proper grounds for the appeal. They'd have to demonstrate, for example, that [the independent commission] had misapplied the law, acted in bad faith, misunderstood the facts, or come to a conclusion that no reasonable commission could possibly have come to. Effectively, that there was some sort of misconduct in the proceedings.
What we've seen from [Man City CEO Ferran] Soriano, is an argument that "we presented all of this evidence. It's irrefutable, but the Premier League have either not considered it or not fully understood it or have been biased."
Given City's legal team, I think they will put together a bunch of grounds that somebody somewhere would have to hold a hearing. But if they mount an appeal without sufficient grounds for a hearing, then there won't be one.
Can City produce new evidence in an appeal?
Phillips: Yes, but it has to be evidence that you can demonstrate wasn't available previously.
How likely is it they will have new evidence?
Phillips: They've had so long to put the case together for these proceedings. I can't imagine something that's happened in the past year or so where they've thought "Oh, we should have presented this," which is why I expect it's all been presented and just been rejected.
So what happens next?
Phillips: There are two ongoing strands to this.
Assuming City appeal as expected, (Editor's note: They have until Friday, Oct. 2 to lodge it.) there's a new three-person independent panel who will be appointed to hear that. On the other hand, you've got the sanction, which would just continue as normal. There would be a sanction hearing, which would be private and if they proceed with the sanction, I think they've got 30 days to then announce what that sanction is.
There's nothing in the Premier League handbook that stops them from moving forward with announcing sanctions, but I think it's another area where you're going to have two competing arguments: one for the Premier League saying "we made a finding" because they have been quite bullish. They're saying, "These are our findings. That's it. Done."
That's why they issued the statement calling the commission's decision the "final award."
Langton: The decision isn't waived because there's an appeal. That is the applicable decision until such time as there is a further decision by the appeal panel.
Phillips: They are under a lot of pressure just to continue with the sanction process, and there's nothing I've seen in the regulations that prevents them from doing so.
Man City, on the other hand, may well argue that it's unfair for them to do that because if they bring about the sanction, it could have an impact, for example, on the impartiality and the decision-making of any appeal. If the sanction were to be a deduction of points, that could impact on their current season. And if they were eventually acquitted, that could have a knock-on effect, which would be, again, unfair on the team.
But would that not confuse the process to proceed to sanction while City were still appealing?
Phillips: That's not uncommon in regulatory or criminal proceedings. If you are convicted of an offense, you can tell the court that you are appealing that conviction, but the judge will just move the sentencing in any case. There are times where they will state really strong grounds for that appeal and it'll make the judge think, "Actually, we need to hear the appeal first." But usually, they'll just proceed to sanction because what they'll see it as is part of the appeal process, right? We can just deal with both.
Let's assume that the appeal fails. What punishments are available to the Premier League? Based on your experience, what is the most likely outcome?
Phillips: There's never been anything on this scale to judge from experience! There'll surely be a substantial fine. The fine needs to reflect not just the breaches, but also the fact they haven't cooperated. So they need to hit them hard with a punitive element, which would be the fine.
A points deduction is something else they can do, and they can also expel them from the Premier League. They can't relegate them, because the Premier League does not have any authority over the English Championship [the second tier] as that is run by the English Football League, but they can hit them with a points deduction so large that they are effectively relegated.
They are going to have to look at this based on the case itself. And as you say, they will consider expulsion or suspension. But, for example, where does suspension leave the current squad of players?
Langton: There's also a balance for the Premier League between the owners, the clubs and the consequences of, let's say, expulsion from the Premier League. If they went down to League Two -- English soccer's fourth and final fully professional tier -- that is going to have an inevitable consequence on all sorts of people who are employed by Manchester City. So there can be unintentional, very serious, adverse consequences for all those people with an expulsion when there is a separation between the owners and the club.
Best educated guess: Do you expect the sanction to come this season?
Phillips: I think the Premier League would want that and I don't see anything that would stop them from doing so, barring a compelling argument from Man City that it would not be right to do so. But if I was to put money on it, I think the sanction would come pretty soon. They are so robust in the findings, saying this is the "final award." [Premier League CEO] Richard Masters is on record saying this is the finding. Why not then sanction?
Can City's current owners continue if the appeal fails? Does any of this meet the threshold for criminal charges? If so, that could potentially lead to an enforced sale?
Phillips: I would need to see the evidence in order to respond. I'm sorry to give you a boring answer like that but when you see the word "dishonesty," I think certainly if there's anybody within this working in the regulated sector, then certainly there are going to be elements of misconduct proceedings that could flow, and possibly criminal charges. You would have to know the extent of the dishonesty per the evidence, but there's no reason why not if they believe a fraud has been committed.
That would then have impact on the owners' test and in the most damaging version, the ownership structure. That test is applied every season. [City CEO] Ferran Soriano, who made the statement this week, has been extremely bullish in his defense. If they don't succeed, you can't see him being around much longer.
Sources have told ESPN that other Premier League clubs are taking legal advice regarding action against City. Can you give us a sense of the scale of the potential associated cases with all this?
Phillips: Other litigation, that is huge. It could come from anyone else in the Premier League who feels impacted -- not just teams that haven't won the league or managed to get into Europe, but every position in the Premier League is worth millions in merit money. You've got teams that were relegated, and individuals who will have faced reputational damage as a result of this. Even ex-City players might even be arguing reputational damage, you just don't know. There could be arguments from teams in Europe that Man City shouldn't have been there.
This just opens up a whole can of worms and everybody will be taking legal advice who has in some way had any sort of impact from what they'll say is Man City cheating.
Finally, where else could City go? We know they cannot go to CAS [the European Court of Arbitration for Sport], but what about the High Court?
Phillips: To go to the High Court, you have to demonstrate that the whole process was unlawful in some way.
Langton: They've already tried to suggest it. That was dealt with in the commission's decision, the argument that the Premier League was outside its jurisdiction and didn't have the ability to bring the charges. And that's been dismissed. So they would be fighting something new.
Phillips: There would need to be strong allegations of fraud that impacted the decision. The tribunal exceeding its powers. They could have a human rights-type argument, that they failed to have a fair hearing, which brings in bias or a lack of impartiality. And then the serious procedural irregularity: the conduct of the proceedings caused substantial injustice. So you can tell from the language here that it's quite a high bar for them to go to the High Court.
And there's nowhere else beyond that?
Phillips: They can't go to CAS [due to Premier League sides agreeing that all issues will be adjudicated under British law, with CAS being a European court]. I guess maybe the Court of Human Rights, if they felt that there was a real unfairness in the proceedings, but the High Court is probably about high as it can go in the UK.
