Manchester City Banned From Champions League for 2 Seasons

Manchester City, the reigning Premier League champion and one of the world’s richest soccer clubs, has been barred from the Champions League for the next two seasons for “serious breaches” of European soccer’s financial regulations.

The decision, announced Friday by an independent financial control body of UEFA, the governing body for soccer in Europe, found that Manchester City had been guilty of multiple violations related to club licensing and so-called financial fair play rules — cost controls put in place by UEFA to try to mitigate the growing gap between rich clubs and poor ones in European leagues, and to tackle a growing debt crisis. The club, which also was criticized for failing to cooperate with UEFA’s investigators, also was fined 30 million euros ($32.5 million).

The penalty is the most significant punishment UEFA has handed out in the decade since it created its financial fair play regulations, and if upheld its consequences for Manchester City’s balance sheet and its competitive future could be severe. Participation in the Champions League is worth about $100 million a year to the club, and missing out on it could factor into the career decisions of some of the team’s star players, potential signings and even City’s coach, Pep Guardiola.

The ban has no effect on this year’s Champions League; Manchester City, which has never won the competition, will play Real Madrid on Feb. 26 in the first leg of a home-and-home series in the round of 16. And City, which is currently second in the Premier League, may be able to delay a ban for next season if its appeal is not resolved before the 2020-21 Champions League begins this fall.

UEFA’s decision also raises the prospect of further penalties from the Premier League, which has its own cost control regulations that rely on clubs’ providing accurate financial information. The Premier League said last March that it had opened an investigation into Manchester City in the wake of leaks of the club’s internal documents in the Football Leaks hacking scandal. The Premier League’s chief executive, Richard Masters, last week declined to answer when asked about the status of that investigation.

Shortly after UEFA’s ruling, City issued a statement indicating it would appeal the Champions League ban.

“Manchester City is disappointed but not surprised by today’s announcement by the UEFA Adjudicatory Chamber,” the statement said. “The Club has always anticipated the ultimate need to seek out an independent body and process to impartially consider the comprehensive body of irrefutable evidence in support of its position.”

Manchester City already has sought to short-circuit the investigation by financial regulators at UEFA — and preserve its place in the Champions League, European soccer’s richest competition and the trophy the club covets most — by appealing to the Court of Arbitration for Sport. But in November the court rejected the appeal, in which City had tried to end the investigation on procedural grounds, by ruling that it could not hear the case until the club had exhausted the disciplinary process at UEFA.

The earlier decision at CAS was not, its officials noted at the time, a verdict on whether Manchester City did or did not breach financial regulations, a charge that English soccer authorities and officials at UEFA had been investigating for months.

Manchester City has vigorously denied wrongdoing, and its officials had warned UEFA that they would mount an aggressive response to any effort to bar the club from the competition. “The accusation of financial irregularities are entirely false,” City said in a statement last year, after news media reports that it would face a one-year ban.

Critics fear that City’s ability to avoid punishment would be a death blow for UEFA’s ability to impose financial limits on its clubs. Those rules, in place since 2011, were designed to impose a measure of financial fairness within the European soccer economy, but powerful clubs — including City, as well as Paris St.-Germain, A.C. Milan and others — have routinely avoided serious punishment for breaking them.

Javier Tebas, the president of La Liga, the Spanish top flight, and a longstanding, outspoken critic of Manchester City praised UEFA for “finally taking decisive action.”

“Enforcing the rules of financial fair play and punishing financial doping is essential for the future of football,” Tebas said. “We have been calling for severe action against Manchester City and Paris St.-Germain for years. Better late than never.”

Manchester City has assembled one of the best, and most expensive, teams in the world through the backing and financial might of the club’s owner: Sheik Mansour bin Zayed al-Nahyan, the brother of the ruler of the United Arab Emirates. Sheik Mansour has invested hundreds of millions of dollars over the past two decades — on players, coaches, facilities and the team’s operations — to transform Manchester City, which played in England’s second tier as recently as 2002, into one of soccer’s biggest and most successful clubs.

Many of the allegations of financial impropriety against Manchester City came to light after they were reported by news media outlets with access to the Football Leaks files. The files are said to include emails and internal club documents showing efforts by City to get around UEFA’s financial fair-play regulations. The scheme involved funneling millions of dollars from a United Arab Emirates state-backed investment company through inflated sponsorship agreements with entities including the U.A.E.’s national airline, Etihad.

UEFA’s rules permit sponsorships from companies linked to a club’s owners, provided the agreements are struck at prices that reflect the market rate. The Etihad deals allowed the club to report tens of millions of dollars in income that was used to offset spending on new players.

City has been aggressive in its approach to UEFA’s financial regulations for years. According to one of the leaked emails, details of which were published by the German outlet Der Spiegel, a club lawyer, Simon Cliff, cited the club’s chairman during an earlier financial fair play investigation as saying “he would rather spend 30 million pounds on the 50 best lawyers in the world to sue them for the next 10 years.”

That process ended with City’s agreeing a settlement with UEFA in 2014 in which the club accepted a fine of 49 million pounds and a restriction on its squad size and transfer market spending.

Manchester City dismissed the initial reports of renewed financial impropriety as “an organized and clear attempt” to smear the club’s reputation, and complained that any club documents had been obtained illegally. And CAS seemed to agree with some of the club’s arguments even as its dismissed Manchester City’s appeal in November.

The court suggested the governing body’s behavior in a separate case involving A.C. Milan highlighted a “rather nontransparent internal policy.” It also said the leaks of Manchester City’s internal documents, details of which remain confidential, and have not been linked directly to UEFA or any of its officials, were “worrisome.”

In its coming appeal, Manchester City may point to inconsistencies in the manner in which UEFA dealt with P.S.G. and its financial fair play case, even though the cases are not entirely similar. In City’s case, UEFA concluded club officials had misled investigators and acted in bad faith when they presented details of sponsorship agreements that the leaked emails showed were not independent of the team’s wealthy owner.

In leaked emails, a club official stated that only a fraction of the sponsorship agreement with Etihad came from the airline; the rest, the email said, would be paid for by an investment vehicle controlled by Sheikh Mansour.

Unlike City’s owners, though, P.S.G. officials have been able to cultivate a close relationship with UEFA, where the club’s president holds a seat on the organization’s executive committee. The president, Nasser al-Khelaifi, is also a major executive at beIN Media Group, a broadcast company that is the biggest buyer of UEFA’s television rights.