Background
Manchester City was recently found by an independent commission (the Commission), appointed pursuant to the Premier League’s rules (the PL Rules), to have committed more than 100 breaches of the PL Rules.
As is now well known, in February 2023, the Premier League charged Manchester City with 115 alleged breaches of its financial rules spanning a nine-season period, together with further alleged breaches relating to the club’s failure to cooperate with the Premier League’s investigation after it began in 2018.
The alleged breaches included:
- Inaccurate financial information (2009/10–2017/18): City didn’t give the League accurate figures for revenue (especially sponsorship), related parties and operating costs.
- Premier League spending rules (2015/16–2017/18): City broke the League’s Profitability and Sustainability Rules.
- Not cooperating (December 2018–2022/23): City didn’t cooperate with the League’s investigation, including by not handing over documents.
Following a hearing in 2024, the Commission found Manchester City guilty of 114 of the charges. Its findings included that Manchester City had disguised the true nature of its revenues and liabilities, giving a materially misleading impression of its financial position and understating the extent of the club’s financial reliance on its owners. The Commission also found that Manchester City had entered into sham commercial agreements whose value to the club had been significantly overstated across nine seasons. Importantly, for the purpose of the focus of this article, the Commission found that, had Manchester City reported its accounts accurately, it would have breached both the Premier League’s and UEFA’s spending limits by a very substantial margin. It is important to note that the full decision (including its appendices) has not been published – only a redacted version of the Commission’s core findings – and therefore the full extent of the Commission’s findings and their basis is not yet known. What has been published is available here: Decision
What are the potential repercussions for Manchester City?
Appeal
It is important to note that Manchester City has appealed the decision (pursuant to Rule W.81 of the PL Rules).
Even if Manchester City loses on appeal, that may not be the end of the matter. Rule X.4 would permit the appeal decision to be reviewed by way of arbitration, albeit only on limited grounds.
Those grounds include where the decision:
- was reached as a result of fraud, malice or bad faith;
- was reached as a result of procedural errors so great that the rights of the applicant have been clearly and substantially prejudiced;
- amounted to a perverse interpretation of the law; or
- was one that could not reasonably have been reached by any Commission or Appeal Board which had applied its mind properly to the facts of the case.
Beyond that, it may also be open to Manchester City to challenge the outcome before the English courts under the Arbitration Act 1996 (as amended by the Arbitration Act 2025).
The club will also be able to appeal any sanctions ultimately imposed. The story may therefore not be over for quite some time.
Repercussions
Sanctions
Subject to the appeal process, the most obvious consequence is sanctions. Rule W.64 gives the Commission wide-ranging powers including:
…
W.64.4. in the case of a Respondent which is a Club:
W.64.4.1. suspend it from playing in League Matches or any matches in competitions which form part of the Games Programmes or Professional Development Leagues (as those terms are defined in the Youth Development Rules) for such period as it thinks fit;
W.64.4.2. deduct points scored or to be scored in League Matches or such other matches as are referred to in Rule W.64.4.1;
W.64.4.3. recommend that the Board orders that a League Match or such other match as is referred to in Rule W.64.4.1 be replayed; and/or
W.64.4.4. recommend that the League expels the Respondent from membership in accordance with the provisions of Rule B.6;
W.64.5. order the Respondent to pay compensation unlimited in amount to any Person or to any Club (or club);
…
W.64.7. impose upon the Respondent any combination of the foregoing or such other penalty as it shall think fit.
There is no precedent for breaches of the PL Rules of this number or scale, making it difficult to predict what sanctions may be imposed. There may also be other wider consequences including for individuals found to have assisted Manchester City in its breaches. Whatever happens, it is likely to cause widespread debate amongst practitioners and football fans alike. This article does not consider those issues further. Rather, the remainder of the article focuses on Rule W.64.5.
W.64.5
Although framed as a sanction that the Commission may impose, Rule W.64.5 is in substance an invitation to anyone affected by the relevant rule breaches to make a claim for compensation if they are able to establish both:
- that they have been impacted by the breaches; and
- that they have suffered loss as a result.
This is precisely what happened in the recent landmark case between Burnley and Everton, where Everton had been charged in 2023 with breaches of the PL Rules with respect to overspending, and Burnley argued that if Everton had not committed those breaches, Everton and not Burnley would have been relegated at the end of the 2021/22 season.
In the past, it may have been difficult to imagine third-party claims flowing from regulatory breaches. However, in the relatively new world of financial fair play rules, with increasing prize money and other financial incentives in professional football, and the apparent willingness of Commissions (as evidenced in Burnley v Everton) to engage in the detailed factual and causation analyses more familiar to complex commercial litigation, clubs may be increasingly willing to pursue such claims.
That may be particularly so in light of the concerning financial picture painted by the Independent Football Regulator’s recently published draft State of the Game report, which highlights wide-ranging concerns regarding the financial sustainability of professional football.
Burnley v Everton
In Burnley v Everton, in summary, Burnley claimed compensation from Everton pursuant to the then Rule W.51.5 after Everton was charged with breaches of the PL Rules on the basis that its losses in the three-year period ending in mid-2022 exceeded the permitted £105 million threshold by £19.5 million.
Burnley alleged that but for the overspend (and resulting sporting advantage), Everton would have been relegated that year instead of Burnley. Burnley prevailed on the basis that Everton’s breaches gave Everton a sporting advantage, which the commission found, on the balance of probabilities, caused Burnley’s relegation from the Premier League and substantial financial losses that followed. The commission awarded Burnley £26 million in compensation, plus interest (initially £9.1 million).
In assessing that question, much like damages in a typical commercial dispute, the parties agreed that the commission had to consider various counterfactual scenarios to determine “what would have happened if the contract had not been broken” (paragraph 22 of the decision).In other words, the commission had “to make findings as to what Everton would probably have done if it had complied” with the rules (paragraph 26), and what impact that would have had on its results.
As is common across complex commercial disputes, that question involved hearing detailed and complex expert industry and quantum evidence, including sophisticated modelling involving different counterfactual scenarios based on what Everton may have done to stay within the rules, and what impact that would have had on Everton’s points total that season.
Similar to Manchester City, it is important to note that Everton is appealing the Commission’s decision, and so it is possible that the decision will be overturned. Nonetheless, it appears to provide a (relatively) clear rubric for how clubs affected by another club’s breaches may seek to recover some of their losses – something that may not previously have been seen as seriously possible or even contemplated.
What might this mean for Manchester City?
In the nine relevant seasons, Manchester City finished in the following places:
| 2009/10 | 5th |
| 2010/11 | 3rd |
| 2011/12 | 1st |
| 2012/13 | 2nd |
| 2013/14 | 1st |
| 2014/15 | 2nd |
| 2015/16 | 4th |
| 2016/17 | 3rd |
| 2017/18 | 1st |
In each of these seasons, other clubs missed out on the Premier League title, qualification for the Champions League or other European competitions, and higher league positions. Echoing the case advanced by Burnley, multiple clubs could argue that, had Manchester City complied with the PL Rules, the club would have finished lower in the league and they would correspondingly have finished higher. The potential financial consequences may extend beyond the prize money attributable to a particular finishing position. Qualification for European competition, for example, can provide additional revenues and the opportunity to compete for further prize money, while also enhancing a club’s ability to attract players and potentially improve its sporting performance in subsequent seasons.
As in Burnley v Everton, any claimant club would likely need to establish, on the balance of probabilities, through sophisticated modelling and counterfactual analysis, that it would have finished in a higher league position in the league (potentially across multiple seasons) but for Manchester City’s breaches. Similar arguments might potentially be advanced in relation to cup competitions.
That exercise is likely to be considerably more complicated in claims against Manchester City than it was in Burnley v Everton. In Burnley v Everton, 100,000 simulations of Everton’s results across a single season were undertaken, with all other results remaining unchanged. Claims against Manchester City will likely involve significantly more moving parts, potentially requiring the modelling of different results for multiple clubs and, depending on the losses claimed, the consequences of those results across multiple seasons. The resulting counterfactual analysis could therefore become considerably more complex and uncertain.
That complexity may make it difficult for a claimant to establish its case (or parts thereof) on the balance of probabilities because rather than asking what would have happened to a single club in a single season arising from a single breach, the analysis could require consideration of how different breaches would have affected different results and numerous clubs as well as the consequential effects of altered league positions in later seasons. There is also a risk of inconsistent/differing results across claims brought by different claimant clubs instructing different experts with varying modelling tools. Against that backdrop, the 100,000 simulations undertaken in Burnley v Everton may begin to look relatively contained.
Where a club cannot establish its (or part of its) counterfactual on the balance of probabilities, it might seek to instead rely on the doctrine of loss of chance. The doctrine of loss of chance (and its application) has developed inconsistently since its inception (typically credited to Chaplin v Hicks [1911] 2 KB 786 (CA)) but essentially, it can in appropriate circumstances allow a party to seek compensation on the basis that a defendant’s breach deprived it of the opportunity to achieve a particular outcome. This usually arises where the outcome depended on what third parties would have done, or on future or hypothetical events. The court or tribunal will then assess the likelihood of that outcome and discount the would-be damages by reference to the percentage chance of the outcome happening.
Most recently, loss of chance has arisen in the context of professional negligence claims, and whilst applying that type of analysis in a sporting context is inherently different and potentially novel, it could be an area for lawyers and potential claimants to explore, in particular if they consider that it is likely to be difficult to establish some or all of their potential case on the balance of probabilities (i.e. more than a 50% chance).
Conclusion
It remains to be seen how matters will play out in the appeal and beyond, but we will be keeping a close eye on developments.
Enyo’s sports team would be happy to discuss any matters raised in this article or any other sports-related disputes that you may have.
If you would like to discuss any of the issues raised in this article, please contact Anna Maxwell.