Demonising Justin Gatlin
13th September 2015
Manchester City and Paris Saint Germain pressured the Union of European Football Associations (UEFA) into Settlement Agreements that inflated the value of their sponsorship deals so that they were not found in violation of UEFA’s Club Licensing and Financial Fair Play (CLFFP) Regulations, articles published by journalists working on the Football Leaks project have alleged. The articles allege that Gianni Infantino, then General Secretary of UEFA and now President of FIFA, engineered secret deals and negotiations between UEFA and both clubs so that they would not be found in breach of the Regulations.
The ‘break even’ element of UEFA’s CLFFP Regulations is designed to ensure that clubs do not spend more than they earn over a three year period. If a club reports an aggregate deficit during a three year period, they must demonstrate that it is covered by a surplus from the two years prior to the three-year monitoring period.
The Regulations are designed to police against rich owners pumping money into clubs through agreed inflated sponsorship deals with companies that they own. The logic behind this is that the artificial inflation of such deals is unfair, as they allow clubs to buy their way to success. As such, Article 58 of the CLFFP Regulations mandates that ‘relevant income and expenses from related parties must be adjusted to reflect the fair value of any such transactions’.
In May 2014, UEFA signed Settlement Agreements with both clubs, following concerns over whether sponsorship agreements with such ‘related parties’, slated to cover deficits, had been inflated beyond ‘fair value’. It is alleged that although both Settlement Agreements reduced the amount of sponsorship money received from such ‘related parties’, it was still far in excess of what was considered ‘fair value’.
Manchester City is part of the City Football Group (CFG), which in turn is owned by Abu Dhabi United Group (ADUG – 87%) and the China Media Capital Consortium (13%). Both ADUG & CFG are owned by His Highness Sheikh Mansour bin Zayed Al Nahyan, the Deputy Prime Minister of the United Arab Emirates (UAE) and a member of the Abu Dhabi royal family.
In January 2014, UEFA auditors were sent to audit City, as the club had reported large deficits between 2009 and 2011. They found that 84% of ‘other commercial income’ reported by the club originated from sponsors based in Abu Dhabi, reports Der Spiegel. The newspaper also reported that auditors found that the club had hidden €35 million in costs from UEFA in its annual accounts.
UEFA auditors reportedly found that three of the four contracts signed with companies from Abu Dhabi were overvalued – up to 80% higher than what was considered ‘fair value’ for the deals. They also considered two additional companies sponsoring the club as ‘related parties’, reports Der Spiegel. The newspaper alleges that a series of secret negotiations between the club, UEFA and Infantino resulted in the Settlement Agreement below.
‘We will not be providing any comment on out of context materials purportedly hacked or stolen from CFG and Manchester City personnel and associated people’, read a statement from City sent to the BBC. ‘The attempt to damage the Club’s reputation is organised and clear’.
In 2013, Paris Saint Germain agreed a four-year deal with the Qatar Tourism Authority (QTA), which it said was worth €200 million per year. Oryx Sports Investments, also known as Qatar Sports Investments (QSI), had taken control of the French club in 2011.
In 2014, UEFA agreed a Settlement Agreement (PDF below), similar to the one agreed with Manchester City. It is understood that UEFA assessed the value of the deal with QTA to be half that stated by the club (in other words, €100 million per year). In other words, in 2014 UEFA admitted that PSG and QTA had artificially inflated the value of the deal.
However, it is alleged that the €100 million per year represented a massive upscaling of UEFA’s initial assessment of the ‘fair value’ of the deal. It is alleged that sports marketing agency Octagon originally valued the deal between Paris Saint Germain and QTA at just €2.78 million per year. It is also alleged that the deal did not place any obligations on the club, and stated that the money was to be used to buy players.
It is further alleged that on 19 April 2014, a secret meeting took place at the French League Cup final, where it was agreed by UEFA that Paris Saint Germain could make up the difference between the club’s stated value for the contract and UEFA’s ‘fair value’ assessment. This would be done through new sponsorship agreements with companies with Qatari connections, it is alleged.
Paris Saint Germain said that it ‘firmly denies’ the allegations. ‘The club has always strictly complied with all applicable laws and regulations and firmly denies the allegations published today’, continued a statement. ‘The QTA contract figure has been known to UEFA and to the general public since 2014. In 2014 UEFA confirmed that our contract with the Qatar Tourism Authority provided promotion and diffusion of the country. The principle of this contract is simple: today, the positive results of PSG are systematically associated with Qatar and directly benefit its image.’
The QTA is a State body, and Paris Saint Germain are owned by QSI, which describes itself as a ‘private shareholding organisation’ founded in 2004. QSI was founded by Sheikh Tamim Bin Hamad Al Thani, current Emir of Qatar, reports the BBC. His father, Sheikh Hamad bin Khalifa bin Hamad bin Abdullah bin Jassim bin Mohammed Al Thani, established the State owned Qatar Investment Authority (QIA).
The Chairman of QSI is Nasser al-Khelaifi, President of Paris Saint Germain, who is also CEO of BeIN Media Group. The Arabic version of BeIN Media Group’s internet site lists him as a being a board member of QIA since 2015, whereas the English version neglects to mention this. If Nasser al-Khelaifi does sit on the board of QIA, as his Arabic BeIN profile suggests, then this may attract further attention from UEFA investigators, as it suggests links between the club and the Qatar State owned companies that sponsor it.
FIFA and UEFA provided statements to the BBC denying any wrongdoing over the allegations made by Football Leaks. The documents behind Football Leaks come from an individual known as ‘John’, who founded Football Leaks, reports Reuters. Given the fiasco over who was apparently behind the Fancy Bears hacks into anti-doping organisations, some degree of scepticism from football’s governing bodies regarding the source of the leaks is perhaps understandable.
In 2014, we already knew that UEFA had adjusted its assessment of what was considered ‘fair value’ for sponsorship deals with ‘related parties’ agreed by both clubs. However, what we didn’t know is just how far UEFA were allegedly prepared to scale up the value of both deals in order to avoid finding both clubs in breach of its Regulations.
If the reports are accurate, and UEFA has not completely denied that they are, then this upscaling provided both clubs with extra money that might not have otherwise been available to them – the very thing that the CLFFP Regulations are supposed to protect against. This allowed both clubs to go on spending sprees that included the retention of two of the world’s most expensive players – Raheem Sterling and Neymar.
In August last year, Javier Tebas, President of Spain’s football league (LFP), alleged that Paris Saint Germain’s purchase of Neymar represented ‘financial doping’, as it was backed by the Qatar State. After similar allegations were made against Manchester City, City Football Group threatened legal action.
Now PSG has appealed against UEFA’s September 2018 decision to reexamine its finances at the Court of Arbitration for Sport (CAS). The CLFFP Regulations were designed to ensure that success in football was determined by the strength of a club, not just the size of its bank balance. It would now appear that the size of a club’s bank balance can be determined by the strength of a club’s legal team.
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