Manchester City have been accused of engaging in an Enron-style financial deception by the president of La Liga, Javier Tebas.
Tebas said the Spanish league filed a complaint against City with the European Commission in the summer of 2023, which he says the Commission is investigating. City have not commented on Tebas’s allegations, but club sources are aware of them and strongly deny them.
Tebas claims City used related companies in the United Arab Emirates to conceal losses and thereby improve the club’s own balance sheet, comparing it to the Enron scandal. Enron executives were found to have gained millions by using a network of partnerships to create false profits and hide the company’s true debt.
Tebas said in a press conference at the Financial Times Business of Football Summit: “City have a lot of companies in their group which lie outside the City Football Group structure, additional companies where they allocate their expenses. These other companies incur the losses, not the club itself. We have reported them to the European Commission. We have the facts and figures.
“We asked for City to be scrutinized. It’s very important that all clubs adhere to the same transparency rules and governance on both the sporting and financial aspects. The City case is one where we believe they have transferred the losses to companies not officially part of City Football Group.
“Do you recall the case in the United States? The Enron case. What they did was shift their losses to different companies. Well, it’s a similar scenario.”
Tebas added: “They [City] have a scouting company, a marketing company. That’s where they have very high expenses. They bill City for less money. City have costs that are lower than if they didn’t operate within this network of companies.”
Asked about the status of the complaint, Tebas replied: “I think it is in the investigation phase. We haven’t received a response, so it must be in the investigation phase.”
City declined to comment, but sources close to the club said Tebas has a long history of criticizing City. The club is believed to strongly deny the allegations, and sources pointed to the club’s accounts, which are a matter of public record, as evidence of no wrongdoing. Details of La Liga’s complaint, seen by PA, allege City’s financial mechanisms cause a significant distortion in the internal market of the European Union.
The complaint was filed under European regulation governing state subsidies, on the grounds that City is alleged to have received foreign subsidies from the United Arab Emirates. La Liga alleges this allowed the club to strengthen its competitive position and caused significant distortions across various national and EU markets.
These foreign subsidies, La Liga alleges, enabled the club to sign top-tier players and coaches far beyond what would be achievable under normal market conditions and secure sponsorship revenues at levels that do not correspond with fair market value. This, in turn, La Liga alleged, enhanced the club’s sporting performance while also affecting the recruitment capabilities of rival clubs.
The claims from Tebas emerge at a time when City is separately awaiting a verdict from an independent commission after being charged by the Premier League in February 2023 with more than 100 breaches of Premier League rules, which they vehemently deny.
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