Cheques and the City: Premier League disgrace

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1:03Rosie Blau:The Economist.

1:10Rosie Blau:Hello and welcome to The Intelligence from The Economist. I'm Rosie Bloor. And I'm Jason Palmer.

1:19Rosie Blau:Today on the show, Russia's grey zone attacks become more brazen. And they're small, they're cute, and they're going global. Japan's Chikawa.

1:35But first... Manchester City are still alive here. Balotelli, Aguero!

1:52Rosie Blau:Sergio Aguero's 94th minute goal for Manchester City in 2012 is among the greatest moments in football history. It won the Premier League title, not just in the dying moments of the game, but of the whole season. That goal has become as infamous as it is famous. Man City is the most successful English team of the past 15 years We are City! Super City! Now an independent commission has found it guilty of breaching over 100 Premier League rules

2:26Sonny Loughran:The legal case against Manchester City is by far the most complicated in the history of English football

2:32Rosie Blau:Sonny Loughran is a Britain correspondent

2:36Sonny Loughran:It's eight years since allegations of financial mismanagement first arose, and it's two years since the Independent Commission had a closed-doors hearing into those allegations. With more than 700 pages worth of witness statements submitted, it's been dragging on for a while. And it could also prove to be the most consequential case in English football.

2:57Rosie Blau:Sunny, years' worth of investigation, hugely complicated as you say. Give us a summary. What's at the heart of this judgment?

3:05Sonny Loughran:So in football, there are lots of rules around spending. The relationship between money and success is famously quite linear. And most of the charges against Manchester City relate to attempts by the club to circumvent regulations that prevent owners from pumping vast sums of money into their club by limiting what teams can spend relative to their revenue. According to the verdict, City's ownership evaded those rules with sham sponsorship contracts that allowed the club to overstate its income by more than£830 million, money that enabled City to buy players who made a mediocre club record-breaking.

3:43Sonny Loughran:Manchester City's chief executive, Ferran Soriano, has branded those claims a conspiracy theory. But in the decade 2020, the club, which was far from the global brand it is today, recorded£600 million more in commercial income than Arsenal, Chelsea or Liverpool.

4:00Rosie Blau:Give me a bit of context here. Man City was mediocre. It became record-breaking. How did that happen? And tell me about its owners.

4:09Sonny Loughran:So for decades, Man City were the second team in Manchester. Kids were picked on at school for not supporting Manchester United, who they had to watch win all of the trophies and break all of the records. In 1998, City were playing in the third tier of English football. But that all changed in 2008 with the takeover by the Abu Dhabi United Group. Its majority owner is Mansour bin Zayed Almayan, who is Vice President and Deputy Prime Minister of the United Arab Emirates. That was really the catalyst for unprecedented success. And the allegation is that inflated sponsorship deals allowed the group to pump money into the club so that they could buy the big name players that made them such a success.

4:51Sonny Loughran:And it worked. City have won 24 trophies, including eight Premier League titles since the takeover. They've even broken the Premier League points record.

5:00Rosie Blau:What's the club said about these rulings?

5:03Sonny Loughran:Well, they strongly deny any guilt. In a statement, they said that they have a comprehensive body of irrefutable evidence proving their innocence. It has until Friday to lodge an appeal, which everyone expects them to do and a separate panel will then have 12 weeks to consider it. But the most significant decision is still to be made. The Premier League says that sanctions will be addressed in a separate hearing.

5:27Rosie Blau:And what kind of penalty could Manchester City face?

5:31Sonny Loughran:Well, nothing's off the table. Frival fans are demanding that Man City be stripped of its titles, forced out of the Premier League and handed nine years of points deductions to atone for nine years of financial doping. Something of that scale seems the most likely. The Premier League has handed out four and six point deductions for single breaches of its financial rules, and we're talking about more than 100. Given the scale of Man City's alleged cheating, serious punishment seems the only way for the Premier League to emerge with its reputation intact. But we have no time frame for that decision.

6:05Sonny Loughran:And when it comes, City will also be able to lodge an appeal.

6:09Rosie Blau:Are other Premier League clubs also likely to be out for compensation?

6:14Sonny Loughran:Well there are rumours that they've been lining up these cases in anticipation of this decision so yes and that's the real doomsday scenario for City. So in July Burnley successfully sued Everton who had been found guilty of a single breach of the league's financial rules for more than 30 million pounds worth of lost income. Their argument was that Everton had cheated to employ the players who kept them from relegation and sent Burnley down. The difference is that while Everton were competing at the bottom end of the table, City tends to compete at the top where there's a lot more money involved.

6:48Sonny Loughran:So Manchester City could soon have multiple clubs suing them to the tune of hundreds of millions of pounds.

6:54Rosie Blau:What does this ultimately mean for the Premier League, which is one of Britain's best exports?

7:01Sonny Loughran:Well, it's not great. The business model of the Premier League depends on being attractive to foreign investment. Costly lawsuits, not to mention financial regulations which limit how much you can invest, are anything but. These financial fair play laws were introduced to stop dodgy owners from loading clubs up with unsustainable levels of debt. But they increasingly serve to prevent the owners of mid-sized clubs from investing the money that their teams need to compete at the top. so the Premier League may succeed in upholding its rules-based order whether those rules are worth having is another matter

7:35Rosie Blau:and Manchester City fans?

7:37Sonny Loughran:I think we can feel some sympathy for Manchester City fans maybe not the young ones who jumped on the bandwagon when they were winning everything but there's a big core of City supporters who have followed the club through years of crisis watching them lose on miserable nights in Grimsby only to find themselves crowned European champions in Istanbul all. Supporting a football club is an act of faith and theirs seem to have been rewarded. They made it to the promised land. Now they could face a return to the footballing wilderness which could end up being the biggest test of their faith yet.

8:14Rosie Blau:Sunny, thank you very much.

8:16Sonny Loughran:Thanks Rosie.

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10:19Rosie Blau:On a NATO mission earlier this month, Italian jets shot down an explosives-laden drone that had flown into Lithuanian airspace from Belarus, as Italy's defense minister Guido Crosetto explained. A month ago, Italian pilots have intervened and they have destroyed a threat, probably from Russia. Note that word, probablemente. He said the threat had probably come from Russia. There are plenty of other so-called grey zone acts that can probably be blamed on Russia. They've been going on for years, but they ticked up after Russia's full-scale invasion of Ukraine. Recently, our international correspondent Jonathan Rosenthal says they've ticked up further still.

11:04Russia seems to be trying to pursue a couple of related objectives, making it harder for Europe to support Ukraine, damaging Europe's will to keep supporting Ukraine, and lastly, trying to damage Europe's unity and most of all, the NATO Article 5 guarantee that says that an attack on one is an attack on all.

11:26Rosie Blau:And so tell me the full range of the kinds of attacks that we're talking about here. So there is a really wide range of activities that fall in here and they range from things like cyber attacks, some fairly low-key sightings of drones that just seem to be doing reconnaissance, very hard to attribute who they belong to, up to greater and greater risk and escalation. Parcel bombs that have been found on cargo planes. We've seen attempted assassinations. We've seen plots against executives of European arms firms, all the way up to some quite recent incidents where, for instance, in Leipzig in Germany, a drone armed with military-grade explosives was flown into a cargo plane, fortunately not exploding.

12:08Rosie Blau:And you hinted there that the issue here is attributability. We don't know for sure Russia is behind this and that's what makes it all very gray zone. Again there's a kind of range here. So in some cases Russia is clearly sending a message. The attempted assassinations in the UK and the assassination of Russian defectors going all the way back to 2018 and then 2006, where they used nerve agents, Novichok or radioactive poisons, that was clearly sending a message saying, defect from us and we will find you, into a lot of other stuff that is very gray zone. So the fact that it is difficult to attribute in many cases and or deniable is part of the strategy.

12:51Rosie Blau:How do you mean? Why is being slightly oblique better than just being on the nose. So one of Russia's objectives here is to spread fear and uncertainty without provoking a full response from the West. Part of the deniability is that genuine acts by Russia can be disclaimed and potentially not provoke a response. But Russia also benefits from fear and uncertainty in the sense that it can get blamed for all kinds of things that it may not have been behind. So in Europe, we saw massive disruptions of trains in the Netherlands where saboteurs had put cables and steel pipes onto the train tracks and disrupted train travel.

13:30The government hasn't yet said whether Russia is involved and there is some speculation that it may just have been angry farmers who were protesting about other issues. Either way, Russia benefits because that uncertainty and that fear is a win for Russia.