What future for City Football Group?

For years, CFG has been viewed as the gold standard for multi-club networks. It still is, having housed so many of the game’s top executives along the way.

While City dominated English football and clubs around the world came scavenging for their staff, it carried that tag unabashed. But after the judgment delivered by the independent commission that deemed City’s success was partly built on inflated revenue from “sham” commercial contracts to the tune of over £900million ($1.19bn), what does the future hold for the rest of the group?

Manchester City’s on-pitch success has been the veneer behind which CFG has existed. The leaders at the Premier League outfit, namely chairman Khaldoon Al Mubarak and chief executive Soriano, have been effective at presenting City as a well-run, profitable club. They recorded four profitable years in five between 2019 and 2023, and their player trading, particularly the conveyor belt of academy talent, has been the envy of many teams.

City account for over 70 per cent of the revenue generated by CFG, but the global network they spearhead has haemorrhaged money ever since its inception in 2013. Composed of 44 subsidiary companies, the most recent accounts show a loss of £292million for 2024.

There is no limit on the losses CFG, as a multi-club holding company, can report. The umbrella group is not subject to the Premier League’s profitability and sustainability rules (PSR), nor European football governing body UEFA's financial sustainability regulations.

UEFA operates a 'reporting perimeter' that means if there are costs that contribute to the club (City) but are housed in a different legal entity (CFG), they must be included in that particular club’s submissions. As a result, for many years, City have been reporting a different (higher) loss figure in their standalone accounts than they do to UEFA, as the latter includes non-playing staff costs recorded in CFG’s books.

The setup has acted as a convenient gully for costs. Although Manchester City report the higher numbers in CFG to UEFA, it creates an opaqueness in which it is difficult to tell where City end and CFG begins.

What could that mean for the future of CFG? Manchester City continue to vehemently deny they breached the Premier League's financial rules and have submitted their appeal against the judgment, but if they exhaust the appeals process and are unable to overturn the main charges of trumping up commercial deals, it could lead to major sporting sanctions.

City becoming a pariah club would have wider ramifications. Every possible outcome is on the table currently, with the independent football regulator having the power to force owners found guilty of wrongdoing to divest by a certain date. But there are political considerations to such an extreme measure, given the huge investments made into the broader Manchester economy by the UAE and ADUG, and how that links them to the UK Prime Minister Andy Burnham, who was Greater Manchester mayor for part of the period in which foreign investment fuelled the regeneration of the east of that city.

If they were to sell Manchester City, would they want to retain the rest of CFG? Could it survive as an entity, or would it be broken up and sold off as separate pieces? Finding a buyer for the entire network of 12 clubs — CFG sold its majority stake in Mumbai City this year amid concerns about the viability of the Indian league — is not a straightforward proposal.

Not all of the CFG teams serve the same purpose. Each one is put into buckets with definitive aims. Melbourne City are a performance club designed to win. Lommel are a development side intended to improve players. Shenzhen Peng City are a commercial operation geared towards growing revenues.

CFG realised it did not have the legacy fanbase of Liverpool and Manchester United, so created commercial solutions and partners to give it relevance in other world markets. Some of the countries in which it purchased clubs — India, China, Brazil — aligned with ADUG and Silver Lake's foreign direct investment and allowed it to capitalise on growing markets.

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The Political Economy of Football V2

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