La Liga president Javier Tebas accuses Man City of trying to circumvent financial rules
La Liga boss Javier Tebas has accused Manchester City of trying to circumvent football's financial fair play rules by hiding their costs in affiliated companies and likened the situation to the infamous Enron accounting scandal of 2001.
Speaking to journalists at The Financial Times' Business of Football Summit on Thursday, the 62-year-old Spaniard said La Liga filed a complaint about the club's alleged behaviour with the European Commission in July 2023 and claimed the Brussels-based body is investigating the case.
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Manchester City have declined to comment.
The Spanish league made the complaint a week after the commission introduced a rule banning companies that operate within the European Union (EU) from receiving foreign subsidies that distort the internal market.
Tebas said that while the English champions are obviously no longer an EU-based company, they still play in European competitions and have 'commercial activities' within the single market.
Tebas, who has a long history of contentious statements, made his remarks in response to a question about City's dispute with the Premier League over its associated party transaction (APT) rules, which are primarily meant to stop clubs from banking inflated sponsorship deals.
'What worries me is not the APTs, what worries me is the companies outside the City Football Group (Manchester City's parent company) where the City expenses are sent,' said Tebas.
'They have a scouting company, a marketing company. That's where they have very high expenses. They invoice City for less money. City have costs that are less than if they didn't have this circle of companies.
'All they do is they think about how they can avoid the rules and regulations. We have reported this to the European Union with facts and figures.'
Tebas said that La Liga decided to file a complaint with the EU's executive arm after it brought in its Foreign Subsidies Regulation, as the Spanish league believes Manchester City are subsidised by Abu Dhabi-based companies and funds with close links to club owner Sheikh Mansour, the vice president and deputy prime minister of the United Arab Emirates.
'Taking into account their relationship with the sovereign fund of Abu Dhabi, we asked for these things to be checked,' said Tebas.
'It's really important that all clubs are subject to transparency rules and governance and real competition in the financial and sporting side of their business. If it's not controlled — and we do control — it means football ends up in the hands of states.'
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He then likened Manchester City's alleged behaviour to the actions of American energy company Enron, which filed for bankruptcy in 2001 after reports emerged of widespread internal fraud over a number of years. The case, which was the largest bankruptcy in U.S. corporate history at the time, also led to the collapse of Enron's auditors, Arthur Andersen.
'You remember the case in the U.S., the Enron case,' said Tebas.
'They put losses into different companies. These are similar cases.'
Tebas said La Liga has not had any response from the European Commission.
'So it must be in the investigation phase,' he said.
Tebas, a lawyer by trade, explained that La Liga has previously filed a similar complaint against Paris Saint-Germain on the basis that the French champions' Qatari owners are distorting the EU market via inflated sponsorship deals with Qatari companies.
La Liga announced that complaint in a press release in August 2023 but there has been no further news on its progress.
The Athletic has contacted the European Commission for comment.
When asked if La Liga was also concerned about Newcastle United, who are majority-owned by Saudi Arabia's sovereign wealth fund, he said the Premier League club have not done anything to warrant a complaint yet.
While Manchester City have declined to comment on Tebas' claims, their accounts are a matter of public record and there is no obvious sign of the club using a web of related companies to hide their costs, although they do share senior staff with City Football Group, their parent company.
This, however, is not against football's rules or unique, as several leading clubs are now part of multi-club groups that share resources.
It should also be noted that Tebas' remarks have nothing to do with Manchester City's other dispute with the Premier League, the so-called '115' case. A result in that case is expected in the coming weeks.
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Of course, it's a big role, but for our maison, I believe it brings more consistency — in the product and in the communication. It's a good thing to have more coherence, and to have one designer, one vision for the house. It is a lot of work, I can see that. He will have many shows and a lot of collections to work on. But he has an amazing team. We truly have ateliers that are exceptional — the best in the world. He's going to work closely with them. IA: The 'One Dior' strategy is something that you've been working on for some time. Not only to achieve alignment between the men's and women's fashion collections, but also alignment with Dior beauty. Can you explain 'One Dior' and why it is important for you as CEO? DA: I think that the consumer doesn't know that there's a CEO of fashion and a CEO of beauty. For the consumer, Dior is one brand. Whether you see a makeup ad, a perfume ad, or a fashion ad — it's all Dior. So I think the 'One Dior' strategy is very important. 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It was also the first time a woman designed for Dior. As a woman CEO, with the two of you leading the growth of this business, what do you think Maria Grazia's legacy is at Dior — and what did it mean to have a woman designing for this brand? DA: I really [want to] thank Maria Grazia so much. She impresses me every day. She's very strong, very passionate, and has such a clear vision. She developed the collections at Dior in a way that was truly remarkable, as you said. She put women at the centre of her work. For the first time, women had a voice, and also the women artists. I remember her first show. I was sitting next to Jennifer Lawrence and she already had the J'Adior shoes and the jeans and the t-shirt and the bar jacket that was with an easier fit. And you know, when you see things for the first time — because at the time I was working at Vuitton — it takes a minute, like hearing a song for the first time that you know you're going to love. And I remember thinking, 'Wow, this is so cool.' It was such a new way to present Dior. She continued to develop that with a very clear idea of what she wanted to do, empowering women, empowering women artists, empowering women photographers. She's really done so much for her house. She really has a vision. I really admire her and really loved working with her. She's super inspiring. IA: What changes now? Because once again, it's a man designing the women's collection. Maria Grazia had a real connection with women — and with a very strong, diverse female customer base. How do you make sure that connection is preserved? DA: Maria Grazia created a beautiful body of work and did so much for women. And Jonathan designs both womenswear and menswear. He also has many women in his team. As you know, when you have a studio, you have designers across all categories — bags, ready-to-wear, haute couture, shoes — and each category often has its own dedicated designers. It's a collective effort. There are also many women who inspire him. And yes, of course, it will be different — but I think that's what's interesting. And it's also my responsibility, as CEO, to know when it's time for change — and to make that change happen. IA: It took some time for all of this to be revealed ... the news had been circulating in the industry for a while — there was a lot of speculation that these changes were happening. Why did you decide to announce things in stages? Why did it take so long? DA: It's a good question. Well, we talked a lot with Maria Grazia, and we thought that it would be great for her last show to take place in Rome, her hometown. I think for her, it means a lot personally. She wanted it to be something joyful and so we agreed that we would announce that she decided to leave after her show in Rome — and not before. So out of respect for her, we decided to do that. That's why it took a little bit of time. What Luxury Customers Want IA: The luxury industry is experiencing a sharp downturn, as luxury customers' preferences are changing. From your perspective, how are they changing? What are luxury customers — particularly women — looking for now? DA: You know, in every industry, you have cycles. And it's in the tougher moments that big innovations or inventions happen. If you take the history of Christian Dior — the New Look was created in 1947, after the war. It was something totally new. So I think that, yes, big inventions often come during these cycles. As for the luxury customer — it's hard to generalise — but I think they're looking for authenticity. Quality is something that's extremely important: quality in the manufacturing, in the products. And also, having products that are iconic. We have a lot of iconic products, like the Bar jacket, the Lady Dior, just to name a few. So yes, everything moves in cycles, and I'm sure new things are going to be invented and created. 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We have [Deputy CEO] Pierre-Emmanuel Angeloglou, whom I worked with at Vuitton. He arrived at Dior on April 15. We also have a new industrial director Nicolas Carré who comes from Louis Vuitton, and chief industrial officer Giorgio Striano looking over all the activities. Of course, Jonathan is also going to bring a lot of newness with his creativity. It's hard to speak about his creations, I think he should speak about it, it's going to be better said that way. IA: Earlier, you said all industries have cycles. In your view, is the current issue cyclical, or is there also a structural issue in the way the luxury industry works that needs to be addressed? DA: I'm very optimistic about the future, and about this new direction and vision that Jonathan is bringing — especially in terms of connecting with customers. As I was saying earlier, it's all about the product — but stores are also extremely important. The service, the decoration of the stores — it's all part of the mix. We're opening a store in New York in July, on the corner of Madison and 57th. That's going to be a very big message for the American market. It will be a beautiful store, almost the size of the Avenue Montaigne store. We're also opening a store on Rodeo Drive in September — so this year, in terms of retail, is really the year of the American market for Dior. Having those stores — like Avenue Montaigne, and the new ones in New York and Rodeo Drive — is extremely important for the development of our maison. They give a full vision of the brand: the men's collection, the women's collection, perfume, jewellery, and even some restaurants. It's where you really understand the full Dior universe. And I think the attention to service, the way you're welcomed into the store — is going to be very, very important for us. You know, Dior still has very big potential. The name alone is magical. Jean Cocteau said: 'ce nom magique qui melange Dieu et or' IA: A mix of god and gold? DA: Yes, Dior is a magical name that is known all over the world. We've grown a lot, but there's still a lot more growth potential at Dior. This interview has been edited for length and clarity. Disclosure: LVMH is part of a group of investors who, together, hold a minority interest in The Business of Fashion. All investors have signed shareholders' documentation guaranteeing BoF's complete editorial independence.
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Cyberattackers will target any industry with high transaction volumes, making fashion an appealing target. Plus, because most retail giants operate their e-commerce storefronts on years-old custom platforms that are likely outdated, they are particularly vulnerable, said Juan Pellerano-Rendón, chief marketing officer at e-commerce software start-up Swap. 'A lot of times these larger conglomerates have IT teams, and they're updating their website regularly, but security might not always be at the top of their list,' Pellerano-Rendón added. Retailers that operate with thin margins have historically been slower to invest in cybersecurity over tools like a website redesign that can immediately drive revenue, said Sam Rubin, senior vice president of consulting and threat intelligence for Unit 42 at cybersecurity firm Palo Alto Networks. 'You could spend several million dollars on cybersecurity and feel safer and be safer, but what's going to show up on your P&L is greater operating expenses without a necessarily highly visible tangible benefit,' Rubin said. 'Sometimes that does get neglected in favor of driving top line growth in business.' How should retailers respond? When a company is hacked, they often have no choice but to shut down services until they can find the culprit and boot them out of their network. Preventing an initial cyberattack can be a near impossible task as cyber criminals' tools become more advanced and accessible. Many retailers have increased cybersecurity measures in recent years, specifically around payment processing, Beckner said. Customers' financial information wasn't compromised in many of the recent attacks, which is the scariest violation for many customers and therefore a natural priority for companies to prevent. To lower the risk of repeat offenses, retailers have to 'assess where there might be existing vulnerabilities in your IT systems and services, and patch and upgrade those where they existed,' Beckner added, including adding multi-step authentications for company log-ins and conducting additional training for employees across the organisation. The latest run of cybersecurity hiccups could also push major retailers to make big personnel changes such as hiring heads of security (if they don't have them already), according to Pellerano-Rendón. They might also consider using more e-commerce services from software giants like Shopify that routinely update their software, making it more difficult to infiltrate, he added. Companies can institute drills where they work with third party firms to simulate an attack to better assess the strength of their existing systems and what additional processes they need to implement, said Steve Ross, director of cybersecurity, Americas at S-RM. In the aftermath of an attack, retailers also must do damage control in order to make sure their customers feel safe buying from them again. Shoppers today are aware that technology violations occur and are outside of a company's control, 'and not necessarily that Victoria's Secret or Marks & Spencer has betrayed their trust in any way,' Pellerano-Rendón said. Still, retailers need to tell customers whose personal information may have been compromised exactly which steps they've taken to protect their data down the line. 'It really comes down to making sure you're communicating … and having that plan in place to quickly bounce back,' Beckner said.
