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Financial Integrity, Football, Moral Integrity

Celtic now part of Manchester City’s player Development Pathway through Lawwell & Son. Related Party Transactions need to be reported.

Manchester City on 9 August 2018 announced the signing of Australian Daniel Arzani from their fellow City Football Group team Melbourne City.

Brian Marwood City Football Group

Manchester City development pathway

City Football Group driven by Manchester City includes a network with numerous football teams, however at the time Arzani appeared to be going immediately on loan to another club outwith their network, Celtic. Which did eventuate. But as the PR notice puts it this loan move will be part of the ‘development pathway’ for Arzani.

So Celtic is part of the Manchester City ‘development pathway’ and Arzani is only the latest.

Given the size and reach of City Football Group it seems a nonsense that they don’t have a place for Arzani within their own 6 clubs or the 5 other development clubs and that they need to use the Lawwell familial connections to place Arzani at Celtic.

When it was first announced last month that Arzani was possibly going to Celtic it was a complete surprise to their manager Brendan Rodgers. Peter Lawwell and son Mark at the City Football Group appear to have already lined the deal up without consideration of the Celtic manager. 

City Football Group

This financial football behemoth, funded through the royal family controlling the Abu Dhabi emirate controls/has interest in 6 football clubs throughout the world:

Manchester City in England

Melbourne City in Australia

New York City FC in USA

Yokohama F. Marinos in Japan (20%)

Club Atletico Torque in Uruguay

Girona FC in Spain (44.3%)

They also have Player Development/recruitment partner teams with:

NAC Breda in the Netherlands

2 US teams via NYCFC

Atletico Venezuela

CF Peralada-Girona B

It was reported in Feb 2018 of the possibility CFG acquiring 50% of KV Oostende in Belgium. ‘City see a partner in Ostend where they can send (mainly) foreign talents in bulk, particularly ones who are ineligible for work permits in the UK’.

This Group is largely driven operationally by Manchester City. 

Brendan Rodgers Out of the Equation

What did Brendan Rodgers, Celtic’s coach think of Arzani’s arrival? From Ewing Grahame in The Times 27 July 2018:

Rodgers Knows Nothing about Arzani 1

Rodgers does not know about Arzani

Brendan Rodgers sounds a bit upset to say the least. Here was Celtic’s manager kept out of the loop. Not even considered important enough to inform. This during a transfer window where Rodgers would have told the Celtic’s recruitment dept his requirements for the season ahead. Meanwhile Rodgers was informed Arzani’s coming no matter your requirements. Arzani’s payments would impact the player budget even though he appears to have been taken just because he was offered.

How much did the Arzani story start a sequence of Rodger’s press statements proclaiming his disenchantment lead to Celtic dropping out of the ECL qualifiers? Rodgers is in a bind. As they say if you don’t control the circumstances the circumstances will control you.

Mark Lawwell City Football Group

Celtic’s CEO Peter Lawwell’s son, Mark, is City Football Group’s Scouting & Recruitment Manager. It would be unusual that the Arzani offer did not come via this conduit.

Is it possible, since Brendan Rodgers was originally not in the know about Arzani that Peter Lawwell was? Who else could it have been? Was the deal arranged over the Lawwell kitchen table? Although Lee Congerton was named as Head of Recruitment at Celtic in 2017 he seems to be keeping his head down as barbs are traded internally about lack of transfer action this summer.

Scottish football these days is ripe with conflicts of interest (Murdoch MacLennan & the Celtic INM plc connections). Are Celtic’s loan deals with Manchester City/City Football Group another? Celtic have had a few Manchester City loanees over recent years, all presumably through Mark Lawwell.

Cui Bono – So who benefits?

Patrick Roberts Loan Example

Signed by City in July 2015, Roberts had 1 league appearance then after 6 months was loaned out to Celtic for the next 3 seasons. The last season he had 8 appearances for Celtic due to injury. 

It is not known what the details were in the deal between Celtic and Man City were but Celtic were acting as marketing agents for Manchester City. Roberts was on public view so if he turns out good then City either take him back as their player or on sell him. 

Celtic get the benefit of a higher class of player, if fit. It is not known if they get any on-selling commission after developing the player for 3 years.

A week ago Brendan Rodgers was talking about Roberts coming back to Celtic but even Roberts has had enough deja-vu. Is this the ‘Development Pathway’ that Arzani can look forward to?

Is it good for Scottish and European football competition?

Whatever Financial Fair Play run by UEFA was supposed to achieve it’s not working. Large English clubs are banking young players, and over stocking them well beyond their needs as a club, then farming them out as loans. Fair enough when they are part of your ‘network’ but having large networks then using familial connections to extend to other clubs?

Rangers have, due to Steven Gerrard’s Liverpool links, signed a few loans but those players had been brought up Liverpool’s academy not signed like Arzani then placed directly on loan. Mark Allen, Rangers Director of Football and responsible for loans/transfers even though arriving from Manchester City has signed much needed permanent centre-backs while steering clear of the Manchester City surplus.

In the interests of Sporting Integrity the SPFL/SFA/UEFA footballing authorities need to know everything is above board:

  1. How this Arzani’s deal is structured? Who is paying Arzani’s wages, bonuses, image rights and where? Is City Football Group or a subsidiary subsidizing any payments by Celtic?
  2. Do Celtic get any on-sell commissions on City Football Group loan players?
  3. Does Peter Lawwell or his son Mark Lawwell at City Football Group get any commissions/bonuses linked to these deals? We’ve seen Dundee United destroyed when Celtic old bhoy, Jackie McNamara’s commission driven deals to sell 3 of their top players to Celtic ruined a competitive team then challenging Celtic.
  4. Do the SPFL/SFA/UEFA need to update it regulations concerning clubs in the same competitions acting in concert or a team having related party transactions with another?

Related Party Transactions

Perhaps both Celtic PLC, public listed, and City Football Group, private, need to highlight these transactions in their annual accounts as per the International Accounting Standard, IAS 24?

Related Party

As the second bullet point says a related party with ‘significant influence’ can be a person or close member of that person’s family. Peter Lawwell, as CEO of Celtic PLC appears to be in charge of their transfers while Mark Lawwell is City Football Group’s Scouting & Recruitment Manager heavily involved with their player acquisition & disposal.

Celtic’s last annual report does have a Related Party Transaction section but with no mention of any Manchester City transactions.

SFA and SPFL rules may need updating

The SFA has team cross ownership rules which restricted Mike Ashley increasing his shareholding in Rangers while controlling Newcastle Utd. However as the Related Party Transaction accounting rules show there does not need to be shareholdings involved to influence clubs.

Corporate regulators have anti-competitive price/market fixing regulations restricting collusion even just based on behaviour and no evidence of meetings between parties. It seems strange that there are none between footballing companies considering UEFA’s fight to maintain the integrity of their competitions.

If there is to be any discussions of related party transactions at the SPFL Board then indeed both Mr MacLennan and Mr Lawwell will have to recuse themselves from any discussion of Celtic and Manchester City acting in concert.

Murdoch MacLennan, SPFL Chairman, doesn’t seem to know a conflict of interest but he should know what a related party transaction looks like. That’s one of the problems Mr MacLennan is currently dealing with the corporate regulator at INM plc regarding a related party transaction of Celtic shareholder Denis O’Brien. That was the valuation conflict within the, Denis O’Brien controlled, INM plc, involving the never eventuated acquisition of Newstalk, another Denis O’Brien controlled company.

Of course the SPFL said there would never be a conflict of interest in having Mr MacLennan as chairman at both INM plc and the SPFL.

©footballtaxhavens.wordpress.com 2018 CC-by icon

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