Are Manchester City too big to fail? Here’s what economic modelling says

In an investigation into whether Manchester City are too big to fail, economic modelling for City AM has been commissioned to assess the potential contagion threat associated with severe sanctions against the club. The label "too big to fail" first entered the public consciousness in 1984 following the US state rescue of Continental Illinois National Bank and Trust Company.

It gained renewed attention in the wake of the 2008 financial crash, with governments worldwide intervening to save banks. Recently, the concept has been applied to football, particularly in discussions surrounding the impact of sanctions on Manchester City following their 107-count guilty verdict for breaking Premier League financial rules.

The modelling, conducted by Dr. Danny F Hill of Virsolus, aims to shed light on the risks contagion poses to the wider football ecosystem.

The report considers various scenarios, including Manchester City spending one or two seasons outside of the Premier League, the size of any imposed fines, and the potential access to parachute payments. It identifies six clubs, accounting for approximately 85% of City's estimated transfer instalments in the upcoming two years: Chelsea, Lille, Everton, Nottingham Forest, Palmeiras, and Bournemouth.

If City were unable to pay these clubs, it could lead to liquidity problems, potentially affecting other clubs as well. While the report acknowledges the economic plausibility of such contagion, it also finds no evidence to support the notion of systemic insolvency. Instead, it suggests that Manchester City's financial interconnectedness may not be sufficient to conclude that the club is "too big to fail."