Exclusive economic modelling for assesses whether Manchester City are too big to fail and whether a contagion threat should be factored into any punishment of the club.

You have to go back to 1984 and the US state rescue of Continental Illinois National Bank and Trust Company to pinpoint the moment that “too big to fail” entered the popular lexicon.

More than two decades later, the label was in widespread use again as governments on both sides of the Atlantic raided the coffers to save banks – most notably in the UK, Royal Bank of Scotland and Lloyds Banking Group – during the financial crash of 2008.

In recent weeks its use has spread to football, and in particular discussions of the impact on the wider game if Manchester City were to be dealt severe sanctions after being found guilty on more than 100 counts of breaking Premier League financial rules.

One argument advanced goes something like this: if City are clobbered with relegation from the top division and massive fines, it could quickly render them insolvent. And because they owe hundreds of millions of pounds in transfer fee instalments to other clubs in England and abroad, it could trigger a domino effect that topples innocent teams and further damages the integrity of the game.

It’s a theory that the independent commission currently mulling City’s punishment – while the club pursues in parallel an appeal against the original findings – will have to consider.

But how credible is the threat of contagion? Is it a genuine risk or a last-ditch ploy from those advocating for leniency towards England’s most successful club of the last 15 years? In short, are Manchester City really too big to fail?

commissioned independent economic modelling in an attempt to shed some light on those questions. The report, compiled by Dr Danny F Hill of sports valuation consultancy Virsolus, considers the financial impact on the club of various scenarios, including one or two seasons outside of the Premier League, the size of any fine which may be imposed and the conditions which might be attached, and access to parachute payments.

The findings, while necessarily limited by the finite variety of scenarios modelled, provide the most meaningful indication yet of how much risk City’s case carries to the rest of football. 

How other clubs may be affected if Man City go into financial shock

Self-evidently, clubs who have recently sold players to Manchester City and for whom a portion of the transfer fee remains unpaid could be affected in the event of default. 

According to the analysis, six clubs account for around 85 per cent of City’s estimated transfer instalments for the next two years, with Chelsea the most exposed following their sale of Argentina midfielder Enzo Fernandez for £125m in September this year. 

The other five are, in order of most exposed: Lille, due to their sale of Ayyoub Bouaddi for £86m in August; Everton, following their sale of Iliman Ndiaye for £60m in September; Nottingham Forest, who sold Elliot Anderson for £116m in June; Palmeiras, for the sales of Vitor Reis and Allan Elias for a total of £64m since 2025; and Bournemouth, who traded Antoine Semenyo for £62.5m in January.

Were City to become unable to pay their outstanding obligations to any of these clubs, it could cause liquidity problems that mean they, in turn, cannot meet transfer instalments for players they have signed in recent years. 

In the case of Chelsea, for example, who have spent £345m in the last two years on 10 players, that could create difficulties in paying, for example, Aston Villa, for Morgan Rogers and Emiliano Martinez.

That could, hypothetically, then impact Villa’s ability to pay clubs they owe, such as Southampton, Atletico Madrid, Paris Saint-Germain and Freiburg. And so on and so forth.

“Liquidity contagion is economically plausible,” the report states. But whether City qualify as too big to fail rests on a more drastic outcome: the club falling into administration and dragging others with them. 

And on that point, the report finds no evidence to justify a doomsday scenario, which also rests on the relative solvency of other clubs. “Systemic insolvency is not demonstrated,” it adds. “These relationships do not establish that the resulting payment disruption would be sufficient to cause widespread club failures.”

How Man City’s revenue may be affected

The most extreme form of contagion would require Manchester City to go bust, a prospect raised if they were to be banished from the Premier League either by a heavy points deduction that ensures relegation or, in a move considered less likely, a vote of other clubs to expel them.

The economic modelling by Dr Hill, a US-based Briton and Assistant Professor of Finance at Providence College, estimates the impact on City’s revenue of spending one and two seasons outside the Premier League. The latter scenario could occur if, for instance, they started next season in the second tier with a large negative points balance.

It estimates that City would suffer a £268m hit to their revenue if relegated, a figure that rises to £330m over two years even if they achieve promotion at the first attempt. Were they to spend two seasons outside the Premier League, revenue could suffer by £566m. 

While these are vast sums, the report concludes that they are not necessarily enough to trigger City’s insolvency as long as the club makes cuts, sells players and their ultimate owner, Sheikh Mansour, continues to support them. The latter consideration appears more likely since the Abu Dhabi royal injected a further £100m into City’s parent company last month.

“Overall, the analysis suggests that Manchester City’s financial interconnectedness does not, by itself, establish that the club is too big to fail,” the report says. 

“The more relevant question is whether any sporting or financial sanction would create a liquidity shortfall City could not absorb or refinance, and whether that shortfall would then exceed other football clubs’ and financial institutions’ capacity to manage their own obligations. The model suggests this outcome is conditional, not inevitable.”

It has been widely speculated that any punishment handed down to Manchester City would include a financial penalty of some kind, at the very least in the tens of millions of pounds and potentially in the hundreds. 

But it is not just the size of the fine which is important, the report notes. How the fine is collected is equally if not more significant. For instance, a one-off fine of £200m payable now would hurt the club’s liquidity more – and therefore make it more likely to fall over – than a £300m fine payable over five years.

Parachute payments could also be critical. Expulsion from the Premier League via a vote of other clubs might deny City the downside mitigation benefits that flow to clubs relegated from the top flight by on-field performance. The absence of £100m in parachute payments while out of the Premier League would add to the strain on City’s finances.

The biggest single factor in determining how close City come to insolvency, the report concludes, may be Sheikh Mansour – more specifically, whether he sees the value in continuing to support an asset in which he has already invested billions of pounds.

“This leads to a potentially different interpretation of the ‘too big to fail’ argument. City may be too big to fail because of its importance to its own investors,” it says. 

“From an investment perspective, allowing City to enter financial distress could jeopardise considerably more than the immediate cost of meeting outstanding transfer obligations. 

“The consequences could include deterioration in enterprise value, commercial relationships, sporting competitiveness, geopolitical fallout and the wider strategic value associated with the ownership group’s football investments.” 

So are Manchester City too big to fail? And for who?

As the independent commission mulls how severely Manchester City should be punished, then, this analysis suggests there is no evidence to support fears of a catastrophic chain reaction blowing up other clubs.

There may be important considerations to be made regarding the way in which any fine should be collected but the Virsolus report says that City’s future survival rests more in the hands of the club’s ownership than anything else.

“The central finding is that City’s financial interconnectedness creates the potential for contagion, but its strategic importance to its controlling investors may provide a stronger economic incentive to prevent it,” it states. 

“Paradoxically, the ‘too big to fail’ argument may be more compelling to City’s owners than to the wider football community. This does not eliminate systemic risk but suggests that a serious contagion event would more likely require both a substantial financial shock via the fine size, payment schedule, and payee restrictions, and a failure, withdrawal, or constraint of the ownership and financing mechanisms that would ordinarily absorb it. 

“The critical question is who would find its failure economically more unacceptable.”