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The Label
Every spending limit in professional sport rests on a quiet assumption. The rule does not measure where money came from. It measures what the club says the money is. A pound or a dollar that arrives labeled “owner investment” is counted one way. The same pound arriving labeled “sponsorship revenue” is counted another way. If the label can be chosen, the limit applies only to those who label honestly.
Two cases decided within five weeks of each other, one in English football and one in the NBA, turn on exactly this point. This series reads them together. This first post sets out what each system was built to limit, and what each one trusted.
I. The Premier League: Equity Versus Revenue
The Premier League's Profitability and Sustainability Rules took effect ahead of the 2013-14 season. They let a club lose up to £105m over a rolling three-year window, but only about £15m of that could be a loss the club simply absorbed. The remaining £90m had to be covered by secure owner funding, meaning equity. UEFA's Financial Fair Play rules, which Premier League clubs were also bound to follow, worked on a similar principle of capping how far owner money could cover losses.
The design logic is clear. An owner may invest, but only up to a limit. A club may spend what it earns. Genuine commercial revenue — sponsorship, ticketing, broadcast, merchandise — expands the spending envelope without limit, because the market, not the owner, is paying. The rule therefore depends entirely on the line between those two kinds of money.
On September 29, 2026, the Premier League announced that an independent commission had found Manchester City arranged “sham” commercial deals with sponsors between 2009-10 and 2017-18. According to the league, those sponsors paid only a portion of the stated fees, and the rest was funded by Abu Dhabi United Group Investment & Development Ltd, the club's owner. The league says the effect was to inflate revenue and reduce costs by more than £900m so that the club appeared compliant. The commission found that, with accurate reporting, City would have breached both the Premier League's and UEFA's limits by a very large margin.
One feature of the charges deserves attention. The profitability and sustainability charges covered only 2015-16 to 2017-18, and the UEFA-compliance charges began in 2013-14. But the charge for providing accurate financial information ran from 2009-10 across all nine seasons. The label was policed even before the limit it was meant to defeat existed. The commission found that City's accounts for all nine seasons failed to give a true and fair view, and that the club concealed its finances from its auditors and football regulators.
II. The NBA: Salary Versus Endorsement
The NBA's version uses different machinery for the same purpose. A team may pay a player only within the salary cap. Salary cap circumvention, as the league's collective bargaining agreement frames it, is a team using a third party to pay a player more than he could be paid under the cap. Players are free to earn outside income from genuine endorsements, so the rule again depends on a label: is a given payment real endorsement income, or is it salary routed through someone else?
On September 2, 2026, the NBA announced penalties against the LA Clippers and Kawhi Leonard after a Wachtell Lipton investigation. The league said the team broke the rules by initiating off-court income opportunities between Leonard and four companies doing business with the team — Aspiration Partners, Boingo Wireless, Daktronics, and Lockton Insurance — and by facilitating endorsement agreements between them. The penalties included a $30 million fine, the loss of five first-round picks, and a one-year suspension for owner Steve Ballmer; Leonard was fined $700,000. The Clippers publicly rejected the findings.
III. The Trust Assumption
Set the two findings next to each other and the shared structure shows. In both, the party the rule limits also controlled how a payment was described. In both, a third party stood between the money and its destination. In both, the described label was the thing the limit ultimately tested. Using the four FSA layers:
| Layer | Manchester City (as found) | LA Clippers (as found) |
|---|---|---|
| Source | Owner funds (ADUG) | Companies doing business with the team |
| Conduit | Sponsors paying a fraction of stated fees | Endorsement agreements with Leonard |
| Conversion | Equity recorded as commercial revenue | Salary-equivalent value labeled as endorsement income |
| Insulation | Misstated accounts; auditors and regulators misled | Findings describe a paper trail built to look compliant |
The two cases differ in where the money lands. At City it lands in club revenue and distorts the club's apparent compliance. At the Clippers it lands in a player's pocket, outside the cap. But the mechanism is the same: money's true category was replaced by a more convenient one, and the system had no independent step to test the replacement.
That is the question the rest of this series asks. If a rule's entire force depends on a classification, who verifies the classification, and when?
Next, Post II: Two Cases, One Mechanism. A side-by-side reading of how the money moved at each.
Randy Gipe · Claude / Anthropic · 2026 · Sub Verbis · Vera
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