The verdict has been announced in Manchester City’s legal case against the Premier League over the league’s rules on commercial deals involving clubs’ owners.
City, who are owned by the Abu Dhabi-backed City Football Group, had some complaints upheld, with two aspects of the associated party transaction (APT) rules deemed unlawful by a tribunal.
But the Premier League says the tribunal rejected the majority of Manchester City’s challenges and “endorsed the overall objectives, framework and decision-making of the APT system”.
APTs are aimed at the value of sponsorship deals with companies linked to clubs’ owners.
This case is not directly related to the Premier League disciplinary commission which will hear 115 charges against City for allegedly breaching its financial regulations, some of which date back to 2009.
The tribunal – in a 175-page document – ruled that shareholder loans should not be excluded from the scope of APT rules and that some amendments made in February by the Premier League should not be retained.
In this arbitration process, Chelsea, Newcastle and Everton all acted as witnesses for City.
How did we get here?
APTs are commercial deals involving clubs and companies to which they have close ties. Restrictions on fair market values (FMVs) were introduced in December 2021, shortly after a Saudi-led takeover of Newcastle.
The Premier League has the right to assess the value of such deals to ensure they have not been inflated, which could give clubs more to spend under current financial rules.
The rules were changed following a vote in February that was not unanimous. Twelve clubs voted to change the rules, with two abstaining and six voting against the changes.
Those rule changes involved amendments to the definition FMV, and shifting the burden of proof to a club to show a transaction is at fair market value.
The BBC reported in June that City were due to face the Premier League in a legal battle.
The Premier League and Manchester City both said they welcomed the tribunal findings announced on Monday, with each side focusing on the elements in their favour.
What the Premier League says…
The Premier League’s statement said that City “brought a wholesale challenge” to the APT rules and were “unsuccessful in the majority” of the challenge.
It added the tribunal deemed the APT rules to be necessary and that if prices above fair market value were paid then “competition will be distorted as the club would be benefiting from a subsidy”.
The league also said the tribunal had “rejected Manchester City’s argument that the object of the APT rules was to discriminate against clubs with ownership from the Gulf region”.
Its statement also said that, except in the two respects where City won, the tribunal found that City’s arguments were “unfounded, including on any alleged inconsistency in approach as between certain types of clubs”.
What Manchester City say…
City’s statement focused on the two areas where they won, as the club claimed the “Premier League was found to have abused its dominant position”.
It said the club had “succeeded with its claim” and that “the APT rules were found to be unlawful”.
City added that the tribunal found “both the original APT rules and the… amended… rules violate UK competition law… and the requirements of procedural fairness”.
The Premier League champions said the rules were found to be “discriminatory… because they deliberately excluded shareholder loans”.
And the club added “there was an unreasonable delay in the Premier League’s fair market value assessment of two of the club’s sponsorship transactions”.
What’s next?
The Premier League says it will look to change the two aspects that the tribunal ruled against the league on.
That means integrating the tribunal’s assessment of shareholder loans and removing some of the February amendments.
It says it is “conducting a process that can allow the league and clubs to enact those specific changes quickly and effectively”.
