Man City claim seismic victory after Premier League sponsorship rules ruled illegal
Manchester City have scored a huge victory over the Premier League after rules regarding commercial deals were deemed illegal.
In a landmark ruling that is separate from the 115 charges facing the English champions, it was ruled that City were unfairly prevented from agreeing two major sponsorship deals earlier this year.
This is because governance states that commercial agreements between clubs and companies related to club ownership must have a fair market value.
It means the Abu Dhabi-backed city has opened the door to signing significantly larger sponsorship deals with associated parties than previously permitted.
It also means they will be able to claim compensation and costs from the Premier League for abusing their position.
Additionally, other top-flight clubs could now claim compensation if they believe they have been affected.
City had launched legal action against the Premier League earlier this year over associated party transactions (APT) rules, claiming they were anti-competitive.
An independent panel consisting of three retired judges deliberated on the matter. And they concluded that the rules were illegal because they did not take into account the interest-free loans that shareholders grant to clubs.
The panel claims that of the £4bn in total loans in the Premier League, £1.5bn is in loans from club owners and shareholders.
The city had argued that such payments were unfair and not at market value because they were interest-free and, in some cases, did not have to be repaid at all.
This decision will cause major concern among several Premier League clubs, including Arsenal, who rely heavily on such loans, meaning it is likely to lead to a rule change.
If the rules are changed and commercial loan rates are included in these agreements, many clubs could find that they are breaking profit and sustainability rules.
The rules for associated party transactions (APT) were introduced in December 2021 following Newcastle United's acquisition of Saudi Arabia's PIF, before being amended again this year.
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The rules were introduced to maintain the competitive nature of the Premier League, preventing clubs from inflating commercial deals with companies linked to their owners.
However, this latest development could open an almighty can of worms for the Premier League.
While some elements of City's claim were dismissed, the 175-page partial final award gave the champions a major victory.
Manchester City's statement
Manchester City's statement
Following today's publication of the Rule X Arbitration Tribunal Award, Manchester City Football Club thanks the distinguished members of the Arbitration Tribunal for their work and considerations and welcomes their conclusions:
– The Club has been successful in its claim: the rules on transactions between associated parties (APT) have been found illegal and the Premier League's decisions on two specific MCFC sponsorship transactions have been annulled.
– The Court concluded that both the original APT rules and the current (amended) APT rules violate UK competition law and breach the requirements of procedural fairness.
– The Premier League was found to have abused its dominant position.
– The Tribunal has found that the rules are structurally unfair and that the Premier League was specifically unfair in the way it applied those rules to the Club in practice.
– The rules were considered to be discriminatory in their operation, because they deliberately excluded shareholder loans.
– In addition to these general conclusions on legality, the Court has set aside specific Premier League decisions to restate the fair market value of two transactions carried out by the Club.
– The court found that the Premier League had made decisions in a procedurally unfair manner.
– The Tribunal also ruled that there was an unreasonable delay in the Premier League's assessment of the fair market value of two of the Club's sponsorship transactions, resulting in the Premier League breaching its own rules.
