Why Manchester City's sponsorship victory is a blow to Arsenal and Liverpool with the Premier League in a 'civil war' over the ruling

Manchester City's victory in its legal battle against the Premier League over associated party transactions (APT) will be bad news for its rivals.

After a lengthy tribunal, the panel of three retired judges decided that the top flight APT rules are 'illegal'.

City launched the challenge earlier this year but it was not directly related to its ongoing case with the top flight. 130 alleged violations of financial regulations.

Rather, it related to APT rules that were introduced after Saudi Arabia's Public Investment Fund completed a majority acquisition of Newcastle in October 2021.

The regulations are designed to prevent sponsors linked to club owners from investing money above fair market value as a way to circumvent the Profit and Sustainability Rules (PSR).

City, which has extremely close ties to the United Arab Emirates, argued that these rules were anti-competitive and, in that sense, won because the panel ruled that certain aspects of the APT rules were “illegal”.

The Citizens have had two recent agreements blocked, and can claim damages for them, just like any other party that has been vetoed by the APT.

On the face of it, this is very good news for City, but it could actually be worse for Arsenal. Liverpool and other clubs.

Here, speakSPORT.com explores the implications of City's victory.

Why is Manchester City's sponsorship victory a blow to Arsenal and Liverpool?

talkSPORT understands that Arsenal and Liverpool are among the clubs unhappy with the news that the Premier League's APT rules have been deemed illegal.

Meanwhile, Newcastle, Everton and Nottingham Forest They supported Manchester City's case, meaning there is a division in the league at boardroom level.

Indeed, the Gunners and the Reds provided evidence in support of the top flight, while the Toon and Chelsea provided the same for the city.

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Of course, the reasons why Arsenal, Liverpool and others will suffer are quite clear.

The Gunners and Reds are owned by very rich Americans, but have no real connections to state sponsors.

Meanwhile, Newcastle and City do, so if the APT rules are changed or modified, these clubs may start signing potentially inflated sponsorship deals.

This would put Liverpool, Arsenal and most other teams in the league at a significant disadvantage.

However, there is another very important factor, which will almost certainly lead to a change in the rules.

In their case, Man City argued that shareholder loans should be viewed in the same way as sponsorships linked to owners.

This is because these loans come from the owners through shareholders.

Interestingly, these loans are not part of APT or PSR, but are considered separate.

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Additionally, these loans are usually interest-free and have flexible payments.

Now this is bad news for Arsenal and Liverpool because they each have millions of pounds in these loans, while Newcastle and City have none.

So if they are included in new regulations, we could see the Reds and Gunners limit their spending and have to sell players.

This specific part was a very small part of the overall case, but could have huge ramifications for these clubs and their PSR situation.

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The Times' Matt Lawton stopped by talkSPORT to discuss these sponsorship deals.

He said: “Shareholder loans are basically loans which are money that their owners, their shareholders lend to clubs, and right now across the Premier League landscape there are these loans worth £1.5bn.

“Everton has obtained more than 400 million in these loans. Arsenal obtained more than 200 million in these loans and before this ruling they were not considered part of any type of financial regulation. It was considered that they should sit outside.

“But the judges agree with City that they should be part of this because how different are they from receiving a sponsorship deal from a company linked to the owners?

“We think the knock-on effect of this is that if they now have to be part of the regulation because these are interest-free loans, that will be distorted and essentially change the return that clubs have to deliver each year.” about how much they have spent.”

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Lawton was then asked how this had fared for the rest of the Premier League.

He said: “Right now the Premier League is in a civil war. It's very messy, this is not a good place.

“Although we enjoy watching football on Saturdays and Sundays, there is a lot of friction here.

“Eight or nine clubs testified in this particular case in support of the Premier League. The clubs are divided.

“It's a complicated situation and the consequences of this are shareholder loans – if you're Arsenal with over £200m in shareholder loans this is a worrying development.”