What has happened?
The verdict of an arbitration hearing between Manchester City and the Premier League A report on the competition's Associated Party Transaction (APT) rules has been published. It is the first of two highly anticipated rulings affecting both parties and, more broadly, English football as a whole.
What does arbitration refer to?
In February, the Premier League tightened its rules on APTs. These are the regulations that apply to any financial agreement or arrangement made between a club and persons directly related to its ownership. Such agreements include those reached by city of manchester and companies such as Etihad Aviation Group which, like City, has an ownership structure linked to the state of Abu Dhabi. When the rules were updated, the City legally challenged them. City's challenge was broad and questioned the league's governance model, arguing that voting rules, which require a two-thirds majority to pass, subjected clubs to the “tyranny of the majority.” This challenge was rejected, as were many others. However, City managed to dispute two aspects of the rules.
Where did City win?
The main success was related to the rules regarding loans granted by shareholders to clubs. Under Premier League rules, these loans have not been subject to fair market value assessments as a sponsorship deal would. This is because, the first division According to him, any club could obtain such a loan and, therefore, the practice was not anti-competitive. The city argued that it was anticompetitive by object (i.e., not all property owners have the ability to make loans) and that it had distortive effects. The arbitration panel of judges agreed.
Why does this matter?
In terms of City's own interests, it doesn't matter much. But several other Premier League teams (perhaps as many as nine) have been subsidized by owner loans given at better rates than those available on the open market. These clubs will have to correct course and the question may arise as to whether these clubs could be subject to legal action for their previous actions. More generally, this part of the ruling is important because it shows that City dealt a blow to its criticism of the league as a regulatory and governing body. The same applies to City's second victory, given the need for better disclosure by the league when conducting its FMV evaluations. These procedural failures, when it was found that the league had not provided information to City in time, have meant that two major City sponsorship deals, with Etihad and First Abu Dhabi Bank, which were rejected for not meeting the FMV, have now been been “left aside.” , which means they must be evaluated again.
Does this mean the end of APT rules?
No. A wide range of additional City challenges were rejected. The panel's judges found that there was no evidence that the rules lacked transparency (unlike UEFA's rules relating to new competitions, such as in the case of the European Super League). They found that they did not distort competition or trade in players. In fact, the panel said there was enough evidence for the league to tighten its rules as it did. The Premier League believes its rules may be amended shortly to take account of the verdict's considerations.
So who won this battle?
Both sides are publicly claiming victory and it may well be true, although for different reasons. City's claims against the Premier League were broad and couched in the most serious language. They were largely rejected by the arbitral tribunal. The fundamental principles on which the League has built this aspect of governance were also vindicated. So victory for the Premier League. But City managed to demonstrate that the rules have been illegal, however small, and that the league's processes have not been properly managed. This last point is likely to be raised again in the second, more important case under consideration. related to 130 city charges of breaking the rules of the Premier League. The feeling that the league is not living up to its responsibilities and that unforced errors are being made has been reinforced, which will contribute to the feeling of instability in and around the competition. For a serial champion who has said clearly that he does not believe the Premier League should have the control it does, this is also a victory. As for what happens next, you can be pretty sure of one thing: Lawyers won't be short of work.
