Manchester City have claimed success in their fight against the Premier League and its rules over associated party transactions (APT).
It is a claim disputed by the Premier League, and the verdict laid down by a panel of judges at an arbitration tribunal appeared to confirm the necessity of APT rules and the Premier League’s right to enforce them. Such a divergence in interpretation between the league and its champions suggests any hopes the verdict might restore calm to the competition and its off-field troubles are likely to be unfulfilled.
“The Club has succeeded with its claim: the Associated Party Transaction rules have been found to be unlawful and the Premier League’s decisions on two specific MCFC sponsorship transactions have been set aside,” City said in a statement.
The unlawful aspects, as determined by the tribunal, relate to the exclusion of shareholder loans from APT rules and the process by which clubs were informed of “benchmarking” decisions when assessing fair market value.
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These two subsidiary aspects of the regulations will have to change. City have also had APT sponsorship deals with Etihad and First Abu Dhabi Bank, rejected during the past year over a failure to achieve fair market value, set aside meaning they have a chance to be considered again under reformed rules.
The clearest victory for City came in the challenge to rules on loans made by shareholders to their clubs. Despite Uefa having regulations that require such loans to meet fair market value – ie that the loans be made at or close to market rates – the Premier League exempted such deals when the rules were redrafted this year.
The league argued the exemption was not discriminatory because any club could undertake such an activity. City argued that such loans, which could be made either at no or low interest, were discriminatory and distortive. The arbitration panel agreed with City. The rules distort competition, the panel argued, because “they permit one form of subsidy … but not another”.
The second victory for City related to a complaint that the league had not shared relevant benchmarking information at an appropriate point, denying the club the opportunity to feed back before a decision was made. This was upheld by the tribunal and will necessitate another rule change.
The Premier League argued it was the party to have emerged successfully from the process because the ruling “upheld the need for the APT system as a whole and rejected the majority of Manchester City’s challenges”. The league said it planned to “quickly and effectively” adjust its rulebook in discussion with its shareholder clubs.
Information revealed as part of the verdict showed the case had split opinion throughout the cohort of Premier League clubs.
Everton, Newcastle and Chelsea were revealed to have given witness statements in support of City’s claim, while Liverpool, Manchester United, West Ham, Arsenal and Brighton made submissions in support of the league. The verdict ends a process which began this year after the league revised its rules over APTs. It has no direct connection to the legal process which has seen the league charge City with 130 breaches of its rules. City have denied wrongdoing and lawyers began hearing that case on 16 September, with a verdict expected in the new year.
APTs, in which clubs strike sponsorship or revenue deals with businesses linked to their owners, have been the subject of scrutiny from the league for some time.
In February clubs voted to approve tougher rules regarding how such deals are valued. A requirement to assess fair market value for APTs was challenged by City, who have argued it contravenes competition law.
City are understood to have asked for financial damages from the league for perceived losses from sponsorship deals that were halted by the rules. They argue that the league has not been able to prove that clubs get an unfair advantage from APTs and that it has previously failed to act with the same urgency to control big spending by dominant sides.
The takeover of Newcastle United by Saudi Arabia’s sovereign wealth fund in 2021 had previously prompted hurried attempts by clubs to change APT rules.
City also allege the rules were designed to stymie owners from Gulf states – a claim rejected by the tribunal – and members of multi-club ownership groups and were established only because of the desire of rivals to “safeguard their own commercial advantages”.
