Man City win major legal battle against Premier League with huge ramifications

Manchester City have won a huge legal battle against the Premier League after rules relating to commercial deals between clubs and related companies were declared unlawful.

City are said to have had two major sponsorship deals blocked because of the Associated Party Transaction (APT) rules, which were brought in following Newcastle United’s Saudi-backed takeover and amended in February this year.

The reigning Premier League champions had reportedly seen a major renewal of the deal with UAE-based airline Etihad, who have sponsored the club’s shirts since 2009, blocked last year.

It had been unprecedented for a club to take legal action against the Premier League, with the panel deciding the APT rules unfairly prevented City from confirming the Etihad sponsorship, as well as a separate deal with an Abu Dhabi-based bank, which was also rejected.

It was found the APT rules breached competition law ‘by object’ – a damning infringement.

A statement released by the Premier League champions read: “Following today’s publication of the Rule X Arbitral Tribunal Award, Manchester City Football Club thanks the distinguished members of the Arbitral Tribunal for their work and considerations and welcomes their findings:

“The Club has succeeded with its claim: the Associated Party Transaction (APT) rules have been found to be unlawful and the Premier League’s decisions on two specific MCFC sponsorship transactions have been set aside

“The Tribunal found that both the original APT rules and the current, (amended) APT Rules violate UK competition law and violate the requirements of procedural fairness.

“The Premier League was found to have abused its dominant position.

“The Tribunal has determined both that the rules are structurally unfair and that the Premier League was specifically unfair in how it applied those rules to the Club in practice.

“The rules were found to be discriminatory in how they operate, because they deliberately excluded shareholder loans.”

Before going on to detail how the Premier League breached its own rules by taking too long to return a fair market value assessment of the two sponsorship deals.

The ruling could force the Premier League into dumping the APT rules completely, with City expected to seek damages from the organisation as a result.

It also opens up the possibility for other clubs to also seek damages, should they believe the existing APT framework also prevented them from completing lucrative sponsorship deals.

But it isn’t good news for all 20 clubs in the division, with several vehemently opposed to any APT changes.

The Daily Mail have reported Arsenal, Manchester United, Liverpool, West Ham, Brentford, Bournemouth, Fulham and Wolves all gave evidence in favour of the Premier League in association with Associated Party Transaction rules.

The tribunal ruled that one of the reasons the APT rules were deemed unlawful was because they omitted ‘shareholder loans’ – something used by several clubs in the league.

It’s reported that of the £4billion borrowed across the league, £1.5bn comes from shareholder loans – a figure that includes all of Arsenal’s estimated £250m borrowings.

A statement from the Premier League read: “The Premier League welcomes the Tribunal’s findings, which endorsed the overall objectives, framework and decision-making of the APT system. The Tribunal upheld the need for the APT system as a whole and rejected the majority of Manchester City’s challenges. Moreover, the Tribunal found that the Rules are necessary in order for the League’s financial controls to be effective.

“The decision represents an important and detailed assessment of the APT Rules, which ensure clubs are not able to benefit from commercial deals or reductions in costs that are not at Fair Market Value (FMV) by virtue of relationships with Associated Parties. These Rules were introduced to provide a robust mechanism to safeguard the financial stability, integrity and competitive balance of the League.

“The Tribunal did, however, identify a small number of discrete elements of the Rules which do not, in their current form, comply with competition and public law requirements (more information below). These elements can quickly and effectively be remedied by the League and clubs.

“In the meantime, the Premier League will continue to operate the existing APT system, taking into account the findings made by the Tribunal.

“While the Arbitration process is confidential, the Premier League and the Club have agreed to make public a redacted copy of the decision, withholding only confidential and commercially sensitive information. “