Manchester City have landed a blow in their latest legal challenge against the Premier League, after an independent tribunal ruled the league unfairly blocked two of the club’s sponsorship deals and that some of the regulations breached competition law.
The tribunal also concluded that Premier League’s financial fair play calculations should factor in interest-free loans from club shareholders, which clubs such as Everton, Brighton, Arsenal and Chelsea all significantly benefit from.
If these loans are now to be considered associated party deals, it means City’s rivals could be in danger of breaching profitability and sustainability rules (PSR).
City launched a legal action against the associated party transaction (APT) rules earlier this year on the grounds they were anti-competitive. The rules are designed to ensure commercial deals with entities linked to a club’s owners are done for fair market value.
The matter is separate to the ongoing case of 115 charges City face for alleged breaches of the Premier League’s financial rules, but the APT rules which City have partially successfully challenged here are central to that larger case.
The Premier League claimed its own victory, pointing to the tribunal’s conclusions that, “the objectives, framework and decision-making of the APT system” were broadly sound. The league promised to quickly remedy “a small number of discrete elements of the Rules which do not, in their current form, comply with competition and public law requirements”.
The league also said the panel had rejected City’s argument that the purpose of the rules was to discriminate against clubs with ownership from the Gulf region.
City indicated that the panel found that APT rules were “structurally unfair” and that the panel had set aside specific decisions of the Premier League to restate the fair market value of the two transactions entered into by the club.
City said in a statement: “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. — Independent