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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 – meaning City’s rivals could now 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 in the case, 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”.
But the independent panel of three retired judges deemed that City were unfairly blocked from completing sponsorship deals with two associated companies, Etihad Aviation Group and the First Abu Dhabi Bank, because the UAE-owned club were, in the first instance, not given the chance to respond to the league’s analysis of fair market value, and in the latter case because they were not given access to a database of comparable deals used by the Premier League to determine fair value.
City will be free to make bolder, more lucrative deals with associated parties once the league’s rules are amended, and both they and other clubs could now push for compensation over lost earnings.
more to follow…