A tribunal has ruled that the Premier League’s commercial agreements rules between football club owners, and their related companies, are illegal. This is after a legal challenge by Manchester City, which will require some of these regulations to be revised.
City, owned by a family member of Abu Dhabi’s ruling family, , challenged earlier this year the league’s so-called Associated Party Transaction Rules, claiming they unfairly blocked sponsor deals, such as one with Abu Dhabi based airline Etihad.
After the acquisition of Newcastle United by Saudi Arabia’s Public Investment Fund, in late 2021. The Premier League APT rules have been updated earlier this year.
The regulations were intended to stop companies associated with club owners from using inflated sponsor deals to boost revenues and give teams more money to spend on their players.
The panel found the existing rules to be “unlawful” in the UK under UK competition law, even though it rejected many of City’s arguments and acknowledged the Premier League’s requirement for a mechanism to assess related-party deals.
The rules did not include shareholder loans in their calculations. Many Premier League clubs are dependent on interest-free loan from their owners, but unlike sponsorship deals, loans do not have to meet the “fair market value”.
The tribunal found that APTs were assessed in an illegal manner, as clubs were denied vital information prior to decisions being made.
The original assessment by the Premier League of two City sponsorship agreements, including the Etihad contract in question, is no longer valid. Etihad already sponsors the club’s shirt front and holds naming rights for its stadium.
Premier League officials said a few “discrete elements” of its rulebook would need to be updated, but the changes could still be made “quickly and efficiently”.
City’s partial win on APT rules came as an independent panel heard the case brought against the club by the Premier League in relation to 115 alleged financial rule violations stretching back many years. The verdict is expected to be delivered in the coming year.
City became the dominant force of English football after Sheikh Mansour bin Zayed Al Nahyan acquired it in 2008. The club won the Premier League 6 times in the last 7 years and won the Uefa Champion League for the very first time.
The ruling on Monday is just the latest in a series of legal challenges brought against football’s rulesmakers.
The European Court of Justice ruled on Friday that the rules currently set forth by the global football governing body Fifa in regards to transfers are illegal. Last year, the same court found Fifa’s European counterpart Uefa had violated the competition law when they responded to the European Super League.
City’s fight against the league shows how more and more football clubs are turning to the law in order to establish the rules of the competition. This is an acknowledgement that the rules on and off the field can affect the winners and losers of the competition.
Premier League stated that the verdict “endorsed overall objectives, the framework and the decision-making process of the APT System”. The Premier League said that it will now include shareholder loans in its assessments, and remove some of this year’s amendments.
The tribunal upheld that the APT system was necessary in its entirety and rejected most of Manchester City’s arguments. The tribunal also found that these rules were necessary for the League to have effective financial controls.
City welcomed the findings. The club said that it had won its case: the Associated Party Transaction Rules were found to be illegal and the Premier League’s decisions regarding two specific MCFC sponsoring transactions have been overturned.
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