Manchester City Win Legal Challenge Against Premier League

Manchester City has secured a legal victory against the Premier League, challenging the rules governing sponsorship deals linked to club owners.

October 7, 2024
4:45 pm

In a groundbreaking ruling, a panel of three retired judges found parts of the Premier League’s Associated Party Transactions (APT) regulations unlawful, marking a pivotal moment in the financial governance of English football.

The APT rules were introduced to prevent clubs from inflating sponsorship deals with companies linked to their owners, particularly following the Saudi takeover of Newcastle United. These regulations aimed to stop wealthy owners from artificially boosting their clubs’ revenues. In City’s case, the Premier League had rejected a new sponsorship agreement with Etihad and a deal with an Abu Dhabi-based bank, citing the APT regulations.

City, owned by Abu Dhabi’s ruling family, challenged these rejections in court, arguing that the rules were unfair and breached the UK’s Competition Act. The panel, consisting of retired judges Sir Nigel Teare, Christopher Vajda KC, and Lord Dyson, sided with City, potentially reshaping the financial landscape of English football. They found that some elements of the APT regulations violated competition law, deeming them “unlawful by object.”

This decision has sent shockwaves through the Premier League and is a significant blow to chief executive Richard Masters, as it could influence future financial regulations. Wealthy club owners may now find it easier to secure lucrative sponsorship deals, providing greater financial flexibility. However, this raises concerns about potential imbalances in football’s financial ecosystem, particularly regarding player transfers and sustainability.

City’s legal team, led by Lord Pannick KC, presented multiple arguments against the APT rules, focusing on the Premier League’s Fair Market Value (FMV) requirement, which they claimed was used to unfairly block their sponsorship deals. While the panel dismissed many claims, they upheld key arguments, particularly criticizing the procedural fairness of rejecting City’s Etihad deal, stating the club was not given a fair chance to respond before a decision was made.

The ruling has broader implications, as other clubs with wealthy owners may now push for more favorable sponsorship agreements. Clubs like Arsenal, Manchester United, Liverpool, and West Ham supported the Premier League’s position, highlighting the league-wide significance of the outcome. City is also expected to seek costs and damages, further complicating the league’s financial structure.

This victory comes amid a separate case where City faces 115 charges of alleged breaches of Premier League financial rules, relating to historical conduct that could lead to severe penalties. Although the two cases are unrelated, this win strengthens City’s position as they contest the financial allegations.

The verdict, delivered in a 175-page report, follows weeks of speculation. Last week, a proposed amendment to the APT rules was suddenly withdrawn from the Premier League’s agenda, hinting at the ruling’s direction. The Premier League is now expected to amend or potentially scrap the current APT system, although they maintain that the core objectives of the rules were upheld.

As the dust settles, Manchester City’s legal triumph is poised to have lasting ramifications for the Premier League’s financial oversight. Wealthy clubs may now have greater freedom to negotiate sponsorship deals, potentially widening the gap between the top clubs and the rest of the league. This ruling may also affect the competition between clubs with significant financial backing and those reliant on traditional revenue streams, reshaping the future of English football.

City will continue their legal battle over the 115 charges in the coming weeks, seeking to defend themselves against claims of widespread financial misconduct. With this ruling in their favor, City’s legal team has scored a significant victory that could have far-reaching consequences for the Premier League and its clubs.