Man City launch legal action against Premier League over financial rules ahead of their own 115-charge hearing

Man City taking legal action against Premier League over league's rules regarding valuations of sponsorships; under regulations introduced in 2021 all deals with companies associated with clubs' owners must be independently assessed to be of 'fair market value'

Monday 7 October 2024 14:24, UK

Manchester City are taking legal action against the Premier League.

City are attempting to end the Premier League's Associated Party Transaction (APT) rules.

Those rules regard commercial and sponsorship deals with companies owned or associated with the same club's owners.

As things stand, those rules dictate such transactions have to be independently assessed to be of fair market value.

The Times, who first broke the news on Tuesday, reports that City believe the rules are "unlawful" and they want to seek damages for revenue lost by preventions made by those rules.

The newspaper quotes a 165-page legal document in which City argue they are the victims of "discrimination".

The rule was brought in in December 2021 as Newcastle was bought by the Saudi Arabian Public Investment Fund.

The legal dispute will be settled during a two-week arbitration hearing beginning on Monday June 10.

Sky Sports News has contacted the Premier League and Manchester City for comment.

What are the Associated Party Transaction rules?

The Premier League’s rules require any club, its players, manager or any ‘senior official’ to run dealings with ‘associated parties’ past them.
‘Associated parties’ are companies or people who have a significant interest in the relevant club, financially or otherwise.
The Premier League’s board then reviews each transaction, to assess whether it believes they represent a fair market value.
The league says the rule helps to build “fairness” across the division, by ending a “reliance on enhanced commercial revenues linked to the club’s ownership”.

'This could have big ramifications for future competitive balance of Premier League'

Sky Sports News chief reporter Kaveh Solhekol:

"What is being reported is unprecedented. We've got a situation where a Premier League club, Manchester City, the champions of the Premier League, are basically suing the Premier League.

"What City are going to argue at this arbitration hearing, which will start on Monday, is that some of the league's financial rules are unlawful and they are incompatible with UK competition law. The rules they are talking about are the Associated Party Transaction rules.

"These were brought in in 2021 and they are designed to make sure that if a club signs a commercial deal with a company that is linked to its owners that it has to be a fair value, and that is checked to make sure that it is of fair value.

"So, if you are the owner of a Premier League club and you have another company, say an airline or an energy company, and you want to get that company to sponsor your club - because that is a good way of bringing revenue into your club - that deal has to be checked by independent auditors to make sure it is of fair value.

"You cannot just make up a number and say the deal is worth £100m, £200m or £300m as a way of bringing money into your club. It has to be of fair value.

"But City are going to argue that these rules are unlawful and obviously, this could have big, serious ramifications for the future competitive balance of the Premier League."

How is this linked to Man City's existing 115 charges from the Premier League?

Manchester City were first charged in February 2023 with breaking financial fair play rules around 100 times over a nine-year period, which starts in 2009 and goes on until 2018.

Allegedly, they did not fully disclose the financial remunerations that were made to one of their managers over a four-year period. The suggestion is that there was a secret contract so one of the managers was getting paid much more than officially stated.

The Premier League also allege Man City didn't comply with UEFA's financial fair play rules over a five-year period. They also allege that Man City have not fully co-operated with the Premier League's investigation.

The Times report claims the hearing into City's alleged 115 breaches, all of which the club denies, will be heard in November. Read more about the charges in full here.

Sky Sports News chief reporter Kaveh Solhekol said: "The charges and this case are two separate things.

"The 115 charges have been brought by the Premier League against Man City for allegations that they have broken the league's financial rules over 12 or 13 years.

"The hearing into those charges is set for November but obviously, a lot of those charges are also to do with sponsorship deals, deals that were done with companies that are connected to the owners of Manchester City.

"So, if Man City win this case, which starts next week, that would blow a big hole in the Premier League's case at the hearing in November about the 115 charges because Man City would have argued successfully next week that some of these rules are unlawful and incompatible with UK competition law."