Manchester City’s legal battle with the Premier League

Manchester City will face the Premier League in a legal fight next week over the organization’s commercial laws.

Context and Background

• Legal Battle Dates: Manchester City is set to face the Premier League in an arbitration hearing from June 10-21, 2024, concerning the legality of the league’s associated party transaction (APT) rules.
• Associated Party Transaction (APT) Rules: These rules are designed to ensure that sponsorship deals involving companies linked to club owners are financially fair and not inflated to circumvent Profit and Sustainability Rules (PSR), which limit clubs to a maximum loss of £105m over three years.

Details of the Dispute

• Rule Tightening:

• The rules were tightened following a vote by Premier League clubs in February, requiring such deals to be at fair market value.
• This move was partly in response to Newcastle’s takeover by the Saudi Arabian Public Investment Fund, sparking concerns about potentially inflated sponsorship deals.

• City’s Challenge:

• Manchester City claims these rules are discriminatory and were approved by rival clubs to stifle their success.
• They argue that the new regulations constitute a “tyranny of the majority.”
• City is not only challenging the rules but also seeking damages.

Implications

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• Potential Outcomes:

• If Manchester City wins, the Premier League’s ability to regulate commercial deals for fair market value could be undermined.
• This could lead to associated companies offering unlimited sponsorship deals, increasing clubs’ spending power under PSR rules.
• The challenge also calls into question the Premier League rule requiring a 14-club majority to implement regulations.

• Impact on Financial Charges:

• Although this action is separate, it comes months before City faces a disciplinary commission for 115 charges of alleged financial breaches, some related to sponsorship deals with Abu Dhabi-linked companies.
• A successful challenge could impact the validity of historic rules under which City is charged.

Current Situation

• Club and League Stance:
  • Both Manchester City and the Premier League have not publicly commented on the ongoing case.
  • The Premier League has allowed the remaining 19 clubs to submit witness statements for the case.
• Hearing and Confidentiality:
  • The two-week arbitration hearing is private, so the timing and details of the outcome are uncertain.

Significance

This legal battle is critical, not just for Manchester City but for the broader governance of the Premier League.

The outcome could redefine how financial regulations and commercial fairness are managed within the league, potentially setting a precedent for future sponsorship and financial dealings among clubs.