Manchester City has scored a significant victory in their legal battle against the Premier League, with an independent tribunal ruling in their favor. The tribunal found that the league unfairly blocked two of the club’s sponsorship deals and that some of the regulations breached competition law.
The tribunal also determined that the Premier League’s financial fair play calculations should consider interest-free loans from club shareholders. This decision could potentially impact other clubs such as Everton, Brighton, Arsenal, and Chelsea, putting them at risk of violating profitability and sustainability rules.
City had challenged the associated party transaction (APT) rules earlier this year, arguing that they were anti-competitive. These rules are meant to ensure that commercial deals with entities linked to a club’s owners are conducted at fair market value.
While this legal dispute is separate from the ongoing case involving 115 charges against City for alleged breaches of the Premier League’s financial rules, the APT rules play a crucial role in the larger case.
The Premier League also claimed a victory in this legal battle, highlighting that the tribunal endorsed the overall objectives and framework of the APT system. The league acknowledged that there were some elements of the rules that needed adjustment to comply with competition and public law requirements.
However, the panel of three retired judges concluded that City had been unjustly prevented from finalizing sponsorship deals with two associated companies – Etihad Aviation Group and the First Abu Dhabi Bank. City was not given the opportunity to respond to the league’s analysis of fair market value in one case and was denied access to a database of comparable deals in another.
In response to the tribunal’s findings, City stated that the APT rules were deemed “structurally unfair” and that specific decisions made by the Premier League regarding the fair market value of the club’s transactions were set aside. City indicated that the Premier League had abused its dominant position.
Once the league amends its rules, City will be able to pursue more lucrative deals with associated parties. This ruling may prompt City and other clubs to seek compensation for lost earnings as a result of the blocked sponsorship deals.