Man City claim seismic victory as Premier League’s sponsorship rules declared unlawful
Manchester City have claimed a major victory over the Premier League after rules regarding commercial deals were deemed to be unlawful.
In a landmark ruling to a case that is separate to the 115 charges the English champions are facing, it was ruled that City were unfairly blocked from agreeing two huge sponsorship deals earlier this year
This is due to governance declaring that commercial deals between clubs and companies related to the club’s ownership must be of fair market value.
City had launched legal action against the Premier League earlier this year over associated party transaction (APT) rules, on the grounds they were anti-competitive.
That was in response to the Premier League rejecting a new sponsorship deal the club had lined up with Etihad in 2023, as well as another agreement with an Abu Dhabi-based bank.
An independent panel made up of three retired judges deliberated on the matter. And they concluded that the rules set out by the Premier League were unlawful because they did not take into consideration interest-free loans which shareholders lend to clubs.
It means that Abu Dhabi-backed City have opened the door to striking significantly higher sponsorship agreements with associated parties than previously allowed.
It also means that they’ll be able to pursue compensation and costs from the Premier League for abusing its position.
In addition, other top-flight clubs could now seek damages should they believe that they have been impacted.
The panel states that, of the £4billion in total borrowing across the Premier League, £1.5billion is in loans from club owners and shareholders.
City had argued that such payments were unfair and not at market value because they were interest-free and, in some cases, did not have to be repaid at all.
This decision will spark huge concern among a number of Premier League clubs, including Arsenal, who rely heavily on such loans, as it is likely to lead to rules being changed.
If rules are changed and commercial loan rates are included in these arrangements, it could lead many clubs to find that they are in breach of profit and sustainability rules.
Associated party transaction rules were introduced in December 2021 following Newcastle United’s takeover from Saudi Arabia’s PIF, before being further amended this year.
The rules were introduced to maintain the competitive nature of the Premier League by stopping clubs from inflating commercial deals with companies linked to their owners.
Both parties published the 175-page ruling from the arbitration panel, with the Premier League maintaining that the tribunal rejected the majority of City’s challenges and “endorsed the overall objectives, framework and decision-making of the APT system”.
