League is served
Manchester City: Important victory in court
English champions Manchester City have won an important legal victory against the Premier League.
An independent arbitration tribunal ruled that the league's new sponsorship rules, which were intended to prevent clubs from artificially inflating their sponsorship contracts with owner-affiliated companies, were unlawful. Man City, which is funded by sheikhs from Abu Dhabi, welcomed the decision.
A panel of retired judges ruled that the Premier League's rules were in breach of UK competition law. The league's recent blocking of two Manchester City sponsorship deals, including an extensive contract with airline Etihad, was therefore unlawful. ManCity announced that it would demand compensation for the blocked deals. The Premier League may have to revise or scrap its sponsorship rules.
The decision could also have far-reaching consequences for other Premier League clubs operating in similar financial structures, including Arsenal and Brighton, who have received loans from their owners. The arbitration tribunal found that loans from shareholders and owners are not covered by the Associated Party Transactions (APT) rules and the Premier League is therefore not allowed to regulate these transactions.
Setback for the Premier League
This is a major setback for the Premier League. The hearing into the allegations against Pep Guardiola's club is currently underway. The league accuses City of financial violations in 115 cases. There is no direct link to the latest ruling. Whether it could nevertheless have an impact on the proceedings was initially unclear. The regulations on "Associated Party Transactions" (APT) were introduced in December 2021 in the course of the Saudi Arabian-led takeover of Newcastle United and were further amended in February of this year.
As a result of the ruling, Manchester City and other clubs could potentially conclude even more lucrative deals with associated companies in the future. This would put further pressure on the Premier League to ensure financially fair competition between clubs, which critics already feel is lacking.
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