City Wins First Legal Battle: Fair Play Rules in Jeopardy
Manchester City has achieved a legal victory against the Premier League, putting the regulations related to Associated Party Transactions (APT) under review for infringing UK competition law. The club argued that these regulations were discriminatory and designed to hinder City's success, accusing the Premier League of unfairly applying these rules, which also affected their sponsorships with Etihad and the Abu Dhabi bank.
The APT rules were implemented in 2021 to prevent clubs like Newcastle United, under the new ownership of the Saudi Arabian investment fund, from inflating their accounts with sponsorships from their own ownership. Given that a third of City's promotional agreements come from the United Arab Emirates, the club argued that the current rules disincentivize these legitimate agreements and result in a misuse of power by the Premier League.
The independent tribunal noted that the rules are "structurally unfair" and have been applied in a "specifically unjust" manner. They found that the Premier League had violated its own rules by delaying the valuation of the fair market price for two of the club's transactions. In particular, they criticized the "unjust" blocking of City's deal with Etihad without giving the club the opportunity to respond to the analysis performed.
Regarding the Abu Dhabi bank, it was determined that Manchester City was not allowed to access the database used by the Premier League to assess the fair market value, raising concerns about the equity of how these financial evaluations are applied among clubs.
This judicial decision implies a potential change in how interest-free loans are managed, which have not been accounted for within the financial fair play. With interest-free loans accumulated by the owners of different clubs, this change could put teams like Arsenal and Everton at risk of violating financial rules given their considerable debt based on loans.
The resolution of the case, presented by City's lawyer, Lord Pannick, who is also defending the club in another process involving 115 financial charges, could significantly change the financial landscape in the Premier League. These cases are not related, but they underscore the growing tension between Manchester City and the league's administration.
