Man City victory in legal battle against Premier League.
Manchester City had taken legal action against the Premier League's APT rules.
The verdict has been delivered in Manchester City's legal dispute with the Premier League concerning the league's regulations on commercial agreements involving club owners. Manchester City, which is owned by the Abu Dhabi-backed City Football Group, had several grievances validated, with two elements of the associated party transaction (APT) regulations found to be unlawful by the tribunal. However, the Premier League contends that the tribunal dismissed the majority of Manchester City's objections and "endorsed the overall objectives, framework, and decision-making of the APT system."
APTs are designed to assess the value of sponsorship agreements with entities connected to club owners. This case is separate from the Premier League disciplinary commission, which is set to address 115 charges against City for purported violations of financial regulations, some of which date back to 2009.
The tribunal, in a comprehensive 175-page document, determined that shareholder loans should not be exempt from the APT regulations and that certain amendments made by the Premier League in February should not be upheld. During this arbitration process, Chelsea, Newcastle, and Everton served as witnesses for Manchester City. Witnesses representing the Premier League included Manchester United, Liverpool, Arsenal, Tottenham, Brighton, and West Ham. Brentford, Bournemouth, Fulham, and Wolves submitted letters in support of the regulations.
APTs refer to commercial agreements between clubs and affiliated companies. In December 2021, shortly after a Saudi-led acquisition of Newcastle, new restrictions on fair market values (FMVs) were implemented. The Premier League holds the authority to evaluate the value of these agreements to prevent any potential inflation, which could allow clubs to increase their spending under existing financial regulations.
These regulations were modified following a February vote that did not achieve unanimous support. Twelve clubs voted in favor of the changes, while two abstained and six opposed them.
The amendments included a revised definition of FMV and placed the onus on clubs to demonstrate that a transaction reflects fair market value.
Earlier this year, it was reported that Manchester City was set to engage in a legal dispute with the Premier League. Both the Premier League and Manchester City expressed their approval of the tribunal's findings announced on Monday, with each party highlighting aspects that favoured their positions.
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How did we arrive at this point?
APTs represent commercial agreements between clubs and affiliated companies. In December 2021, shortly after a Saudi-led acquisition of Newcastle, new restrictions on fair market values (FMVs) were implemented. The Premier League holds the authority to evaluate the value of these agreements to prevent any inflation that could allow clubs to exceed their current financial limits. Changes to the rules were enacted following a February vote that did not achieve unanimous consent. Twelve clubs supported the amendments, while two abstained and six opposed them. These modifications included a revised definition of FMV and placed the onus on clubs to demonstrate that a transaction reflects fair market value. Both the Premier League and Manchester City expressed their approval of the tribunal's findings announced on Monday, with each party highlighting aspects that favored their position.
Premier League Statement
The Premier League has issued a statement indicating that Manchester City "mounted a comprehensive challenge" to the APT regulations but was "largely unsuccessful" in this endeavor.
The statement further noted that the tribunal recognized the necessity of the APT rules, asserting that if payments exceeded fair market value, it would lead to "distorted competition, as the club would gain an unfair advantage through a subsidy." Additionally, the league mentioned that the tribunal dismissed Manchester City's claim that the APT rules were intended to discriminate against clubs owned by entities from the Gulf region.
Furthermore, the statement highlighted that, aside from the two areas where City prevailed, the tribunal found City's arguments to be "baseless," including any claims of inconsistency in the treatment of different types of clubs.
Manchester City Statement
Manchester City's statement emphasized the two key areas in which they achieved success, asserting that the "Premier League was determined to have misused its dominant position." The club declared that it had "prevailed in its claim" and noted that "the APT rules were deemed unlawful." Additionally, City pointed out that the tribunal concluded "both the initial APT rules and the revised rules contravene UK competition law, as well as the principles of procedural fairness.
" The reigning Premier League champions stated that the rules were identified as "discriminatory... due to their intentional exclusion of shareholder loans." Furthermore, the club remarked on "an unreasonable delay in the Premier League's assessment of fair market value regarding two of the club's sponsorship agreements."
What Happens Next...
The Premier League has announced its intention to address the two issues identified by the tribunal in its ruling against them. This involves incorporating the tribunal's evaluation of shareholder loans and eliminating certain amendments made in February. The league has stated that it is "implementing a process to enable the league and clubs to swiftly and effectively implement these specific changes."
