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Manchester City assert victory over 'unlawful' rules in landmark sponsorship case against Premier League
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Published 07/10/2024 at 15:57 GMT+1
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Manchester City and the Premier League have released conflicting statements after a legal ruling surrounding the league's associated party transaction (APT) rules was delivered. City claim the ruling exposes unfair financial restrictions, while the league insists the rules are vital to ensuring integrity and only minor adjustments are needed. The case could impact future sponsorship deals.
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Manchester City have claimed a significant legal victory over the Premier League after certain sponsorship rules were declared unlawful, although the league insisted the tribunal had "rejected the majority" of City's challenges.
The verdict ruled that the Premier League were wrong to block two major sponsorship deals involving the club, raising questions about the future of financial regulations in English football.
The case is separate to the ongoing hearing against Man City for 115 alleged breaches of the Premier League's financial rules – a verdict on this is not expected until 2025.
However, the new ruling over associated party transactions (APTs) could have significant ramifications on the case.
In a statement, Manchester City said: “The Associated Party Transaction (APT) rules have been found to be unlawful and the Premier League’s decisions on two specific MCFC sponsorship transactions have been set aside.
"The tribunal found that both the original APT rules and the current, (amended) APT rules violate UK competition law and violate the requirements of procedural fairness."
The case centered on the Premier League’s APT rules, which were introduced to ensure clubs do not benefit from inflated deals with companies linked to their ownership.
The independent tribunal, which consisted of three retired judges, found that two substantial sponsorship deals - one with stadium sponsors Etihad and another with a bank based in Abu Dhabi - were unfairly blocked.
The tribunal also found that the Premier League failed to account for interest-free loans from shareholders to clubs, a key factor in City’s argument.
City argued this led to the Premier League applying the rules in a "discriminatory" manner, ultimately stifling their ability to secure fair-market sponsorship deals.
City's statement continued: "The Premier League was found to have abused its dominant position. The tribunal has determined both that the rules are structurally unfair and that the Premier League was specifically unfair in how it applied those rules to the club in practice.
"The rules were found to be discriminatory in how they operate, because they deliberately excluded shareholder loans."
The Premier League, however, maintained its stance on the necessity of the APT rules.
In their response to the ruling, they "welcomed" the tribunal's findings and said the panel "found that the [APT] rules are necessary in order for the league’s financial controls to be effective."
Their statement read: "Significantly, the tribunal determined that the APT Rules are necessary, pursued a legitimate objective and were put in place to ensure that the Profitability and Sustainability Rules (PSR) are effective, thereby supporting and delivering sporting integrity and sustainability in the Premier League. 
"The tribunal noted that 'it is difficult to see how the PSR can be effective' without the APT Rules, including the ability to restate transactions."
It added: "The Tribunal did, however, identify a small number of discrete elements of the rules which do not, in their current form, comply with competition and public law requirements. These elements can quickly and effectively be remedied by the league and clubs.Â
"In the meantime, the Premier League will continue to operate the existing APT system, taking into account the findings made by the tribunal."
However, the tribunal’s decision means that the Premier League may have to alter how it enforces its financial controls, potentially paving the way for more lucrative sponsorship deals involving clubs with wealthy owners.
The rules regarding APTs were introduced to prevent clubs from inflating commercial deals, which, if inflated, would allow clubs to increase the amount they could then spend under Financial Fair Play (FFP) rules.
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