The Memo: Manchester City directs legal assault on Premier League

Premier League champions Manchester City have announced the inception of a barrage of legal attacks aimed at the Premier League over the sponsorship and transactions rules set by the league’s authorities. Challenging the current associated party transaction (APT) and sponsorship rules, the move comes amidst preparation from both parties for the tribunal relating to City’s 115 charges for allegedly infringing on rules of financial fair play. The APT rules essentially limit the valuation of deals between clubs over sponsorship and revenue with businesses with strong links to their ownership. Whilst this particular case does not directly relate to the 115 charges headed City’s way, a number of the club’s potential breaches do in fact relate to inflated sponsorship deals linked to Abu Dhabi, where the club’s owner Sheikh Mansour bin Zayed Al Nahyan is a royal. 

City's claim is that, since clubs are technically not able to complete all partnership deals their financial standing may invite, the league's rules breach UK competition law. In short, Manchester City are firmly aware of the financial advantage they have over their rivals and would like to pay whatever they want in order to bring the best players, coaches, lawyers, and sponsorship deals to the Etihad. Any sponsorship deals agreed between parties must adhere to what is considered fair market value, preventing artificially inflated transactions which would subsequently permit clubs with an opportunity to spend more within the league’s Profit and Sustainability Rules (PSRs). 

Already fearing distorted competition by state-financed clubs, the Saudi-backed takeover of fellow Premier League club Newcastle United proved to be the straw that broke the camel’s back. As a result, APT rules were tightened back in February after a vote. Funnily enough, the rule that 14 of the 20 clubs must vote for a piece of legislation for it to be passed is another one that City would like to twist, citing the so-called ‘tyranny of the majority’ that ensues following such votes. According to reports, The Times newspaper has been able to get its hands on the 165-page document compiled by City ahead of the case which reveals, to the astonishment of many, that the club views themselves as the victims here.  

With arbitration dates provided, the case will take place from 10 to 21 June, with all 19 other Premier League clubs invited to provide witness statements. But, while the case will take place in the short-term, existential questions for the Premier League more generally plague the institution in the long run. Many now believe that clubs – such as City with their state-backed ownership – can blow the Premier League authorities out of the water when it comes to a battle in the courts. If this ultimately proves to be the case, then a dangerous precedent will be set, meaning the Premier League may find it difficult to enforce its own rules in future if a more powerful party simply does not like them. Many have dreaded the repercussions of state-owned football clubs and the unfettered corporate capitalisation of the English game. Only now is the end game coming into sight...