Manchester City has recently scored a victory against the Premier League in a legal dispute over sponsorship rules.
A third-party tribunal determined that some of the league’s rules about business deals with connected parties were illegal. The ruling requires a revision of these regulations to comply with UK competition law, partially supporting city’s position.
Background
The Associated Party Transaction (APT) regulations of the Premier League are designed to prevent clubs from unfairly profiting from overblown sponsorship agreements with companies associated with their owners.
By guaranteeing that such agreements represent “fair market value,” these regulations hope to keep the playing field level for all clubs.
Sheikh Mansour of Abu Dhabi, the owner of Manchester City, challenged these regulations, claiming they unjustly restricted transactions with businesses such as Etihad Airways, a longstanding sponsor.
Earlier this year, Manchester City argued that these restrictions limited their commercial opportunities.
The club argued that by making it harder for them to get lucrative sponsorships, the rules prevented them from generating additional revenue. They argued that excluding shareholder loans from these financial assessments was unreasonable and anti-competitive, which led to the tribunal’s review.
Result of Tribunal Review
The tribunal took City’s side on various issues. It determined that the Premier League’s rules were unlawful in how they evaluated certain financial contributions, particularly shareholder loans.
The tribunal concluded that the league’s regulations needed to be changed because it was not compliant with UK competition laws to exclude shareholder loans from financial assessments.
The panel found that Manchester City had indeed faced unfair restrictions. The ruling means the Premier League will now need to modify its rules to prevent similar conflicts in the future.
This includes adjustments to ensure shareholder loans are assessed fairly in the context of associated party transactions.
“The club has succeeded with its claim: 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.”
What do you need to know?
The Premier League now faces the task of rewriting specific parts of its financial regulations.
With the current decision, clubs may gain more flexibility in securing sponsorships with associated companies, but the league will need to balance this with its commitment to maintaining a level playing field.
Although Manchester City views this decision as a victory in their ongoing legal battles, it is unclear how it will impact their future interactions with the Premier League.
