Manchester City Secures Partial Victory in Dispute Over Sponsorship Rules with Premier League

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LONDON,– Manchester City scored a partial win against the Premier League on Monday after an arbitration panel issued a decision concerning the club’s sponsorship deals, known as Associated Party Transactions (APT).

The panel’s ruling centered on the league’s decision to block certain deals involving City, which is owned by Abu Dhabi interests.

The dispute arose after the Premier League challenged two of City’s transactions from 2023, involving First Abu Dhabi Bank and Etihad Aviation Group. The arbitration panel found that the Premier League’s decisions on these transactions were “reached in a procedurally unfair manner” and ordered that they be overturned.

While the Premier League maintained that the panel’s verdict affirmed the purpose and decision-making process of its APT system, the ruling also identified flaws. Specifically, parts of the APT rules were deemed to be in violation of British competition law, and the panel criticized the rules for being unlawful as they restricted clubs from commenting on the types of data the league considered.

Manchester City welcomed the ruling, viewing it as a validation of their claims. “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 club said in a statement. City further argued that the rules were discriminatory, noting that they excluded shareholder loans, which could favor certain clubs.

The Premier League, however, highlighted that the majority of City’s challenges were dismissed by the panel. “Moreover, the Tribunal found that the rules are necessary in order for the League’s financial controls to be effective,” it said in a statement, underscoring the importance of APT rules in maintaining competitive balance within the league.

The APT regulations were initially designed to prevent clubs from artificially inflating the value of sponsorship deals with companies linked to their owners, a practice that could undermine the league’s financial fairness. The rules were particularly significant following the sale of Newcastle United in 2021 to a consortium led by Saudi Arabia’s Public Investment Fund (PIF), which led to a temporary ban on clubs entering into sponsorship agreements with companies connected to their ownership.

Although the panel did not find that the APT rules specifically targeted clubs owned by Gulf-based companies, it confirmed that the rules were meant to apply to any club using APTs. The revised rules, which were amended in March after consultations with Premier League clubs, require that each APT undergo a Fair Market Value Assessment by the Premier League Board.

In the arbitration process, representatives from Chelsea, Newcastle United, and Everton provided testimonies in support of City. Meanwhile, written statements from West Ham United, Manchester United, Liverpool, Tottenham Hotspur, and Arsenal backed the Premier League’s stance. Clubs including Brentford, Bournemouth, Fulham, and Wolverhampton Wanderers submitted letters in favor of maintaining the APT rules.

One of Manchester City’s main contentions was the exclusion of shareholder loans from APT regulations, arguing that this created a competitive imbalance. According to the ruling, some clubs, such as Arsenal and Brighton, relied heavily on shareholder loans for financing. The panel noted that “the exclusion of shareholder loans from the APT Rules distorts competition in permitting one form of subsidy, namely a non-commercial loan, but not another, namely a non-commercial sponsorship agreement.”

The ruling marks only one aspect of Manchester City’s ongoing legal battles with the Premier League. The club is also facing a separate independent hearing over alleged breaches of the league’s financial regulations, which began in September. A verdict from this proceeding is expected before the end of the current season.

Since being acquired by Sheikh Mansour’s Abu Dhabi United Group in 2008, Manchester City has become a dominant force in English football, winning eight Premier League titles, the Champions League, three FA Cups, six League Cups, the UEFA Super Cup, and the FIFA Club World Cup. The club’s legal challenges and the outcomes of these proceedings could have significant implications for the Premier League’s financial regulations and the broader landscape of club ownership and sponsorship in English football.

Source: Reuters