Manchester City defeat Premier League over financial rules

The Premier League has suffered another blow to its regulatory powers after Manchester City partially won a challenge to rules on associated party transactions (APT).

An independent arbitration panel agreed with the current champions that some elements of the APT rules did not comply with competition and public law requirements, and that clubs should be given more information when APTs are assessed for fair market value.

The panel sided with the Premier League over the general purpose and implementation of APT rules and rejected claims from Manchester City’s lawyers that the process was biased against owners from the Middle East. 

Coming after Leicester City defeated the Premier League over its profitability and sustainability rules (PSR), however, it represents another setback for the competition’s chiefs – all while an even bigger legal battle with Manchester City over financial breaches is held.

And it underlines a trend of successful courtroom challenges to sport’s governing bodies, following the landmark verdict in a case brought by former footballer Lassana Diarra against Fifa’s transfer rules at the European Court of Justice last week. 

Manchester City said: “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.

“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 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 said it welcomed the tribunal’s findings, which it said “endorsed the overall objectives, framework and decision-making of the APT system”. 

It added: “The tribunal upheld the need for the APT system as a whole and rejected the majority of Manchester City’s challenges. 

“Moreover, the tribunal found that the rules are necessary in order for the league’s financial controls to be effective.  

“The decision represents an important and detailed assessment of the APT rules, which ensure clubs are not able to benefit from commercial deals or reductions in costs that are not at Fair Market Value (FMV) by virtue of relationships with associated parties. 

“These rules were introduced to provide a robust mechanism to safeguard the financial stability, integrity and competitive balance of the league.

“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.”