Manchester City say Premier League rule is now void. Lawyers disagree

Lawyers have shot down claims by Manchester City that the Premier League’s associated party transaction (APT) rules should be considered “void” following the club’s partially successful legal challenge.

In a letter to the other 19 top-flight clubs, Manchester City general counsel Simon Cliff said APT rules – designed to prevent clubs benefiting from artificially inflated sponsorship deals – should be disregarded as a result of Monday’s verdict by an arbitration panel.

The English champions challenged the regulations’ compatibility with competition law on 25 separate points. They succeeded on two points but saw the other 23 rejected, as the panel broadly backed the Premier League’s aims and methodology.

“While it is true that MCFC did not succeed with every point that it ran in its legal challenge, the club did not need to prove that the APT rules are unlawful for lots of different reasons,” Cliff said.

“The tribunal has declared the APT rules to be unlawful. MCFC’s position is that this means that all of the APT rules are void, and have been since 2021.”

The Premier League has not responded but is understood to reject that reading of the verdict, having said on Monday that it would “continue to operate the existing APT system, taking into account the findings made by the tribunal”. 

This case is part of a wider litigation battle between the league and its most successful club of the last decade, which includes an ongoing hearing into more than 100 alleged breaches of financial rules.

Lawyer Joel Leigh, a partner at Howard Kennedy, said: “Manchester City seem to take the stance that the APT rules are now void, when in fact the majority of the rules, in conjunction with PSR [profitability rules], were unsuccessfully challenged by Manchester City on a larger scale.

“Therefore on face value, the award actually shows that Manchester City failed in the majority of their legal challenges, whilst the APT rules were actually deemed to be fair and compatible with competition law, simply highlighting the need for them to be revisited and strengthened from a procedural perspective. 

“It seems that Manchester City are hopeful of winning the PR battle – even though, in truth, the club failed to strike a decisive blow in its wider war with the Premier League.”

Simon Leaf, a partner at Mishcon de Reya, said that while Manchester City had “won on penalties” by forcing the rules to be revised, “a more decisive victory” would have seen “the rules being completely scrapped”.

Leaf added: “Where we’ve ended up is that actually we’re likely to see a broader set of rules. The panel has said the rules didn’t go far enough and now need to be expanded to cover this particular part of financing.”

Cliff also told clubs that the Premier League’s summary of the findings was “misleading” and urged them not to rush into approving a new version of APT regulations. Team bosses are due to meet next week, with a 14 out of 20 majority needed to pass changes.