MANCHESTER CITY’S legal brawl with the Prem is set to drag rivals, including Arsenal and Chelsea, into the fight.
In what was hailed a landmark ruling, the Prem champs claimed victory as an element of the rules on commercial deals involving companies linked to clubs’ owners was judged “unlawful”.
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It related to shareholder loans not being included in the “Associated Party Transaction” calculation.
Arsenal owners the Kroenkes are believed to have ploughed nearly £260million into the club in loans. Chelsea received £146m in the first year of their new ownership model.
Brighton’s Tony Bloom has put £373m into the Seagulls, while Everton, who are subject to a takeover from The Friedkin Group, have the highest shareholder loans at £451m.
That has been loaned at low or even zero interest and will almost certainly now need recalculating.
Former Master of the Rolls — the country’s second most senior lawyer — Lord Dyson and two fellow judges agreed the rule preventing City from responding to the Prem over “Fair Market Value” of two proposed deals was “procedurally unfair”.
But a number of City’s other claims against Prem rules “failed”, including that the League wrongly applied its regulations.
Arsenal, Manchester United, Liverpool, Brentford, West Ham, Fulham, Wolves and Bournemouth gave evidence on behalf of the Prem.
It has all left battle lines drawn even deeper — with the case into City’s alleged 115 financial breaches still being heard.
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City launched the case after tighter rules were voted in by Prem clubs at a meeting in February.
The club said yesterday: “The Tribunal found both the original APT rules and the current (amended) APT Rules violate UK competition law and procedural fairness . . . ”
“The Premier League was specifically unfair in how it applied those rules to the Club in practice.
“They deliberately excluded shareholder loans while the Premier League reached decisions in a procedurally unfair manner.”
City’s case centred on two sponsorship proposals, with First Abu Dhabi Bank and Etihad Aviation Group.
But while the Arbitration Tribunal — which heard evidence in June — did side with City on some matters, League bosses claimed THEY had won.
A Prem spokesman said: “Manchester City brought a wholesale challenge to the APT Rules.
“The club was unsuccessful in the majority of its challenge.
“Significantly, the Tribunal determined the APT Rules are necessary.
“It rejected Manchester City’s argument that APT Rules were to discriminate against clubs with ownership from the ‘Gulf region’.
“Except in two respects, it found that Manchester City’s arguments were unfounded.”
But League chiefs believe they need only make minor changes — and new rules will be tabled for club chiefs to vote on as soon as next week.
The spokesman added: “In the meantime, the Premier League will operate the existing APT system, taking into account the findings made by the Tribunal.”
Man City vs the Premier League: Q&A
By Martin Lipton
BOTH Manchester City and the Premier League were claiming a win after their legal scrap over Associated Party Transactions.
SunSport sifts the claims to try to explain the latest issues.
What was the case about?
City were furious that Prem bosses brought in new tougher regulations – by the smallest possible majority under League rules – in February. They were aimed at blocking clubs bypassing financial controls by earning “unfair” amounts via sponsorship from a company with the same owners, or selling players on the cheap to teams under the same ownership umbrella.
Why were City so upset?
The Etihad club argued that the rules were illegal and had been deliberately aimed at them by rivals and were both flawed and politically driven. They also branded the “two thirds support” rule that has been part of Prem regulations since its inception as a “tyranny of the majority”
This was an Arbitration Tribunal – explain that?
Under Prem rules, any club has the right to ask for Arbitration if they are unhappy about the regulations or due process. The three retired judges heard evidence in June and their full ruling was distributed to the 20 Prem clubs on Monday afternoon.
And what did they say?
Depending on who you listen to, they either totally vindicated one side or the other. The actual answer is that there were “wins” for both City and the Prem. But it’s your choice which ones meant more.
OK, what were City’s wins?
Maybe the most important one in terms of the repercussions. That both the new rules and the previous version – brought in after Saudi Arabia’s PIF bought Newcastle in 2021 – were “unlawful” as they exclude shareholder loans to clubs in any APT calculations. City also won over their claims that the rulebook prevented them from responding to Prem decisions over whether two proposed deals with Abu Dhabi companies represented “Fair Market Value”, access to the “databank” of comparable deals and the time it took for decisions to be reached.
That sounds pretty big. So what about the Prem’s side?
The key finding as far as the League is concerned is that the Tribunal backed the concept of APT rules as well as the Fair Market Value tests. Additionally, City’s challenges to the actual decisions on the two proposed deals “failed”. Prem bosses insist the “rulebook has been found to comply with competition and public law standards and is an effective and necessary system”.
Is that it, then?
Of course not. That shareholder loan issue is a big deal, given that it is believed owners have loaned around £1.5bn at low or preferential rates across the Prem. Those loans will almost certainly have to be calculated at commercial rates now, unless the owners convert them into shares. But the League is convinced the main thrust of the rules remains valid.
And what will be the impact on the “115 charges” case?
Probably nothing. That is an allegation of breaking the rules, while this matter was City questioning whether one small element of the current rulebook was legitimate. But City are using the same legal team, headed by £10,000 per hour Lord Pannick KC. And the stakes on the bigger case are a great deal higher.
