Thunderbolt in the Premier League!

Three independent and retired judges could well cause a monstrous earthquake in the Premier League. While it must defend itself in the “trial of the century”, the Manchester City club had attacked the Premier League in another matter, that of sponsorship rules. Clearly, the Cityzens accused the leaders of the all-powerful English championship of having derailed three very important sponsorship agreements with the Etihad Aviation Group, the First Abu Dhabi Bank (FAB) and the Emirates Palace.

Concretely, the Premier League was based on the rules of the APT (Associated Party Transaction) in order to prevent City, owned by Abu Dhabi, from benefiting from overly juicy contracts concluded with companies from the same country as the club bosses. These APT rules were also introduced in 2021, when Newcastle was bought by the Saudis, in order to guarantee “fair market values” and competitiveness in the Premier League vis-à-vis teams benefiting from petrodollars.

A big defeat for the PL

It is therefore these rules, modified in February 2024, that Manchester City contested, deeming them unfair, unjust and above all accusing the Premier League of having abused its authority to derail these deals. Well this Monday, The Times tells us that these three independent judges concluded that these rules were simply illegal. A decision recently made official by Manchester City who did not fail to rejoice via a press release.

“- The club was successful: the Associated Party Transaction (APT) rules were found to be illegal and the Premier League’s decisions regarding two specific MCFC sponsorship transactions were overturned.

– The Tribunal found that the original APT rules and the current (amended) APT rules breached UK competition law and procedural fairness requirements.

– The Premier League was found guilty of abusing its dominant position.

– The Tribunal has determined that the rules are structurally unfair and that the Premier League has been specifically unfair in the way in which it has applied these rules to the Club in practice.

– The rules were found to be discriminatory in their operation, as they deliberately exclude shareholder loans.

– In addition to these general findings on legality, the court overturned specific decisions by the Premier League to reassess the fair market value of two transactions entered into by the club.

– The court found that the Premier League had made these decisions in a procedurally unfair manner.

*- The Tribunal also found that the Premier League’s assessment of the fair market value of two of the club’s sponsorship transactions had been carried out with unreasonable delay and that the Premier League had therefore breached its own rules. »

It is therefore a real bolt from the blue since Manchester City will be able to renegotiate sponsorship contracts as they wish. However, as indicated in the press release published by the English club, this decision could put several Premier League clubs in great danger. Indeed, City pointed out the fact that these sponsorship rules did not take into account clubs benefiting from shareholder loans. Loans often at 0 interest and which could sometimes not even be repaid at all. And for City, this detail made all the difference.

Moreover, the Times perfectly explains that if the rules are changed and rates are applied to these generous loans, many clubs could find themselves in breach of the rules of profitability and sustainability. This is where the problem lies since these loans granted by the club owners represent no less than 1.7 billion euros! And several clubs benefit from XXL loans. Everton negotiated one for €537m, €444m for Brighton, €308.5m for Arsenal and €174m for Chelsea. Suffice to say that if rates are applied to these free loans, the addition risks being very painful.