Explainer: Who are the real winners in Man City’s case against the Premier League?

On Monday afternoon the decision of an Arbitration Panel was published following a legal challenge by Manchester City FC against the Premier League’s Associated Party Transaction (APT) Rules.

The case, which focused on financial arrangements between clubs and entities connected to their ownership, is one of two major disputes involving City that could reshape the future of financial regulations in English football.

This arbitration hearing was important for City as they sought to challenge the fairness of rules that directly affect their lucrative sponsorship deals. APT regulations were tightened in response to concerns over competitive integrity, especially after Newcastle United’s takeover by Saudi Arabia’s Public Investment Fund.

City, with its ownership links to Abu Dhabi, argued that the updated rules unfairly limited their financial opportunities, calling them anti-competitive and biased.

Within minutes of the tribunal’s decision being made public, both the Premier League and City scrambled to claim the victory in the dispute. Indeed the ensuing PR battle may ultimately be the whole point of the exercise, with City increasingly desperate to see the Premier League’s authority as a regulator eroded as its parallel case with the league continues over the 115 charges. 

Certainly there has been much spin and briefing. One journalist somehow managed to scrutinise the highly guarded 164 page decision and write a 1890 word editorial denouncing the Premier League’s financials rules as “in tatters” within 18 minutes of its publication.

But does the decision actually have far-reaching implications, not only for City but also for the broader landscape of the Premier League? 

The verdict included significant findings regarding how financial transactions like shareholder loans are regulated, potentially affecting several top-flight clubs, but do they actually affect City? Or does the whole case simply serve as a precursor to the much larger one involving 115 charges, which could fundamentally alter City’s standing and whole future in the league?

This explainer breaks down the tribunal’s ruling, answering key questions about what City’s challenge was, what they hoped to achieve, and what the independent panel ultimately found. It explores how these findings could impact City, the Premier League, and the broader financial practices of other clubs. It also scrutinises the implications of this case on the ongoing 115 case against Manchester City. 

What was City’s challenge?

Manchester City’s legal challenge against the Premier League revolved around the rules governing Associated Party Transactions (APTs), which are financial dealings between a club and entities directly linked to its ownership. The Premier League introduced these rules in December 2021 and updated them in February 2024 to tighten oversight on such transactions. They are especially significant for City as so many of their commercial deals are tied to Abu Dhabi, whose ruling family have a controlling stake in the club. 

City, feeling the rules were too restrictive, argued that the regulations were anti-competitive and discriminatory. Specifically, City contended that the governance model behind these rules – i.e. the 20 clubs, who make up the Premier League shareholders – which requires a two-thirds majority vote for changes, amounted to what they described as the “tyranny of the majority.” 

They believed this system unfairly restricted their ability to engage in sponsorship deals with partners connected to their ownership.  Although their broader challenge to the governance structure was dismissed, City did manage to secure two victories in specific areas of the regulations.

What did City hope to gain from the case?

City’s primary objective in challenging the APT rules was to create a more favourable environment for their sponsorship deals with companies that have ties to their ownership, such as Etihad Airways and the First Abu Dhabi Bank. By questioning the Premier League’s application of fair market value (FMV) assessments for these sponsorships, City aimed to weaken the league’s regulatory power over its financial dealings.

Beyond this, it seems City hoped to set a legal precedent that might benefit them in their ongoing battle against the 115 charges of alleged financial misconduct they face. A favourable ruling could undermine the Premier League’s standing as a regulatory body and set the stage for more lenient rulings in the future.

What did the independent panel find?

The independent arbitration panel delivered a mixed verdict, granting City partial victories while also upholding the Premier League’s overall approach to APT regulations. City’s primary win was related to the treatment of shareholder loans. The panel agreed with City’s argument that these loans should be subjected to the same scrutiny as sponsorship deals in terms of fair market value, finding that excluding them was “discriminatory” and “distorted competition.”

Another area where City won was regarding the Premier League’s procedural handling of fair market value assessments. The panel ruled that the Premier League had failed to provide City with timely information that would have allowed them to address concerns over the valuation of their sponsorship deals. This led to two of City’s deals being unfairly rejected, which will now be reassessed.

However, the panel also dismissed many of City’s broader claims, including their argument that the APT rules lacked transparency and distorted competition. The adjudicators confirmed that the rules themselves were generally in line with sporting integrity and sustainability objectives, giving the Premier League validation in its regulatory processes.

How will this change things?

The reality is that City failed in their main argument, which was to overturn APT rules. Yes, there will be a reassessment under fresh criteria, but they aren’t going away.

The most significant outcome of this ruling is that shareholder loans will now fall under the scope of APT regulations. 

This could have implications for other Premier League clubs, chief amongst them (as far as City are concerned) Arsenal, who have £259 million on their books. Everton (£451 million) and Brighton (£373 million) also benefit heavily from them. This change means that clubs receiving interest-free loans from their owners will face greater scrutiny. 

This adjustment will likely force these clubs to align their financial practices more closely with market standards, potentially limiting their ability to finance operations in a way that circumvents the league’s spending controls. In broader terms, the verdict reinforces the need for the Premier League to refine its regulatory framework to avoid procedural lapses that can be legally challenged.

What did City actually gain from the case?

While City did not achieve a comprehensive victory, they managed to win on procedural points. Their success in challenging the exclusion of shareholder loans from APT rules has significance, as it highlights a flaw in the Premier League’s regulatory approach. 

Additionally, City’s ability to force the reassessment of their rejected sponsorship deals with Etihad Airways and the First Abu Dhabi Bank means they could potentially recover revenue they claim to have lost due to these rulings. The opportunity to seek damages for the Premier League’s delays in processing these deals is also on the table, although the financial impact of any potential compensation remains uncertain.

Is there something else going on with this case?

Even if it received no more than a bloody nose from the panel, there is the reality that the Premier League risks being overwhelmed by litigation at a time when it reaches a critical juncture in its much bigger and infinitely more complex case against City on the 115 charges. 

Just on this single arbitration case, there were – reported the well-informed Independent chief football writer, Miguel Delaney – no fewer than 13 barristers on the case, five of whom were King’s Counsels. Such an arsenal of legal experts is “insane”, one source told Delaney. 

“It is a staggering number of barristers,” a partner at a major law firm told Off The Pitch. “I actually find it very difficult to understand what they were all contributing. I can’t bring to mind an example of another case where a party had more than two barristers, i.e. a KC supported by a junior.” 

The source added that a KC would typically command a £100,000 fee for a one week trial, and junior barristers around half that. That is before solicitors, paralegals and expert witnesses were factored in. A solicitor’s fee on such a case would come in as high as £500 per hour.

Who covers these costs? For the Premier League the clubs ultimately share all operating costs, of which this is a significant one. The Times has reported that last season’s Premier League legal bill was £48 million, instead of a budgeted £8 million. 

City – and their parent company, City Football Group – have declined to respond to previous queries made by this publication as to how much their legal bill is and how they account for it.

How does it affect the 115 case?

The ongoing case involving 115 charges against City for alleged breaches of Premier League rules is far more significant in scope. The arbitration panel’s ruling in the APT case does not directly impact these charges, but it could provide City with a legal foothold to argue that the Premier League’s regulatory procedures are flawed. 

The implication that the league’s processes are prone to procedural errors could cast doubt on the fairness of the ongoing investigation into City’s financial conduct.

However, the panel’s decision to uphold the general principles of fair market value assessments weakens City’s broader challenge against the Premier League’s authority. 

Ultimately while City may have scored some tactical victories, the strategic battle over the 115 charges will be much harder to win.

What happens next?

The immediate outcome of the arbitration ruling will be a formal vote among Premier League clubs to amend the APT rules to include shareholder loans. A meeting to discuss them has been called for next week, but they will not be voted for on the same day.

This adjustment could significantly impact clubs that have previously used these loans to support their spending, requiring them to find alternative financing methods that comply with fair market value standards.

Already City have sought to undermine those reforms, circulating an email from its chief counsel, Simon Cliff, to the other nineteen clubs, accusing the Premier League of “misleading” them and repeating “several inaccuracies.” 

City may also choose to pursue compensation for the revenue they claim to have lost due to the Premier League’s handling of their sponsorship deals. This could set a precedent for other clubs to seek damages for any procedural failings by the league in the future.

The broader trend indicated by this case is that legal disputes involving football governance are likely to increase. As financial stakes continue to rise, clubs are becoming more willing to challenge the rules they believe are limiting their commercial opportunities. 

This trend could lead to more cases being settled by legal tribunal, with the Premier League and other governing bodies facing greater scrutiny over their regulatory practices.

Bad news for the Premier League, and also for the member clubs who ultimately pick up the legal table. On the other hand: boom time for lawyers. 

“We are living in the most exciting time for sports law,” Nick De Marco KC, perhaps the most prominent sports lawyer in Britain, wrote in a LinkedIn post after the verdict was published.  “I have never myself been one to celebrate the greater commercialisation and therefore legalisation of sport and its regulation, but it is a real fact of life and economic activity, such that this tendency for greater scrutiny of sports regulation is inevitable.
 
“It does perhaps also lend further support to the calls for greater independence, and transparency, in the regulation of sport.”