Man City claim victory in Premier League case with APT rules deemed ‘unlawful’ & ‘violate UK law’

Manchester City and the Premier League are both claiming victories in the Rule X Arbitral Tribunal Award, relating to how Associated Party Transaction (APT) rules have been applied.

City brought a landmark legal case against the Premier League during the summer in which it alleged that the league’s decision-makers were unfairly implementing the APT rules. Those laws are designed to ensure clubs can not inflate sponsorships from associated parties - such as City and their chief commercial partner Etihad Airways, both of which have ties to Abu Dhabi.

APT rules ensure that fees paid as part of a commercial deal match a fair market value (FMV). Without this system, clubs could inflate those figures allowing them to subsequently navigate the Premier League’s Profit and Sustainability Rules (PSR).

Both City and the league can at least claim some sort of victory from Monday’s verdict, with an independent panel ruling that the APT rules violate UK competition law and it was unlawful to reject two recent City sponsorship arrangements. However, the Premier League claim City’s successful claim only relates to certain elements of the APT laws which can be easily amended. They also highlight that the majority of the club’s challenges were rejected.

In a statement released on Monday afternoon, City said: “ The Club has succeeded with its claim: the Associated Party Transaction (APT) rules have been found to be unlawful.

“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.”

City also add that the Premier League ‘abused its dominant position’, that the rules were ‘structurally unfair’ and they were ‘discriminatory in how they operate’.

As for the Premier League, they state the tribunal - chaired by Sir Nigel Teare, Christopher Vajda KC, Lord Dyson - ruled in favour of the ‘overall objectives, framework and decision-making of the APT system’, adding the rules are ‘necessary in order for the League’s financial controls to be effective’.

“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,” the Premier League added.

That shareholder loans were excluded from APT rules was central in the independent commission's findings, meaning clubs could essentially borrow funds interest-free from owners, who could be viewed in a sense as an associated party.

“The exclusion of shareholder loans from the APT Rules distorts competition in permitting one form of subsidy, namely a non-commercial loan but not another namely a non-commercial sponsorship agreement,” the tribunal determined.

The tribunal also rejected that the rules discriminated against clubs from the Gulf region, with major changes introduced after Newcastle United’s Saudi-backed takeover in 2021. City had also questioned how FMV was determined, but the league rejected that aspect of the club’s challenge.

At the heart of City’s complaint were two commercial transactions that were rejected by the Premier League. But the tribunal ruled the league’s verdict was ‘not unreasonable’ and City have been invited to resubmit these sponsorship applications.

This case is separate from the 115 charges that have been brought agianst City from the Premier League. That case is currently in its third of a 10-weeks hearing.