Manchester City, the English champion, achieved an important legal victory in the English Premier League.
An independent arbitration tribunal has declared that the league's new sponsorship rules, which aim to prevent clubs from artificially inflating their sponsorship deals with owner affiliates, are unlawful. Man City, with the support of Abu Dhabi sheikhs, welcomed the decision.
A panel of retired judges have ruled that the Premier League's rules breach UK competition law.
The league's recent ban on two of Manchester City's sponsorship deals, including a major contract with airline Etihad, was therefore unlawful. Man City announced that they will demand compensation for the blocked deals. The Premier League may need to review or scrap its sponsorship rules.
A bitter setback for the Premier League
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The decision could also have far-reaching consequences for other Premier League clubs operating under similar financial structures, including Arsenal and Brighton, who have taken out loans from their owners.
The court found that loans made by shareholders and owners are not covered by the rules of so-called “associated party transactions” (APT), and therefore the Premier League is not allowed to regulate such transactions.
This is a major setback for the Premier League. Hearings are currently underway into the allegations against Pep Guardiola's club. The association accuses City of committing financial violations in 115 cases.
More trades in this direction are now possible
There is no direct connection to the final ruling. It was not initially clear whether this could still have an impact on the proceedings. Associated Party Transaction (APT) rules were introduced in December 2021 as part of the Saudi-led takeover of Newcastle United and were amended again in February this year.
As a result of this ruling, Manchester City and other clubs may be able to sign more profitable deals with affiliates in the future. This would put the Premier League under more pressure to ensure fair competition financially between clubs, which is what critics already lack.
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