Everything you need to know from the Man City v Premier League ruling

The verdict is in on the landmark associated-party transaction (APT) legal battle between Manchester City and the Premier League, but what are the key findings? Telegraph Sport breaks down the judgment…

Premier League found that City sponsorship deals were overvalued

Manchester City challenged two particular sponsorship deals that were judged last year by the Premier League to not be fair market value – one with Etihad Aviation Group, the other with First Abu Dhabi Bank. The tribunal found that these transactions had been assessed conscientiously and did not find the fair market values to be unreasonable. City failed in these challenges.

However, the tribunal did agree that the decisions were reached in a “procedurally unfair way and must be set aside”. Essentially, City were not given an opportunity to respond to the Premier League’s analysis or data to those sponsorship deals. These were wins for City.

The tribunal also said that there were also “unreasonable” delays of around three and two months respectively for the FAB transaction as well as a separate Emirates Palace deal.

Another win for City was the tribunal’s ruling that rule amendments earlier this year, which included putting the burden of proof on clubs to show that sponsorship deals are of fair market value, increased the risk of inaccurate assessments and thus “a distortion of competition”. The Premier League says that these rules can be “quickly and effectively… remedied”.

City, however, view the verdict as meaning “all of the APT rules are void, and have been since 2021” and are calling for a period of “careful reflection” in a letter issued to the 19 other Premier League clubs.

The pivotal roles of Portsmouth and Newcastle

Included in the 175-page verdict released on Monday is the background to the Premier League’s financial rules. This explains how the rules initially stemmed from Portsmouth’s insolvency in 2009-10 and a desire to limit a club’s losses so that other clubs would not suffer a similar fate.

It was felt necessary to underpin this with rules about “related party transactions” (RPT) – i.e. business deals between a club itself and companies close to that club’s owners.

Then the Newcastle takeover in 2021 became the catalyst for further change.

The tribunal detailed how, five days after Newcastle United’s takeover by Saudi Arabia, an unnamed person emailed the Premier League on behalf of his club and 10 others in an attempt to stop any RPT.

At a vote the following week, 18 clubs agreed to suspend any RPT for around six weeks, pending the formation of a new advisory group. Newcastle and City were the only clubs who did not vote in favour of the suspension.

Ultimately, what resulted were the newly named “associated-party transaction” (APT) rules that were further amended earlier this year and must now again be redrafted.

Four clubs with City, 10 clubs with the Premier League

One striking part of the report is the section that deals with the list of witnesses in the arbitration and highlights the depth of the bitter division now inside the Premier league.

“For the claimant (Manchester City): Chelsea, Newcastle United, Nottingham Forest and Everton. For the respondent (the Premier League): Brighton, West Ham, Manchester United, Liverpool, Tottenham and Arsenal.”

Brentford, Bournemouth, Fulham and Wolves also wrote letters in support of the Premier League rules.

No ‘anti-Gulf agenda’

Perhaps the most eye-catching line in City’s initial submission related to the so-called “tyranny of the majority” whereby a two-thirds majority of Premier League clubs can impose rules. City also claimed they were victims of discrimination.

The tribunal found that the APT rules were not “targeted specifically at clubs owned by companies in the Gulf region but were rather intended to apply to any club that might use APTs”.

An unnamed witness called by the Premier League said there would also have been concerns about similar US takeovers and that “there had been concern for a number of years about related-party transactions…at above market value”.

The Premier League has since also pointed to the wider financial landscape and believes that the tribunal “endorsed the overall objectives, framework and decision-making of the APT system”. This interpretation has since been disputed by City in a fresh letter to all 19 other Premier League clubs.

Shareholder loans must count

Perhaps the most significant element of the verdict released on Monday is around shareholder loans.

Previously APT rules did not apply to these loans, so clubs did not have to show that loans were agreed at “fair market value”. The feeling had been that, because these loans come direct from investors and are transparent, they should be viewed differently from any attempt to artificially inflate commercial deals.

However, Manchester City argued that shareholder loans are an APT transaction – and the interest rates charged are either very low or non-existent and therefore not at fair market value.

A key piece of context here is that Manchester City have no debt to their owners, whereas many of their rivals do, including Arsenal (£259 million) and Liverpool (£137 million).

The arbitration ruling sides strongly here with Manchester City, calling the exclusion of loans as an APT an obvious “distortion of competition” and “discriminatory”. What this means for the new rules is less clear but the “unlawful” finding will presumably result in them having to be adapted in some way so that these owner loans are accounted for in the profit-loss calculations, or the costs of “fair-market” interest are added.