Manchester City Takes Legal Action Against Premier League: Challenging the Associated Party Transaction Rules

Manchester City has initiated legal action against the Premier League, aiming to abolish the Associated Party Transaction (ATP) rules. This development, reported exclusively by The Times, reveals the club’s contention that these regulations are unlawful and have resulted in significant financial losses.

The Core of the Dispute

The ATP rules, implemented in December 2021, require that any commercial or sponsorship transactions between Premier League clubs and companies associated with their owners be independently assessed for fair market value. These regulations were introduced to maintain fairness and prevent clubs from inflating revenues through overly favorable deals with affiliated entities.

Manchester City argues that these rules have unlawfully constrained their commercial activities and resulted in lost revenue. The club’s 165-page legal document, cited by The Times’ reporter Matt Lawton, claims that the ATP rules have led to “discrimination” against the club.

Legal Proceedings

The legal battle will be resolved during a two-week arbitration hearing starting on Monday, June 10. Manchester City seeks not only to overturn the ATP rules but also to secure damages for the revenue lost due to the regulations.

Sky Sports News reached out to both Manchester City and the Premier League for comments but has yet to receive responses.

Implications for the Premier League

Sky Sports News chief reporter Kaveh Solhekol emphasized the unprecedented nature of this lawsuit. Manchester City’s challenge to the Premier League’s financial regulations could have profound implications for the competitive balance within the league. Solhekol explained that if a club signs a commercial deal with an associated company, the agreement must be verified by independent auditors to ensure it represents a fair market value. This prevents clubs from artificially inflating their revenue through excessively lucrative deals with related entities.

City’s legal team will argue that these ATP rules are unlawful and incompatible with UK competition law. A ruling in favor of Manchester City could fundamentally alter the regulatory landscape of the Premier League.

Connection to Previous Charges

This lawsuit is distinct from the 115 charges Manchester City faces for alleged financial fair play violations. In February 2023, the Premier League charged the club with breaching financial fair play rules over 100 times between 2009 and 2018. These charges include allegations of undisclosed financial remunerations and non-compliance with UEFA’s financial fair play regulations. The hearing for these charges is set for November.

Despite being separate cases, the outcomes are interlinked. Solhekol notes that a successful challenge to the ATP rules could significantly impact the November hearing. If Manchester City demonstrates that some financial rules are unlawful, it could weaken the Premier League’s case regarding the 115 charges.

Conclusion

Manchester City’s legal action against the Premier League marks a critical juncture in the ongoing debate over financial regulations in football. The outcome of this arbitration hearing could reshape the rules governing commercial transactions and sponsorship deals, potentially altering the competitive dynamics within the Premier League. As the legal proceedings unfold, all eyes will be on the implications for both Manchester City and the broader football community.