Sponsorship rules in place in the Premier League for nearly three years have been deemed to be “void and unenforceable” in a blow to the league and a significant win for Manchester City.
Both the Premier League and four-time defending champions City claimed victory in October of last year when an independent tribunal ruled that three aspects of the rules — known as Associated Party Transactions (APT) regulations — were “unlawful”.
The latest ruling, seen by The Athletic, has declared that those three “unlawful” respects of the rules “cannot be severed with the result that the APT Rules as a whole are void and unenforceable.”
A tribunal comprised of Sir Nigel Teare, Lord Dyson and Christopher Vajda KC made their conclusion following a two-day hearing at the end of last month which could open the possibility for clubs to claim compensation for deals agreed between December 2021 and November 2024 that may have been undervalued.
The Premier League must also foot the legal bill which could run into the tens of millions.
City’s position was that the “unlawful” elements entirely voided the APT rules — a position agreed upon by the tribunal — while the Premier League played this down and made amendments to the rules in November.
The majority of the clubs — 16 of the 20 — voted through the changes with City as well as Aston Villa, Newcastle United and Nottingham Forest in opposition.
Last week, City mounted a separate legal challenge against the APT amendments with the same three-person panel set to rule on that outcome too.
A Premier League statement on Friday read: “An arbitration tribunal has determined the effects of its first award published last year relating to Manchester City’s legal challenge of the Premier League’s previous associated party transaction (APT) rules.
“The tribunal’s decision has found that the three narrow aspects of the old APT rules, previously found to be unlawful, cannot be separated from the rest of the previous rules as a matter of law. The result, the Tribunal has determined, is that the previous APT rules, as a whole, are unenforceable.
“However, the previous APT rules are no longer in place, as clubs voted new APT rules into force in November 2024. This decision expressly does not impact the valid operation of the new rules.
“The tribunal has made no findings as to the validity and effectiveness of the new rules. The Tribunal states that whether its decision has any benefit to the club, therefore, depends on whether the new APT rules are found to be lawful as part of the second challenge issued by the club last month. The league continues to believe that the new APT rules are valid and enforceable and is pressing for an expeditious resolution of this matter.
“The new APT rules are in full force and clubs remain required to comply with all aspects of the system, including to submit shareholder loans to the Premier League for fair market value assessment.”
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This case is separate from City’s defence of more than 100 charges against them for allegedly breaching financial regulations which they deny.
The aim of the APT rules — which were devised in December 2021 following the Saudi-led, Public Investment Fund (PIF) takeover of Newcastle — were for the Premier League to regulate against its clubs using sponsorship deals with companies linked to their owners to inflate revenue streams and allow room for greater spending.
The APT rules, though, ensured that Newcastle have had their sponsorship agreements with PIF-linked events company Sela and e-commerce company Noon subjected to the market value tests.
City argued the rules were unlawful and against competition law. The league insisted that the rules were fully compatible with the law.
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City’s view is that the new rules are discriminatory and face the same legal issues as the previous iteration because, the club believe, the existing shareholder loans are still not scrutinised in the same way as other commercial deals.
They feel those loans should have been subjected to fair market value tests at the time and should now be subject to them retrospectively as commercial agreements from 2021 to 2024 are scrutinised. City’s belief is that the new rules allow teams to keep that advantage which is, in their view, unlawful and in line with what the independent panel ruled in November.
(Jakub Porzycki/NurPhoto via Getty Images)
