Man City explainer: What Premier League rules do they want scrapped? And which rivals support them?

Matt Stead
Manchester City manager Pep Guardiola and chairman Khaldoon Al Mubarak with a cracked Premier League badge
Manchester City have declared war on the Premier League

Manchester City have taken legal action against the Premier League in the hope of changing rules they feel are ‘discriminatory’. But what does it all mean?

Even with 115 charges of alleged breaches of financial rules hanging over them, Manchester City are going further to take the fight to the Premier League.

The eight-time champions have launched a legal case against the league with a number of their own complaints, ranging from rules on Associated Party Transactions and multi-club ownership, with a two-week tribunal starting on June 10 to find an outcome.

These are the answers to the key questions so far.

 

What are the Premier League’s Associated Party Transaction rules?

Associated Party Transactions are any deals, from sponsorships to transfers and payments to individuals such as players, managers or senior officials, which are completed between a club and an Associated Party.

The Premier League has set out numerous criteria to determine who or what qualifies as an Associated Party, based on ‘the substance of the relationship and not merely the legal form’; it does not have to simply be an owner sponsoring the club through one of their other businesses.

The factors taken into consideration include shareholding, financial interest, pre-existing business relationships and ‘material influence’, such as familial ties.

Rather pointedly, among the Associated Party criteria is when a club and entity ‘are directly or indirectly controlled, jointly controlled, or Materially Influenced by the same government, public or state-funded body or by the same party’.

Details of any APT must be submitted to the Premier League, who will then conduct a Fair Market Value assessment to ensure its legitimacy.

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When and why did they come in?

While rules over Related Party Transactions did exist before, the Saudi Public Investment Fund takeover of Newcastle in October 2021 triggered a monumental change and the guidelines were tightened over concerns the new owners could exploit loopholes with lucrative, favourable commercial deals to strengthen their spending power, giving them an unfair advantage.

An emergency meeting was called in November 2021 at which 18 Premier League clubs voted through legislation to temporarily block commercial arrangements which involved pre-existing business relationships.

Newcastle voted against the rule change; Manchester City abstained, according to reports at the time, ‘on the basis of legal advice that the process was unlawful’.

That arrangement lasted one month before being permanently formalised in December 2021. The rules were amended and tightened further in early 2024 to include guidelines on possible sanctions, with the Premier League handbook stating that clubs agreed to them ‘as a necessary tool in maintaining the effectiveness of the Profitability and Sustainability Rules, by ensuring the veracity of the costs and revenues reported by clubs for the purposes of compliance.’

It was added that rules sought to ensure ‘the long-term financial sustainability of clubs by extinguishing reliance on enhanced commercial
revenues received from entities linked to the club’s ownership; and¬†fairness amongst clubs, so that clubs are not able to derive an unfair advantage over domestic competitors by increasing revenues or reducing costs via arrangements with entities linked to a Club’s ownership.’

Those measures prompted Manchester City to threaten legal action, which have now come to pass.

 

What is Manchester City’s complaint?

Manchester City feel the rules are “discriminatory” towards both clubs with ties to the Middle East and those part of a multi-club ownership group, and are seeking¬†“damages for the losses which it has incurred as a result of the unlawfulness of the FMV rules”.

They, as explained within a 165-page document obtained by The Times, want the APT rules scrapped as they feel they are “deliberately intended to stifle commercial freedoms of particular clubs in particular circumstances, and thus to restrict economic competition”.

Manchester City posted a commercial income of £341.4million for the 2022/23 season Рhigher than Manchester United (£302.9m), Real Madrid (£277m), Liverpool (£240m) and every other club. Their commercial income is up 50 per cent since 2019 and now makes up 48 per cent of their total revenue.

Four of their ten biggest sponsorship deals are with companies based in the United Arab Emirates: Etihad Airways, Etisalat, Abu Dhabi Tourism and Emirates Palace.

Among the 115 charges they still face for breaching Premier League regulations for nine seasons between 2009/10 and 2017/18, the first item alleges that Manchester City signed inflated sponsorship deals with related parties.

Manchester City believe that even if sponsors are linked to club owners, as so many of theirs are, they should still be permitted to decide themselves how much they want to pay, whatever any independent valuation sanctioned by the Premier League says.

They also want to remove the rule which requires 14 of 20 Premier League clubs to agree on a particular motion for it to pass, hence the “tyranny of the majority” line.

 

Do any of their Premier League rivals agree?

At least three clubs are thought in some way to support Manchester City’s stance.

Newcastle, who agreed a multi-year front-of-shirt sponsorship deal worth £25m per annum with leading Saudi Arabian events firm Sela, are among them.

So, too, are Chelsea. Their front-of-shirt sponsor is Infinite Athlete, a company which counts the Blues’ co-owners Todd Boehly and Behdad Eghbali among their investors. But Chelsea’s issue appears to lie more with the multi-club ownership facet of City’s legal challenge.

Perhaps more surprisingly, Aston Villa have been named as the other Premier League club which feels Manchester City’s concerns are valid. Their co-owner, the Egyptian billionaire Nassef Sawiris, feels spending restrictions are too prohibitive and he is thought to be close to City chairman¬†Khaldoon Al Mubarak.

Everton have also been mentioned as potentially backing Manchester City.

 

What is a Fair Market Value Assessment?

When Premier League clubs make an APT, they must submit details to the Premier League along with a ‘declaration by a director’ that they deem it to be at Fair Market Value, with documentation to prove as such.

The Premier League will then conduct a FMV Assessment, with a conclusion delivered within no more than 10 clear working days.

The Premier League board will obtain advice from independent experts and consider the evidence to deem whether or not the relevant deal was made at FMV.

The Premier League rulebook states that FMV is what something would be sold or exchanged for ‘between knowledgeable, willing parties engaging in an arm’s length transaction in normal market conditions’.

There are numerous ‘non-exhaustive factors’ taken into account when assessing FMV of a transfer, including the player’s age, position, contract terms, nationality and injury record, as well as the level of competition a club faced from other teams when signing the player and even the conditions of the transfer window in which they were signed.

For sponsorship deals and similar, clubs must show ‘there is an appropriate commercial rationale for the terms and conditions of the
transaction,’ or that ‘there were one or more competing and/or bidding contractual counterparties whose bids evidence a competitively¬†determined price’.

In both cases, historic similar agreements the club has entered into and the value of similar transactions in football will also be taken into account.

The burden of proof is on the club to demonstrate that a deal represents FMV.

 

What happens if the Premier League deem a transaction not to be Fair Market Value?

If the relevant deal is deemed not to be at FMV but has not yet been completed, it will not be permitted to go through until the numbers are amended to represent the FMV, in accordance with the Premier League’s assessment.

If the relevant deal has already been completed before the Premier League decides it does not represent FMV, the club must within seven days either ‘end the transaction’ and return any money received as part of it; or ‘vary the transaction’ to meet the figure the Premier League deems is FMV – they must make up the shortfall or return any excess money paid, depending on whether the market value is deemed to have been depressed or inflated.

 

What happens if clubs wish to challenge a Premier League ruling over FMV?

If the Premier League determine that a deal does not represent FMV but the club in question wishes to challenge the ruling, they can trigger arbitration with an FMV Dispute.

Independent arbitrators, external legal advisers and independent external experts will then be used to settle the dispute within 30 days.

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