Manchester City has launched a fresh legal battle against the Premier League, arguing that recent amendments to sponsorship regulations unfairly favor rival clubs, particularly Arsenal. The four-time consecutive champions are challenging the amended Associated Party Transaction (APT) rules, which were initially introduced following Newcastle United’s Saudi-led takeover to prevent inflated commercial deals with entities linked to club owners.
Last year, Manchester City successfully argued before a tribunal that the original APT regulations contravened competition law. Despite objections from City, Premier League clubs voted 16-4 in favor of modifying rather than completely rewriting the rules. Manchester City’s latest legal action contends that these revisions continue to discriminate against them while allowing certain clubs to gain financial advantages through shareholder loans.
The Basis of Manchester City’s Legal Argument
Manchester City’s legal team asserts that the amended rules perpetuate unfair treatment, particularly concerning shareholder loans. Under the revised regulations, clubs that received shareholder loans were given a grace period until January to convert them into equity. Loans that were not converted are now subject to a Fair Market Value (FMV) test, a measure Manchester City believes remains discriminatory.
The club argues that teams benefiting from shareholder loans enjoy advantages such as avoiding interest payments at FMV rates and excluding up to three years of interest expenditure from their accounts. This, City claims, results in distorted economic competition. They further argue that unlike sponsorship deals with associated parties, which face a 30-day approval period, shareholder loans can be settled immediately, giving clubs a significant financial edge.
Implications for Premier League Financial Regulations
Should Manchester City’s challenge succeed, the Premier League’s financial regulations could be thrown into disarray. The same tribunal that previously ruled in Manchester City’s favor will adjudicate this latest dispute. If the panel sides with City again, the league may be forced to overhaul its financial governance, potentially incurring substantial legal costs.
This legal battle is separate from the 130 charges Manchester City faces regarding alleged financial rule breaches. However, the club is utilizing the same high-profile legal team for both matters. The outcome of this case could have far-reaching consequences, not only for City but also for the broader financial landscape of English football.
Rival Clubs Named in Manchester City’s Legal Case
City’s case also highlights how rival clubs, including Arsenal, have allegedly benefited from shareholder loans without facing the same regulatory scrutiny. According to Manchester City’s legal filings, Arsenal received approximately £259 million in shareholder loans in 2022-23, Brighton took £406.5 million in 2021-22, Everton secured £450 million in 2022-23, and Leicester obtained £265 million in 2021-22. City argues that these transactions provided financial flexibility that is not available to clubs reliant on sponsorships tied to their ownership groups.
By referencing these figures, City aims to demonstrate that the amended APT rules do not ensure a level playing field but instead continue to allow certain teams to gain an unfair economic edge through preferential financial arrangements.
Premier League’s Stance and Potential Outcomes
The Premier League has defended its amendments, asserting that the tribunal’s earlier ruling invalidated only specific sections of the APT rules rather than the entire framework. League officials maintain that the modified rules remain valid and enforceable.
However, Manchester City argues that the entire rule set was declared void and unenforceable, meaning any amendments to them are also legally void. The club insists that the Premier League should have waited for a complete tribunal ruling before modifying the rules, a position supported by other clubs, including Aston Villa.
If the tribunal rules in Manchester City’s favor, it could force a major rethink of how financial fair play regulations are structured within English football. Additionally, the Premier League may face intensified scrutiny over its governance and transparency. The verdict will be closely watched, as it could redefine financial regulations in the Premier League for years to come.
