Why are Manchester City taking action against the Premier League?

They want Premier League rules for Associated Party Transactions (APT) scrapped, claiming they are unlawful. APT rules, which were introduced in December 2021 and tightened this year, cover sponsorship and commercial deals with companies connected to the clubs, as well as any player transfers between clubs in the same ownership group, to ensure they are of “fair market value”.

If City succeed, any constraints over inflated sponsorship deals would be removed. Victory for City could also have a significant impact on their case concerning 115 Premier League charges for alleged breaches of Profit and Sustainability Rules.

What is an APT and why are they important?

In England there are a number of examples of APTs. Newcastle have secured a £25million-a-year front-of-shirt deal with Saudi events company Sela since their Saudi-led takeover, while Chelsea have a shirt deal with Infinite Athlete, a leisure company that counts joint-Chelsea owners Todd Boehly and Behdad Eghbali among its investors. Four of City’s ten main sponsors have links to Abu Dhabi, including the shirt and stadium deals with Etihad Airways.

Until December 2021, the Premier League only viewed commercial deals as “related party transactions” if they were described as such in clubs’ accounts — Manchester City did not declare sponsorship deals such as Etihad’s as related party transactions. The 2021 rules stated that if the Premier League’s board has reasonable grounds to suspect that it is an associated party deal then an independent firm will determine whether it is of fair market value.

From this January, the Premier League made clubs liable to be charged with a breach of the rules if they do not “use all reasonable care” to ensure deals are of fair market value, with the burden of proof on the clubs to show they are.

If constraints over APTs are removed, there are concerns that deals similar to the €200million-a-year deal between the Qatar Tourist Authority and Qatari-owned Paris Saint-Germain announced in 2014 — which Uefa later judged to be not of fair market value — could be replicated in England.

What are the 115 charges?

Fifty-four concern a failure to provide accurate financial information 2009-10 to 2017-18. Fourteen are related to a failure to provide accurate details for player and manager payments from 2009-10 to 2017-18. Five concern a failure to comply with Uefa’s rules, including Financial Fair Play regulations, from 2013-14 to 2017-18. Seven are for breaching the Premier League’s PSR rules 2015-16 to 2017-18. 35 are for a failure to cooperate with Premier League investigations between December 2018 and February 2023. The allegations first surfaced because of leaked correspondence published by the German newspaper, Der Spiegel. City have always argued that the material was obtained illegally.

What does this mean for City’s charges?

Significantly, next week’s private arbitration hearing comes before the independent hearing for City’s charges, which is due to start in November. Rival clubs are concerned that a successful claim against APT rules could strengthen City’s defence later in the year. It has been alleged that City concealed payments made by owner Sheikh Mansour’s Abu Dhabi United Group through third parties and disguised them as sponsorship revenue. If the tribunal concludes that Premier League rules around fair market value are unlawful — and such regulations existed even before more robust rules were introduced in 2021 — it could open the way for City to launch fresh challenges against the legality of the rules concerning the 115 charges.