Interviewer: Can you break down the recent arbitration ruling involving Manchester City and the Premier League?
Interviewee: Absolutely! The arbitration decision was released after a hearing focused on the Premier League’s associated party transaction rules, or APTs. This ruling is particularly important as it’s just the first of two expected verdicts that will have repercussions not only for Manchester City and the Premier League but for English football as a whole.
Interviewer: What exactly do the arbitration proceedings address?
Interviewee: In February, the Premier League amended its APT rules, which govern transactions and financial arrangements between clubs and associated parties involved in their ownership. For Manchester City, this pertains to agreements with entities like the Etihad Aviation Group, which has ties to the Abu Dhabi government. When the Premier League revised these rules, City challenged them legally, raising concerns about the league’s governance structure. They argued that requiring a two-thirds majority vote could lead to what they termed the “tyranny of the majority.” While many of City’s challenges were dismissed, they were successful in contesting two specific elements of the rules.
Interviewer: Where did Manchester City find success in the arbitration?
Interviewee: Their primary victory involved the rules governing loans from shareholders to clubs. Unlike sponsorship agreements, these loans weren’t typically evaluated for fair market value. The Premier League claimed that any club could secure such loans, and therefore, they weren’t anti-competitive. However, City argued that not all owners have the capability to provide these loans, which skews the competitive landscape. In this instance, the arbitration panel sided with City.
Interviewer: Why does this ruling matter?
Interviewee: Although it might not significantly change Manchester City’s current position, it carries broader implications. Several Premier League teams have benefited from owner loans at advantageous rates, and now they might have to reevaluate these arrangements. The likelihood of legal repercussions for those clubs is significant. Additionally, this ruling reinforces criticisms that City has long voiced about the league’s governance, strengthening their stance against the league’s regulatory practices. City also prevailed on a second point related to the need for improved disclosure from the league when determining fair market value, which has led to the reassessment of two important sponsorship deals.
Interviewer: Does this ruling mean the end of APT rules?
Interviewee: Not at all. Most of City’s broader challenges were rejected. The arbitration panel did not find any evidence that the APT rules lack transparency or distort competition. In fact, the league had ample justification for tightening these rules. The Premier League believes it can swiftly adjust its regulations in response to this ruling.
Interviewer: So who really emerged victorious in this dispute?
Interviewee: Both parties are declaring victory, but for different reasons. Manchester City had extensive claims against the Premier League, most of which were dismissed. However, they did pinpoint some unlawful aspects of the regulations and noted that the league’s processes could improve. This perception of the league’s mismanagement might resurface in the ongoing case regarding the 130 charges against City for allegedly breaching Premier League rules. It reflects a sense of instability within the competition, which can be viewed as a win for City, especially in light of their public criticism of the league’s governance. Moving forward, one thing is clear: there will be plenty of work for lawyers in this arena.
