MCFC vs the Premier League: The Arbitration

Written by Alice Forsyth

Background

In this legal challenge, Manchester City alleges that the Premier League’s Associated Party Transaction (APT) rules are unfairly discriminatory, anti-competitive and represent a “tyranny of the majority”.

I would like to note that this is a completely different legal claim than the one brought against Manchester City over alleged breaches of financial rules.

What are the Premier League’s APT rules?

The Premier League introduced the APT rules after Newcastle United was bought by a Saudi-led consortium in 2021 for ￡305million. The rules are designed to ensure that commercial deals undertaken with ‘owner-linked entities’ are done for fair market value .

An ‘owner-linked entity’ is either an individual or a company that has ties to the owner of any particular football club.

A good example of a commercial deal in this context is Manchester City having a sponsorship deal with Etihad Airways, a separate company which also has links to the club’s Abu Dhabi owners.

Under the rules, clubs need to submit each APT to the Premier League’s board of directors for a ‘Fair Market Value’ assessment. This assessment ensures that the prospective deal represents a fair price that any informed parties would agree on in a typical market situation, regardless of the fact that they are owner-linked entities and most likely, financially linked too.

Ultimately, the Premier League say that the purpose of these rules is to stop clubs (and owners) from earning income that their competitors cannot access simply by inflating commercial agreements with other entities they are linked to.

Manchester City’s claim

After the rules were tightened slightly in February 2024, Manchester City commenced their claim, arguing that they are the victim of “discrimination” and that the APT rules were “deliberately intended to stifle commercial freedoms of particular clubs in particular circumstances and thus to restrict economic competition".

The club argues that the APT rules are “anti-competitive” and violate the Competition Act 1998 .

At the heart of their argument, Manchester City say that they were “historically disadvantaged” having never been on an even playing field with the other ‘Big 6’ Premier League teams (such as Manchester United, Arsenal and Chelsea) with regard to the revenue they could earn without commercial deals.

Putting aside relatively recent success in the League, they say that the other ‘Big 6’ teams were able to establish global brands and fanbases largely because of their successful histories and links to famous managers and players for decades gone by. If Manchester City wished to be competitive with these clubs, they had to do so through commercial deals and owners’ assistance rather than relying on the revenue that a large, international fanbase and image brings.

Manchester City argue that, by effectively preventing their Abu Dabhi-based owners from going into lucrative international markets (such as in the Middle East) to negotiate contracts and sponsorship deals, they are in turn limiting Manchester City’s ability to compete commercially with other clubs in the League.

The arbitration

Rather than initiating a lengthy litigation process which could have ended in a trial in court, the hearing took place by arbitration.

In an arbitration, representatives from both sides will outline their positions and witness evidence will be presented to an independent third-party arbitrator or panel. The arbitrator(s) somewhat acts as a judge would in a trial, as they will make a final decision on the dispute. Although the process is not initiated through the court, the decision of the arbitrator is legally binding on both parties.

The arbitration commenced on 10 June and took place behind closed doors over 2 weeks.

So, why is this really just making the news now?

Executives from each of the Premier League clubs met for the first shareholder meeting of the season on 26 September 2024. At the meeting, clubs were due to take a vote on some amendments to the APT rules. However, this vote was dropped at the last moment.

This has caused many to speculate that Manchester City were at least somewhat successful in their legal challenge against the Premier League. Both parties have declined to comment.

The problem

Since it was suggested that Manchester City were at least somewhat successful in the June arbitration, questions have been raised surrounding the entire outcome of the hearing. However, because (generally) arbitration proceedings are and can be kept private and confidential, we can only speculate the true outcome.

Leading sport law barrister, Nick De Marco KC, took to X to raise his concerns around the secrecy of the matter and urged for the arbitrator’s decision to be published.

De Marco KC claims that “clinging to absolute secrecy” is damaging the Premier League’s reputation, which is particularly harmful at a time when the government is considering implementing a new independent football regulator .

For now, we will simply have to wait and see if either Manchester City or the Premier League wish to make a statement or publish the decision of the arbitrator.