With Manchester City taking legal action against the Premier League, Sky Sports aims to answer the key questions following the unprecedented move.
City are attempting to end the Premier League’s Associated Party Transaction (APT) rules, with a two-week arbitration hearing beginning on Monday.
The claim comes amid 115 Premier League charges against Man City over alleged breaches of financial rules with a hearing set for November, according to The Times, who first broke the legal action story on Tuesday.
In a special Q&A, Sky Sports News senior reporter Geraint Hughes and football finance expert Kieran Maguire answer all the important questions regarding Man City’s legal action against the Premier League…
What are Associated Party Transaction (APT) rules?
Hughes: “It’s all to do with money and commercial revenue that’s brought in by a club. In this case, it’s commercial revenue that the club receives from a company that has a connection to that club. The best example to give on this is Manchester City having a sponsorship deal with the airline Etihad Airways, which has links with the club’s Abu Dhabi owners.
“In the Premier League handbook, how a fair price is determined for commercial revenue like sponsorship is through an independent company. They set a parameter, look at that deal, investigate it, interrogate it, audit it and they will see whether that deal is fair or not.
“What Man City are saying is that it is unfair. It is anti-competitive. It is anti-business. It is not in line with UK business law. They are arguing that there shouldn’t be a statutory rule and you should be able to bring in what you find from that sponsorship.”
Why did the Premier League implement APT rules?
Maguire: “The Premier League confirmed in February the new rules, but this is carrying on from rules that were introduced very shortly after Newcastle United were acquired by the Saudi Arabian Public Investment Fund.
“That appeared to be a knee-jerk reaction from the Premier League clubs who were concerned that Newcastle would sign commercial contracts with partners and sponsors in the Middle East that would be towards the upper-end of the scale and therefore that would give them a competitive advantage.
“That was seen to some extent as effectively shutting down Newcastle’s ability, and Manchester City were interested observers at that point. They weren’t keen on the rules then and they are now moving a couple of years later to see how things will happen going forward.”
Why have Man City gone to such an extreme to sue the Premier League?
Maguire: “Manchester City feel that they have historically been disadvantaged – as have many clubs. We’ve had spectacular success in the Premier League which has allowed the creation of global brands such as Manchester United, Liverpool, Chelsea and so on.
“If Manchester City want to be competitive with those clubs, they’ve had to go through the commercial route and with owners’ assistance as opposed to building a global fanbase first and maintaining it.
“City also feel that they have a disadvantage being in Manchester. They will point out that ticket prices at the Etihad are much cheaper than at the London clubs because London is a bigger tourist market and has a price premium and therefore being able to compete on the commercial side of things gives them an opportunity to be at the top table, where they want to be.
“They’re not saying they want to be ahead of the competition but on a par with them as otherwise you end up with a duopoly. We have now arguably a Big Seven, given the Newcastle takeover.”
What do the other Premier League clubs make of this?
Hughes: “We’re finding that the majority of the Premier League are actually in favour of backing the Premier League’s position on the APT rules have been.
“In fact, one Premier League executive has said that if those rules are scrapped then it would be like the Wild West – the idea that a club’s ability would be unlimited for things like player transfers or player wages, and you couldn’t control it.
“The Premier League are going to vigorously fight this.”
How will next week’s hearing work?
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Football writer and broadcaster Henry Winter and The Mirror’s John Cross discuss the possible implications of Man City’s decision to ‘launch legal action’ against the Premier League over financial rules
Hughes: “Arbitration, in its simplest form, can be used in many ways between companies, individuals and employment. In this case, it’s over a dispute about rules and It’s a way of avoiding court. It could well end up in court, but essentially what happens is Manchester City here are the claimant and the Premier League are the responder, and this arbitration panel will have somebody who effectively acts as a judge.
“It doesn’t happen in a courtroom. It can happen in any room anywhere in the country. But the hearing, however long it lasts, effectively becomes a courtroom.
“They will hear the arguments from both sides here. Manchester City and the Premier League will outline their positions, they’ll hear evidence from witnesses that are brought by both parties either written or oral, that’s determined by the arbitration panel.
“It is independent and their decision is called an award. Now it’s legally binding, but arbitration is a way of keeping things out of court. If it’s not satisfactory for either side, however, then going to court is an option.
“In terms of when an award will be made then that is literally how long is a piece of string. So it could be quick or it could be very long.”
What do Man City need to prove in order for their complaint to be justified?
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Football finance expert Kieran Maguire outlines why Manchester City have opted to launch legal action against the Premier League over their financial rules
Maguire: “City need to prove that the extension of the rules under these associated parties is anti-competition and is preventing them from going out to the markets in the Middle East and other international parties to negotiate contracts and sponsorship deals.
“City’s argument is that if the rules in their current form if applied can take many months to sign off and therefore their potential partners will go elsewhere – LaLiga, Bundesliga, Serie A – because City will say they are in a competitive global market for commercial partners.”
What could be the implications of this legal action?
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Speaking on Saturday June 1, Manchester City chairman Khaldoon Al Mubarak believes the recent restrictions on buying players will see fewer transfers and loan deals this summer
Hughes: “If City lose this then they can go to the courts, which will be even more expensive and even more time consuming than this.
“If they are successful, it could mean there wouldn’t be a Premier League rule in the Premier League handbook about it. That is a possibility, but if they are not successful, it stays in the rulebook and it goes to the majority vote which requires 14 of the 20 clubs to vote in favour of something to pass a new rule or regulation.”
If City lose this legal battle, could that open the door to a European Super League?
Maguire: “Manchester City were always very reluctant partners among the six clubs that initially chose to join the European Super League. If, however, they lose this case and they feel that their position in the Premier League has been disadvantaged to such an extent that they might look at other alternatives, that is a business decision to make.
“There’s no indication from City that it is a route they would consider. They were one of the first clubs to drop out of the European Super League when it began to crumble.”
Could an Independent Football Regulator impact on a case like this?
Hughes: “The short answer is yes and no, because it depends what kind of independent regulator for English men’s football that it gets. You could get an independent light which is not interventionist at all, allows the Premier League to set their own financial rules and allows those clubs to work within it.
“Or there is a regulator who could be quite heavy on intervention, and in that case, they may well have a say in the rules that are set by the Premier League.”
Is this legal action linked to the 115 charges case?
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Speaking on Saturday, June 1, Manchester City chairman Khaldoon Al Mubarak described the 115 charges that the club face as ‘frustrating’ but that they will respect the process
Hughes: “They are completely separate. However, this is the legal world and there are grey areas, so an award from this arbitration panel in favour of Manchester City or the Premier League then lawyers will argue that could have some bearing on some of the chunk of those 115 charges.
“They are absolutely separate, but positives that could be taken or perceived to be taken by a party, either Manchester City or the Premier League, may be used legally when it comes to those 115 charges, which we think are being heard towards the end of this year.”
