Monday, February 26, 2024

Manchester City Face Legal Battle With Premier League Over Proposed Crackdown on Controversial Commercial Deals

HomeSports NewsManchester City Face Legal Battle With Premier League Over Proposed Crackdown on...

The Premier League is seeking to tighten regulations around associated-party transactions (APTs) – commercial deals struck between clubs and sponsor companies that have close ties to club owners. But their efforts have been met with fierce resistance, with reports suggesting that Manchester City are prepared to launch legal action to block the proposed rule changes.

This latest clash comes as City continue to battle historic financial fair play charges brought by the Premier League last year. With nouveau riche City pursuing rapid growth fueled by their Abu Dhabi owners, while the league seeks to protect competitive balance, tensions were always likely to boil over.

What is the Premier League Proposing?

The Premier League wants to curb ‘inflated’ sponsorship deals between clubs and related commercial partners which artificially boost revenues.

Their aim is to stop teams striking agreements above the fair market value, which enables them to gain an unfair advantage by growing their budgets beyond regular commercial income.

The Premier League has form here. In 2020 they vetoed Manchester City’s record £65m-a-year kit supply deal with Puma, partly owned by City shareholder Al Mansour. And Newcastle United’s 2021 takeover was only approved after they vowed to not engage in such deals with new Saudi-led owners.

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Now the Premier League is proposing to formalize these restrictions. Clubs could be forced to provide independent valuations proving fair value for any sponsor deal with a company deemed to have ‘close links’ to the club or its owners.

Why is this Significant for Manchester City?

City have fallen under repeated scrutiny over their Abu Dhabi ownership and phenomenal commercial growth in recent years.

Their ascent has been fueled by sponsorship agreements with Abu Dhabi-based firms like Etihad Airways, Etisalat and Aabar Investments. Between 2009 and 2018, such deals generated £214m annually for City – dwarfing income at rival clubs.

Critics allege these APTs have allowed City to skillfully bypass FFP limits by artificially inflating commercial revenues. Leaked emails in Der Spiegel certainly raise doubts over the independence of some deals.

For City, these new proposals are untenable. Stricter APT rules would constrain their ability to leverage Abu Dhabi ties to supercharge growth. And the club maintain their deals are fair, properly negotiated at arms length without owner influence.

Premier League Charges Add Extra Dimension

This APT dispute lands as City continue to battle historic FFP charges. The Premier League hit City with 115 alleged breaches between 2009-2018 last February, which could bring huge sanctions if proven.

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City vigorously deny wrongdoing. But the APT issue sits firmly within the broader FFP battle. Restricting City’s ability to strike sponsor deals with Abu Dhabi partners would directly impact one of the central allegations against them.

With trust fractured, City are in no mood to accept tightened APT rules that prejudice their case. And the Premier League likely see validating concerns over City’s deals as essential for pursuing historic charges. The stakes are sky-high for both sides.

What Next for City’s Legal Challenge?

According to reports, Manchester City have warned the Premier League they are prepared to go to arbitration if the APT proposals are pushed through against their will.

The club are believed to have serious concerns over the legality of the Premier League’s plans. They feel the proposals unfairly target City, breach competition regulations, and should be struck down.

The Premier League needs 14 clubs to back the rule changes for them to be implemented. But City are hoping that by threatening legal action, they can force a rethink.

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The coming weeks will be crucial in seeing whether City’s stance prompts a Premier League reassessment. If not, City appear willing to aggressively pursue the arbitration route to protect their interests.

The Bigger Picture

This APT dispute represents the latest skirmish in an ongoing battle between City and the Premier League over financial regulations.

With the FFP case against City still awaiting resolution, tensions were always likely to resurface. Restricting City’s Abu Dhabi ties cuts to the heart of that case.

On one side sits a Premier League determined to show it can enforce regulations fairly, no matter the club’s standing. On the other, a City who feel persecuted compared to rival superclubs like Manchester United.

A long legal fight looks inevitable. But City can’t afford to be distracted from their on-pitch ambitions. Securing Champions League qualification and battling for the title remain the immediate priorities.

Off-field disputes will rumble on. But Guardiola’s side know results on the pitch will always outweigh boardroom battles for the fans. For now, City’s focus returns to the next game against Everton.

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Mezhar Alee
Mezhar Alee
Mezhar Alee is a prolific author who provides commentary and analysis on business, finance, politics, sports, and current events on his website Opportuneist. With over a decade of experience in journalism and blogging, Mezhar aims to deliver well-researched insights and thought-provoking perspectives on important local and global issues in society.

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