A legal; ruling is seen to favour Manchester City over the Premier League, although the league also sees it as a victory losing on just some points of detail and says it will continue with business as usual: https://www.premierleague.com/news/4144828
The key facts are:
· Rules deemed unlawful because they did not take into consideration interest-free loans from shareholders to clubs
· Likely change in the regulations could lead to City striking more lucrative deals and seeking damages from the Premier League
· Clubs with high levels of borrowing now in danger of breaching Profitability and Sustainability Rules
· Arsenal, City’s title rivals, have borrowing of more than £200million made up entirely of shareholder loans
· Premier League’s stance was backed by Arsenal, Manchester United, Liverpool, West Ham United, Brentford, Bournemouth, Fulham, and Wolverhampton Wanderers
Manchester City have inflicted a potentially damaging defeat
on the Premier League after the rules governing commercial deals between clubs
and related companies were declared unlawful.
In a landmark decision that could have huge ramifications
for England’s top flight, it was ruled that City were unfairly blocked
from agreeing two huge sponsorship deals this year, with Etihad and First Abu
Dhabi Bank.
The Premier League will now invite all 20 clubs to an
emergency meeting next week to discuss the extent to which it will need to
change its rules as a consequence of the judgment (which suggests it is not
small beer).
The legal decision opens the door for the English champions,
majority-owned by Abu Dhabi, to strike significantly higher sponsorship
agreements with associated parties than previously allowed — including with
Etihad, their stadium and shirt sponsor — and to pursue compensation and costs
from the Premier League for abusing its position. Other clubs could also now
seek damages should they believe they have been impacted.
An independent panel of three retired judges concluded that
the rules were unlawful because they did not take into consideration
interest-free loans which shareholders lend to clubs. The decision will spark
huge concern among a number of City’s Premier League rivals — who
rely heavily on such loans — and is likely to lead to the rules being changed.
The panel states that, of the £4billion in total borrowing
across the Premier League, £1.5billion is in loans from club owners and
shareholders. If the rules are altered and commercial loan rates are now
applied to these interest-free loans and have to be included in a club’s
profitability and sustainability calculation, many clubs could find they are in
breach of Profitability and Sustainability Rules (PSR).
City had argued that such payments were unfair and not
at market value because they were interest-free and, in some cases, did not
have to be repaid at all. For a club such as Arsenal, with borrowing of
more than £200million made up entirely of shareholder loans, that is a
potentially seismic development.
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