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City's laywers run rings round Premier League again

The Premier League has once again been made to look foolish by Manchester City’s smart lawyers and run up yet another big legal bill.   The top flight competitionhas been dealt a devastating blow in its legal battle with Manchester City after its sponsorship rules enforced between 2021 and 2024 were declared void.

An independent tribunal ruled in October last year that three elements of the rules regarding Associated Party Transactions (APT) were unlawful, in particular around loans from owners and shareholders to clubs.

City’s interpretation of the initial decision was that the APT rules in their entirety were void and that the unlawful elements could not simply be struck off. The Premier League dismissed these concerns and pushed ahead with amendments which were approved by 16 of the 20 top-flight clubs in November.

The rules, introduced in December 2021 in the wake of the Saudi-led takeover of Newcastle United, were designed to maintain the competitiveness of the Premier League by preventing clubs from inflating commercial deals with companies linked to their owners. The rules had also been amended in February 2024.

The decision could have wide-ranging consequences including claims from clubs seeking compensation for any deals undervalued between December 2021 and November 2024 as a result of the APT rules.

It will also be viewed by the City legal team, led by Lord Pannick KC and Paul Harris KC with the law firm Freshfields, as a significant victory. The Premier League is now facing legal costs in excess of £10million and questions over its fitness to regulate.   Opponents of a government backed football regulator might like to bear this in mind.

League chief executive R ichard Masters wrote to the league’s 20 clubs at 5pm on Friday, acknowledging that the rules from 2021 to 2024 were now void and unenforceable, but his letter claimed new rules introduced in November were not affected. However, the same tribunal has now been asked to judge whether those new rules are indeed lawful.

Simon Cliff, City’s general counsel, responded by accusing Masters of “misleading” clubs and maintaining that, by finding three elements of the APT rules to be unlawful, the whole system was technically void.

Masters argued that the unlawful elements of the APT rules could simply be taken out, leaving the remainder in place. City argued that was not possible, and the tribunal had agreed with them and found the rules to be unlawful as a matter of competition law and public law.

Should the November rules also be declared void, it would open 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.

The continuing legal battle between City and the Premier League comes amid the case into the club’s alleged 130 breaches of financial rules, which is due to reach its conclusion in the next few weeks.

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