The Premier League champions win key legal battles over associated party transaction rules, though the league maintains that it remains victorious in enforcing its regulations.

Manchester City have emerged from a long-standing legal battle with the Premier League, claiming victory over the league’s rules surrounding associated party transactions (APT). However, the Premier League disputes this interpretation, despite a tribunal ruling which highlighted the need for reform in certain aspects of the APT regulations. This split interpretation indicates that the ruling is unlikely to bring an end to the off-field controversies dogging English football’s top flight.

The case centres around Manchester City’s challenge to the Premier League’s APT rules, which govern sponsorships and financial transactions between clubs and businesses linked to their owners. The city’s principal contention was that aspects of these rules were unlawful and discriminatory. The arbitration tribunal ruled in their favour on two key points, prompting City to declare the verdict a victory.

In a statement, the club said: “The Club has succeeded with its claim: the Associated Party Transaction rules have been found to be unlawful and the Premier League’s decisions on two specific MCFC sponsorship transactions have been set aside.” These sponsorships, involving Etihad Airways and First Abu Dhabi Bank, had previously been rejected by the Premier League on the basis that they did not meet fair market value requirements. Following the ruling, these transactions will be reconsidered under newly revised rules.

The tribunal found two elements of the Premier League’s APT regulations to be unlawful. First, it ruled that the league’s exclusion of shareholder loans from the APT rules created an imbalance. City argued that while clubs were allowed to receive loans from shareholders at low or no interest, such transactions were effectively treated as subsidies, which distorted competition. The tribunal agreed with this view, declaring that the rules permitted one form of financial support while restricting others.

The second aspect concerned the Premier League’s “benchmarking” process, through which the league determines whether a club’s sponsorship deals meet fair market value. The tribunal found that the City had not been given appropriate access to benchmarking data before a decision on its sponsorship deals was made. This lack of transparency denied the club the opportunity to respond before the deals were rejected, a process the tribunal deemed unlawful. The Premier League will now be required to revise these regulations to ensure fairer and more transparent decision-making.

Despite these rulings, the Premier League also claimed victory, emphasising that the tribunal upheld the need for the APT system as a whole. In a statement, the league argued that it had successfully defended the majority of its rules against City’s challenges. “The ruling upheld the need for the APT system as a whole and rejected the majority of Manchester City’s challenges,” the statement read. The league said it would now work with shareholder clubs to implement the necessary rule changes quickly.

This legal saga reflects deeper tensions within the Premier League, as financial regulations become a flashpoint for competing interests. APT rules, which aim to prevent clubs from securing unfair advantages through inflated sponsorship deals with businesses linked to their owners, have been controversial since their introduction.

In February, Premier League clubs voted to introduce stricter rules governing the valuation of such deals, a move seen as a reaction to increasing financial influence from state-backed owners, particularly those from the Gulf. Manchester City, backed by Abu Dhabi-based owners, have consistently argued that the league’s regulations unfairly target clubs with owners from this region.

The verdict has revealed divisions among Premier League clubs. City received support from Everton, Newcastle, and Chelsea, while Liverpool, Manchester United, West Ham, Arsenal, and Brighton sided with the Premier League. These splits reflect the broader debate within the league about how to balance financial power between clubs with different ownership structures.

While this ruling has brought some clarity to the issue of APTs, it is far from the end of City’s legal troubles with the Premier League. This case is separate from the league’s ongoing investigation into Manchester City, which accuses the club of over 130 breaches of financial regulations. That case, which began hearings in September, is expected to deliver a verdict next year, and City have strongly denied any wrongdoing.

The APT case also casts a spotlight on the wider debate surrounding financial regulation in football. Manchester City have consistently argued that the league has failed to provide evidence that associated party transactions give certain clubs an unfair advantage. They contend that rivals with dominant spending power have been allowed to go unchecked for years, while newer financial models are being scrutinised.

The case has drawn comparisons to the takeover of Newcastle United by Saudi Arabia’s sovereign wealth fund in 2021. That acquisition prompted concerns among several clubs about the potential for inflated sponsorship deals, leading to hurried reforms of APT rules. City has suggested that the rules were motivated by a desire to protect the established financial advantages of rival clubs rather than a genuine concern about fair competition. However, the tribunal rejected City’s claims that the regulations were designed to discriminate against owners from Gulf states.

As the Premier League now looks to adjust its rulebook, the tension between its most powerful clubs continues to simmer. The financial landscape of football is evolving, and this ruling will likely shape future debates about how to regulate it.