The Premier League was rocked on Tuesday evening by the scale of Manchester City‘s legal action against the top flight.
It comes against the backdrop of the 115 alleged charges of breaching Premier League financial rules that have already been levelled at the club, an ongoing case that has continued to rumble along in the background of City’s continued domestic dominance.
While no specific date has been scheduled for this highly-anticipated trial to take place, the hearing is set to begin in November and run for around six weeks.
The club has continued to vehemently deny the charges, but a case of that size has seen plenty of speculation as to what a negative outcome could lead to, including the possibility of City being stripped of their titles.
In a separate case, City are arguing that the league’s Associated Party Transaction rules (APT), which prevent clubs from determining the price of deals with companies linked to their owners, are unlawful.
Manchester City have launched ‘unprecedented legal action’ against the Premier League’
The Premier League have already charged Man City with 115 alleged breaches of financial rules (pictured: Premier League CEO Richard Masters)
City have filed a 165-page legal document claiming they are the victims of ‘discrimination’ and that regulations approved by rivals they feel are aimed at curtailing their success are the ‘tyranny of the majority’.
A two-week private hearing starts on Monday and its verdict could have implications on the 115 charges aimed by the Premier League at City for alleged breaches of its rules on accounting.
They have hit out at the ‘tyranny of the majority’ – reference to the fact that all Premier League votes need a two-thirds majority – but what would happen if City were to win their suit?
Huge impact on transfers
Some fear a City victory would open the door to falsely priced deals and huge player spend.
Jack Grealish is among the many players City have spent heavily on since being taken over
Removing the APT rules means that the value of deals between the club and sponsors connected to their owners, such as City and Newcastle, would be unregulated, allowing for sums as little or as large as the club decide fit. Both teams would become hugely powerful.
This would essentially allow clubs to generate as much money as they like, which they could then use to spend on players.
APT regulations are designed to ensure teams cannot inflate such agreements to their own benefit. City’s lawyers are set to make the case that the rules are designed to ‘stifle commercial freedoms’ for those teams that are funded by states such as themselves and Newcastle, as well as that the regulations ‘restrict economic competition’.
Newcastle, majority-owned by Saudi Arabia’s Public Investment Fund, have a shirt sponsorship deal with Saudi rights company Sela while Chelsea have a similar agreement with Infinite Athlete, a company that lists the club’s joint owners Todd Boehly and Behdad Eghbali among its investors.
City claim the Premier League will become less competitive – and, in a way, they’re right. Those teams fortunate enough to be state-backed or have lucrative partnerships with companies close to their ownerships will be able to spend freely, potentially further distorting the competitive balance in a league won by City in six of the past seven years.
A chaotic structure – and scrapping PSR altogether?
Major changes to Premier League rules need 14 out of the 20 clubs to vote in favour to pass, but that could all change if City triumph in arbitration.
City’s suit directly challenges the democracy of the competition. Daniel Gore, a senior associate at law firm Withers, told The Athletic that any alterations to the current regulations could plunge the league’s structure into ‘chaos’.
Is the precedent that a successful suit could set for the rest of the league; what’s to stop teams from calling on a complete change to Profit and Sustainably Rules (PSR)?
Man City owner Sheikh Mansour (right) next to Pep Guardiola (centre) and chairman Khaldoon Al Mubarrak (left), pictured in 2023
‘If a challenge to the legality of these ATPs can succeed, then it is not inconceivable that someone might try to challenge the overarching profit and sustainability rules more generally,’ said Daniel Gore, a senior associate at law firm Withers, who specialises in competition law and arbitration.
Gore adds: ‘[The two-thirds majority rule] is a common threshold for corporate procedure and means that there is a reasonable and transparent process.
‘It is hard to see how effective governance could take place without a threshold such as this, so Manchester City’s challenge could plunge the Premier League’s governance structure into chaos and make it harder for any decision to take place.’
Put simply, votes put forward – such as the motion tabled by Wolves to scrap VAR from next season – would ultimately require less opposition to pass.
Games abroad?
Speaking of votes going through more easily, a City win over the Premier League could provide a boost to the owners who want to stage regular-season matches abroad.
The majority of clubs have American owners, for example, who may want games played in the USA, or to introduce rules from American sports leagues such as closed leagues or how TV revenue is dealt out between the teams.
A move to have, for argument’s sake, five Premier League games played in the US would need only 11 votes to pass if all clubs stake their vote, rather than the 14 currently mandated by the two-thirds majority rule.
The prospect of Premier League games being played in the US could become more likely if the two-thirds majority rule is abolished
Newcastle and Chelsea both have big money sponsorships with related parties and are likely to support City’s suit (Pictured: Newcastle co-owner Amanda Staveley and Chelsea owner Todd Boehly)
| Type of breach | Number of charges relating to breach | Date of trial | Date of decision |
|---|---|---|---|
| Failure to provide accurate and up-to-date financial information from 2009-10 to 2017-18 | 54 | ||
| Failure to provide accurate financial reports for player and manager compensation from 2009-10 to 2017-18 | 14 | ||
| Failure to comply with UEFA’s regulations, including UEFA’s Club and Licensing and Financial Fair Play Regulations | 5 | Autumn 2024 | Summer 2025 |
| Breaches of Premier League profitability and sustainability regulations from 2015-16 to and including 2017-18 season | 7 | ||
| Failure to cooperate with Premier League investigations from December 2018-present | 35 |
And what about the 115 charges?
Opinion appears to be split on if there would be any impact on City’s other outstanding case against the Premier League.
On the one hand, the rules City are challenging in their latest legal action pre-date the financial regulations they are alleged to have breached.
APT rules were only brought in back in December 2021. The 115 charges levelled at City by the Premier League, denied by the club, date from the 2009-10 season to the 2017-18 campaign.
However, others suggest that the fact City are suing the league over rules relating to sponsorship agreements, a key part of the Premier League’s case against them, could be significant.
If APT rules are found to be unlawful, City’s case in contesting the 115 charges could be strengthened.
