Manchester City’s win in their legal battle against the Premier League over Associated Party Transactions [APT] is set to be bad news for their rivals.
After a long tribunal, the panel of three retired judges decided that the top-flight’s APT rules are ‘unlawful’.
City launched the challenge earlier this year, but it was not directly related to their ongoing case with the top-flight over 130 alleged breaches of financial rules.
Instead, it was relating to the APT rules that were brought in after the Saudi Arabian Public Investment Fund completed a majority takeover of Newcastle in October 2021.
The regulations are designed to stop sponsors linked to club owners from pumping in money above a fair market value as a way to get around Profit and Sustainability Rules [PSR].
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City, who have extremely close links to the United Arab Emirates, argued these rules were anti-competitive, and in that sense, they’ve won because the panel ruled that certain aspects of the APT rules were ‘unlawful’.
The Citizens had two recent deals blocked, and they can claim damages for those, so can any other side that have had APT vetoed.
On the face of it, this is extremely good news for City, but it could actually be worse for Arsenal, Liverpool and other clubs.
Here, talkSPORT.com explores the implications of City’s win.
Why Man City’s sponsorship win is a blow for Arsenal and Liverpool?
talkSPORT understands that Arsenal and Liverpool are among the clubs that are unhappy with the news that the Premier League’s APT rules have been deemed unlawful.
Meanwhile, Newcastle, Everton and Nottingham Forest were supportive of Man City’s case, meaning there is a divide in the league at boardroom level.
The Gunners and the Reds actually provided evidence in support of the top-flight, while the Toon and Chelsea provided the same for City.
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Of course, the reasons for why Arsenal, Liverpool and others will suffer is quite clear.
The Gunners and Reds are owned by very wealthy Americans, but they have no real connections to state-owned sponsors.
Meanwhile, Newcastle and City do, so if APT rules are changed or amended, these clubs can start to sign potentially inflated sponsorship agreements.
This would put Liverpool, Arsenal and most other teams in the league at a significant disadvantage.
However, there is another very important factor, which is almost certain to see a rule change.
In their case, Man City argued that shareholder loans should be seen in the same light as sponsorships linked to owners.
This is because these loans come from owners via shareholders.
Interestingly, these loans aren’t part of APT or PSR, they are considered separate.
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Also, these loans are often interest-free and have flexible repayments.
Now, this is bad news for Arsenal and Liverpool because they each have millions of pounds worth of these loans, while Newcastle and City have none.
So, if they are included in new regulations, we could see the Reds and Gunners limit their spending and having to sell players.
This specific bit was a very small part of the overall case, but it could have huge ramifications for these clubs and their PSR situation.
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The Times’ Matt Lawton went on to talkSPORT to speak about these sponsorship deals.
He said: “Shareholder loans are basically the loans that are the money that is lent to clubs by their owners, by their shareholders, and right now across the Premier League landscape there’s 1.5 billion quid’s worth of these loans.
“Everton have got over 400 million in these loans. Arsenal got over 200 million in these loans and prior to this judgement they weren’t deemed to be part of any kind of financial regulation. They were deemed to sit outside.
“But the judges agree with City that they should be part of it because how vastly different are they to being given a sponsorship deal by a company linked to the owners?
“The knock-on effect of that, we think, is if they now have to be part of regulation because these are interest-free loans that then it’s going to distort, it’s going to change essentially the return that clubs have to provide every year on how much they’ve spent.”
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Lawton was then asked about how this has gone down with the rest of the Premier League.
He said: “Right now the Premier League is in civil war. It’s very messy, this is not a good place.
“While we’re enjoying watching the football on a Saturday and Sunday, there’s a lot of friction here.
“Eight or nine clubs gave evidence in this particular case in support of the Premier League. The clubs are divided.
“It’s a messy situation and the consequences of this are the shareholder loans – if you are Arsenal with over 200 million quid worth of shareholder loans this is a worrying development.”
