MANCHESTER CITY are locked in another war of words – after BOTH sides claimed victory in a landmark legal battle.
City had attempted to overturn new rules relating to “Associated Party Transactions” – funding through sponsorship of companies owned by club bosses.
In a major rebuttal of the Prem case, three senior Judges including a former Master of the Rolls have now ruled that the Prem’s Associated Party Transaction rules meant City were “unfairly blocked” from inking two major deals.
Lord Dyson and his colleagues ruled that current regulations, which do not include loans from major shareholders to clubs having to be part of the APT calculations, are “unlawful”.
They also agreed that the element of the rules that prevented City from responding to Prem decisions over what was the “Fair Market Value” of two proposed sponsorship deals was “procedurally unfair”.
But a number of City’s other claims against the Prem and its rulebook “failed”, including that the League had wrongly applied its regulations.
It left the battle lines being drawn even deeper between the two feuding sides – with the case into City’s alleged “115” breaches of Prem rules still being heard in a Central London venue.
City were understood to be triumphant at what they believed was a huge victory, with suggestions that the outcome was a massive blow for the credibility of the League.
Yet Prem bosses issued a lengthy statement in which they insisted that the REAL winners were based at offices near Paddington, not at the Etihad.
A Prem spokesman said: “The Tribunal endorsed the overall objectives, framework and decision-making of the APT system.
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“The Tribunal upheld the need for the APT system as a whole and rejected the majority of Manchester City’s challenges.
“Moreover, the Tribunal found that the Rules are necessary in order for the League’s financial controls to be effective.”
City were furious when League bosses pushed through the rules, strengthening oversight of commercial deals, at a fractious meeting of the 20 “shareholder” clubs in February.
The rules aimed to block clubs bypassing financial controls by earning “unfair” amounts from sponsorships by companies linked to an owner, or by signing a player for below market value from a club in the same ownership group.
In the tightest vote on record, the new rules were approved on a vote of 12 in favour and six against, with two clubs abstaining, meaning they passed with the bare minimum majority.
That came despite clubs being informed that one member – which swiftly became clear was City – had threatened legal action under the League’s rules allowing an Arbitration appeal.
That panel, headed by former Master of the Rolls Lord Dyson, sat to hear submissions in June.
City argued that the new rules were anti-competitive, had been deliberately aimed at them by rivals and were both flawed and politically driven, while also questioning the cost of enforcement.
The judges concluded the rules were unlawful because they did not take into consideration interest-free loans which shareholders lend to clubs.
Of the £4billion borrowing across the Prem, £1.5bn is in loans from club owners and shareholders.
And if regulations are changed to make these loans included in a profitability and sustainability calculation, many clubs could find they are in breach.
That includes City’s title rivals Arsenal, who have borrowed more than £200million from shareholder loans.
