PREMIER LEAGUE meetings are usually cordial, professional and unobtrusive affairs.
All 20 clubs, plus their executives, sit in a room and ignore the massive elephant that also lurks in every meeting — the ongoing litigation and the £50million-plus of legal costs racked up fighting and defending claims.
But at the League meeting next week that elephant is going to get an introduction, as we have just tripped over his trunk.
Manchester City versus the Premier League feels like a boxing match, where at the end of the final round both fighters put their hands up claiming the victory.
If the judges of this heavyweight bout were the public, then City would be clear winners.
They not only have the world’s best team on the pitch but also have the best off it too.
Their PR and media team got their message across while making the Prem’s set-up look like a lower league outfit by comparison.
But it’s not the public or the media the Premier League has to worry about.
It’s the clubs, the rules that govern them and what on earth happens now.
Next week’s meeting is to decide exactly that.
By Martin Lipton
BOTH Manchester City and the Premier League were claiming a win after their legal scrap over Associated Party Transactions.
SunSport sifts the claims to try to explain the latest issues.
What was the case about?
City were furious that Prem bosses brought in new tougher regulations – by the smallest possible majority under League rules – in February. They were aimed at blocking clubs bypassing financial controls by earning “unfair” amounts via sponsorship from a company with the same owners, or selling players on the cheap to teams under the same ownership umbrella.
Why were City so upset?
The Etihad club argued that the rules were illegal and had been deliberately aimed at them by rivals and were both flawed and politically driven. They also branded the “two thirds support” rule that has been part of Prem regulations since its inception as a “tyranny of the majority”
This was an Arbitration Tribunal – explain that?
Under Prem rules, any club has the right to ask for Arbitration if they are unhappy about the regulations or due process. The three retired judges heard evidence in June and their full ruling was distributed to the 20 Prem clubs on Monday afternoon.
And what did they say?
Depending on who you listen to, they either totally vindicated one side or the other. The actual answer is that there were “wins” for both City and the Prem. But it’s your choice which ones meant more.
OK, what were City’s wins?
Maybe the most important one in terms of the repercussions. That both the new rules and the previous version – brought in after Saudi Arabia’s PIF bought Newcastle in 2021 – were “unlawful” as they exclude shareholder loans to clubs in any APT calculations. City also won over their claims that the rulebook prevented them from responding to Prem decisions over whether two proposed deals with Abu Dhabi companies represented “Fair Market Value”, access to the “databank” of comparable deals and the time it took for decisions to be reached.
That sounds pretty big. So what about the Prem’s side?
The key finding as far as the League is concerned is that the Tribunal backed the concept of APT rules as well as the Fair Market Value tests. Additionally, City’s challenges to the actual decisions on the two proposed deals “failed”. Prem bosses insist the “rulebook has been found to comply with competition and public law standards and is an effective and necessary system”.
Is that it, then?
Of course not. That shareholder loan issue is a big deal, given that it is believed owners have loaned around £1.5bn at low or preferential rates across the Prem. Those loans will almost certainly have to be calculated at commercial rates now, unless the owners convert them into shares. But the League is convinced the main thrust of the rules remains valid.
And what will be the impact on the “115 charges” case?
Probably nothing. That is an allegation of breaking the rules, while this matter was City questioning whether one small element of the current rulebook was legitimate. But City are using the same legal team, headed by £10,000 per hour Lord Pannick KC. And the stakes on the bigger case are a great deal higher.
FOOTBALL FREE BETS AND SIGN UP DEALS
But how did we get here?
Most supporters have never heard of the term APT — Associated Party Transactions — or knew about the new rules regulating them when they came into play in 2021.
APT rules were accepted by the majority of clubs — although by no means all — and were put in place to ensure that all clubs’ sponsorship deals reflect a true and fair market value.
It was hoped to prevent clubs from earning revenue through inflated sponsorship deals from companies related to their owners.
This is important, as the value of sponsorship and other commercial revenue is used to offset the costs of the clubs, like player salaries, agent fees and the manager, which leaves you with a number, usually a loss.
If you go over the League’s number of what they consider to be an acceptable loss — as Everton and Nottingham Forest did — you get a fine, a points deduction or possibly both.
So, the higher your sponsorship, the higher your costs can be and the less you get into trouble.
City challenged the legality of these rules, alleging the APT Rules breach competition and public law and the League’s application of the rules also breached public law standards.
The Prem claims the three-man Arbitration Tribunal endorsed the overall objective of their rules.
No one wants it to become a competition between too few clubs, usually by rich ones who can afford multiple multi-million transfers and top wages.
They also agreed that if the price of an APT is evidently not at fair market value — what anyone else OTHER than the party connected with the owner would have paid — then the competition will be distorted as the club would be benefitting from what effectively is a subsidy.
The Prem needs a financial system to ensure that football is, remains and will always be competitive.
The undiminished competitiveness of the Premier League is the envy of every other foreign league and club and the reason why our top-flight is the best in the world.
No one wants it to become a competition between too few clubs, usually by the rich ones who can afford multiple multi-million transfer fees and top wages.
So next week clubs have to agree to make the necessary changes to the APT rules to address the Tribunal’s concerns.
This requires 14 votes — at least 14 clubs have to agree — or the whole system is thrown into chaos.
It needs to be so that the system can continue to be effective.
We must stop clubs spending whatever they like to get an unbeatable team and create an uncompetitive league.
