Manchester City appear to have secured victory in their legal challenge against the Premier League’s associated party transaction rules. The case is unrelated to the ongoing probe into the 115 charges of alleged rule breaches facing the Premier League champions.
Associated party transaction rules were introduced by the Premier League following Newcastle’s takeover by the Public Investment Fund, the sovereign wealth fund of Saudi Arabia. The aim was to protect competitive integrity by stopping clubs from artificially inflating commercial deals involving companies linked to their owners.
Under the rules, sponsorships must be independently assessed and can only be approved if they are deemed ‘fair market value’.
City argued the rules discriminated against their ownership by the Abu Dhabi United Group, an investment company for the royal family of Abu Dhabi. Earlier this year, they issued a 165-page claim against the Premier League with a two-week hearing taking place in June.
A vote on amending those rules was dropped from a meeting between Premier League club shareholders on Thursday, indicating that City’s legal challenge was successful.
City were seeking financial damages for losses incurred as a result of the ‘unlawfulness of the [fair market value] rules’. In their claim, they argued the rules were ‘deliberately intended to stifle commercial freedoms of particular clubs in particular circumstances and thus to restrict economic competition’.
The rules were amended earlier this year, when 12 out of 20 clubs in the Premier League voted to approve a series of changes. City had reportedly accused rival teams of trying to ‘safeguard their own commercial advantages’ by voting in favour of the rules.
Earlier this week, it was reported that City’s legal challenge had split the Premier League with rival clubs adopting different stances. Some clubs were said to believe that a win for City would weaken financial controls and have far-reaching consequences.
The separate hearing into the 115 financial charges against City, which started earlier this month, is expected to continue for several weeks. A verdict will not be announced until next year but is expected to arrive before the end of the current season.
