FFP is well and truly dead

Man City settle with Premier League over sponsorship rules
Club will be allowed to complete huge Etihad deal and in return they have dropped their legal challenge against Associated Party Transactions

Manchester City have reached a settlement with the Premier League in their latest legal challenge over sponsorship rules, enabling them to now complete a hugely lucrative, long-term deal with Etihad Airways.

In March City issued a new claim in response to the Premier League’s attempt to amend sponsorship rules that had been declared unlawful and void by an independent tribunal: a verdict that amounted to a crushing defeat for league officials.

But on Monday the Premier League informed clubs that the matter had been resolved without requiring a tribunal, with City conceding some ground in allowing the new rules on Associated Party Transactions (APTs) to stay in place, having received assurances that they will not be treated differently when securing sponsorship with companies linked to their Abu Dhabi-based owners.

The APT rules are designed to maintain the competitiveness of the Premier League by preventing clubs from inflating commercial deals with companies linked to their owners.

A statement released on Manchester City and the Premier League’s website read: “The Premier League and Manchester City FC have reached a settlement in relation to the arbitration commenced by the club earlier this year concerning the Premier League’s Associated Party Transaction rules and as a result the parties have agreed to terminate the proceedings.

“This settlement brings an end to the dispute between the parties regarding the APT rules. As part of the settlement, Manchester City accepts that the current APT rules are valid and binding. It has been agreed that neither the Premier League nor the club will be making any further comment about the matter.”
City have been at war with the Premier League over rules that were initially introduced after the Saudi-led takeover at Newcastle United, with their legal challenge prompted in 2023 by the blocking of a proposed deal with Etihad Airways to sponsor City’s shirts and provide naming rights for their stadium. The Premier League said it was not considered to be of “fair market value”.

The previous deal, signed in 2011, was worth £400million over ten years and, while the value of the new agreement is a closely guarded secret, it is expected to significantly boost the revenue of the eight-times Premier League champions, and could be worth as much as £1billion.

In April it seemed the legal battle over the new APT rules would run into next year, with a hearing not due to take place until the autumn.

City accused the Premier League of distorting the competition in favour of Arsenal and other rival clubs who had benefited from huge loans from their owners, including Brighton & Hove Albion, Everton and Leicester City, giving them an unfair advantage. They said that shareholder loans — where the owners lend clubs money — worth hundreds of millions of pounds at those four clubs have not been treated the same as other APTs, in particular to sponsorship deals with companies linked to club owners.

The hearing for City’s original legal challenge against APT rules took place in June last year, with the tribunal issuing its initial ruling in October. However, it was not until February this year that the final ruling was published in what was regarded as a resounding victory for the then English champions.

In February the tribunal — comprising three senior legal figures in Sir Nigel Teare, Lord Dyson and Christopher Vajda KC — concluded that the APT rules were “void and unenforceable”, with City then arguing that there needed to be a return to the pre-2021 rules until these matters were fully resolved. They argued in their latest claim that the amended rules continue to “discriminate”.

City argued that they “fail to meet the requirements of transparency, objectivity, precision and proportionality . . . and are liable to distort competition”.
Key to City’s claim was the argument that the Premier League’s attempt to change APT rules was unfair because it treats shareholder loans differently, adding that the clubs who utilise that form of borrowing are benefiting from an unlawful exemption.

City had launched their initial legal challenge after two Abu Dhabi-related sponsorship deals were blocked by the Premier League, making the broader point that the top flight should not change rules that have already been declared void. They accused the league of being too hasty and slapdash in its response to the previous verdict.

Now, however, a battle that was costing both sides tens of millions in legal fees appears to have been resolved with far less acrimony, leaving the case involving City’s 130 alleged breaches of Premier League financial regulations as the one outstanding matter in this long-running battle. The judgment on that case is expected to land in the coming weeks.