Arbitration Hearing Begins in Manchester City’s Legal Dispute with Premier League
The arbitration hearing between Manchester City and the Premier League is set to commence on Monday, marking a significant event that could have far-reaching consequences for the competition. The reigning Premier League champions are challenging the league’s associated party transaction (APT) rules in a hearing that is expected to last until June 21.
City’s main contention lies in the validity of the APT rules under UK competition law. These rules were introduced in December 2021, following the Saudi-led takeover of Newcastle, and were further strengthened in February. Their purpose is to ensure that any commercial deals or player transfers between a club and entities with connections to the club’s ownership are conducted at fair market value. This ensures that club revenues are not artificially inflated.
If the arbitration panel deems the APT rules invalid, it would effectively grant clubs the freedom to engage in any commercial deals without independent scrutiny of their fair market value. This could potentially allow clubs to boost their declared revenue and provide them with more flexibility in terms of transfer and wage spending under financial sustainability regulations. There are concerns that this could result in clubs with wealthy owners, such as City and Newcastle, dominating the league in terms of spending.
According to The Times, City’s lawyers have argued in their submission that the club has been subjected to discrimination and “a tyranny of the majority” due to these rules. This raises concerns about a potential governance crisis for the Premier League if its rule-making process is successfully challenged. Currently, any motion requires a 14-club majority vote for approval.
The Premier League has received support from approximately 10 to 12 clubs in defending the APT rules, with one club even submitting a witness statement in support of City. It remains unclear how this legal dispute could impact the separate matter of the 115 charges brought by the Premier League against City for alleged breaches of financial rules. A hearing for that case is expected to begin in the autumn, and City vehemently denies any wrongdoing.
Moreover, there is no provision in Section X of the Premier League’s rules, which governs this arbitration process, stating that the outcome of such claims must be made public. However, given the potential implications involved, it is likely that the ruling of the arbitration panel will not remain confidential for long.
Both Manchester City and the Premier League have refrained from commenting on the ongoing dispute, keeping their statements and positions undisclosed for now.