Man City and the Premier League both claim victory in the Associated Party case

Manchester City and the Premier League both claimed victory on Monday after an arbitration tribunal released its ruling on a legal challenge to the Associated Party Transaction (APT) rules.

Associated party transactions refer to sponsorship agreements between a club and other potentially affiliated companies, such as: B. City and the Etihad Aviation Group of the United Arab Emirates.

In the case, unrelated to the hearing on 115 charges alleging breaches of the Premier League's financial rules, City claimed “discrimination against Gulf owners” and that the rules were “unlawful”.

The club said it had “succeeded in its claim”, although the panel only upheld two of City's complaints, relating to shareholder loans and how fair market value (FMV) is assessed; All other challenges failed.

City's request to completely change the APT and FMV system was rejected. The panel said this was vital to the Premier League's winning and sustainability rules.

Important details from the panel’s ruling:

• The Premier League's APT system is an integral part of the competition structure.

• Some aspects of the regulations are unlawful and need to be revised. For this reason, verdicts on two Man City deals have been overturned and will have to be reconsidered.

• Man City's case was supported by evidence from Newcastle United, Chelsea and Everton; The Premier League presented written evidence from Arsenal, Manchester United, Liverpool, Tottenham and West Ham.

At one point, the panel said the rules were “unlawful…because they exclude shareholder loans from their scope.” This brings into play millions of interest-free loans granted to clubs by wealthy lenders. Everton, Brighton & Hove Albion, Arsenal and Chelsea have reportedly received loans worth hundreds of millions of pounds.

City, meanwhile, has no such debts and argued that it was unfair that other clubs could gain a financial advantage by deducting such loans from FMV valuations, which may determine whether interest is paid.

The second count looked at how the Premier League determines FMV when assessing an APT. The panel ruled that it was “unlawful” for a club to be unable to comment on the data used by the Premier League before making a decision, that the process was unfair, that City had not been given the opportunity , to challenge the verdict and that this was assumed to be taking too long.

The panel also said it was unfair to place the burden of proof of proving fair market value on the club and this should fall to the Premier League.

The Premier League had rejected two APTs with Etihad and First Abu Dhabi Bank, both of which have now been repealed. The APTs will need to be re-evaluated once the Premier League has re-examined how it applies its APT rules.

However, the biggest win for the Premier League was the support for APTs as a concept. Had the panel declared the system to be entirely unlawful, it would have given City and other clubs in similar state ownership to Newcastle United the ability to sign sponsorship deals regardless of valuation.

“The Premier League welcomes the tribunal’s findings, which confirm the overall objectives, framework and decision-making of the APT system,” the Premier League said in a statement. “The court confirmed the need for the APT system as a whole and rejected most of Manchester City’s challenges. “In addition, the court found that the rules are necessary for the league’s financial controls to be effective.”

“The decision represents an important and detailed assessment of the APT rules, which ensure that clubs cannot benefit from commercial deals or cost reductions that do not reflect fair market value (FMV) due to relationships with related parties. These rules were put in place to provide a robust mechanism to protect the financial stability, integrity and competitive balance of the League.”