Manchester City have made a claim against the Premier League, arguing that changes to certain Premier League rules breach UK competition law, specifically the rules relating to Associated Party Transactions.
Associated Party Transactions
An Associated Party Transaction is a transaction between a club and any of the following:
A person or group who are members of the same company group as the club.
A person or group directly or indirectly controlled or materially influenced by the same government as the club.
A public or state-funded body.
A person or group controlled by any person or group who has control over the club, holds over 5% of the club's shares, has material influence over the club, or is an entity in the same group of companies as the club.
Threshold Transactions
A Threshold Transaction is any transaction exceeding £1 million a year or 5% of the club’s annual revenue, excluding certain revenue streams.
Rules
Under Premier League rules which were enforced in 2021 and tightened in February 2024, any Threshold Transaction determined to be an Associated Party Transaction must be at fair market value. To enforce these regulations, clubs are required to submit all qualifying Associated Party Transactions and Threshold Transactions to the Premier League for market value assessment. The Premier League will:
Conduct an assessment through an independent expert.
Consider any information submitted by the club.
Compare the market value with other similar transactions.
To assist this process, the Premier League has created a database to store commercial transactions between clubs and third parties. Any transaction exceeding £100,000 a year must be submitted to the Premier League and stored anonymously in the database.
If the Premier League concludes that a qualifying transaction is not at fair market value, the club will have seven working days to rectify the transaction by:
Ending the transaction and returning any fees received by the third party.
Varying the transaction to ensure it does not exceed the fair market value.
Claim
Manchester City claim that these rules breach UK competition law and had originally voted against the introduction of the rules in 2021.
It has been alleged that Manchester City believe the rules were introduced to 'discriminate against Gulf owners' and were brought in as a response to the Saudi Newcastle takeover in 2021. This is understandably a concern for Manchester City, as three of their biggest sponsors are linked to their Abu Dhabi owners.
The claim will be handled through an 11-day arbitration. Arbitrations are confidential, and as a result, the specific grounds of Manchester City's claim have not been disclosed. However, it is likely they argue that the rules prevent, limit, or restrict proper competition on the merits between clubs.
To succeed in their claim, Manchester City must demonstrate that the rules have an actual appreciable negative effect on competition and that any pro-competitive effects do not outweigh the restrictions on competition.
As part of the claim, it is alleged that Manchester City are seeking financial damages to account for losses from sponsorship deals they could have secured if the rules were less restrictive.
Manchester City and the Premier League have declined to comment.
Great article!