Manchester City has won a major victory by forcing the Premier League to reconsider sponsorship rules.

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Manchester City's maiden victory: Premier League forced to review sponsorship rules

Manchester City have taken the first step in their legal battle against the Premier League, winning a review of the rules governing sponsorship deals with companies linked to club owners. These rules, known as APT (Associated Party Transactions), were put in place to prevent teams benefiting from inflated sponsorship deals with companies owned by the same owners, but City have managed to stop them being enforced, at least for now.

City's discrimination complaint

The dispute began when Manchester City filed a complaint this year, alleging that the APT regulations were unfair and discriminatory. According to the Manchester club, these rules violate free market and competition laws, and they argued that they were specifically designed to limit their success, driven by other clubs trying to curb their dominance on the pitch.

City's complaint did not fall on deaf ears, and the case went to court last June. For two weeks, the validity of the regulation and whether or not it was legal in the context of the Premier League was debated. In the meantime, the English league was scheduled to discuss and vote on the issue at a quarterly meeting with its representatives. However, according to the British newspaper The Times, the issue has been removed from the agenda, indicating that Manchester City has won an important preliminary victory.

The associated companies rules under review

The associated companies rules were implemented at the end of 2021, just after the purchase of Newcastle United by the Saudi Arabian investment fund. The aim was to prevent clubs from inflating their accounts with fictitious income from sponsorship deals with companies that shared ownership with the club. In other words, the aim was to prevent what is known as ‘financial doping’, a practice that can destabilise competition in the league.

In the case of Manchester City, a large part of its sponsorship deals come from the United Arab Emirates, the home country of the club's owner, Sheikh Mansour, who acquired the club in 2008. In fact, around a third of its sponsors have links to the UAE, which has raised suspicions among rivals about the legitimacy of the contracts.

The current rules state that an independent commission must assess whether the amounts paid for these sponsorships are reasonable and in line with market prices. If the price is found to be inflated, the deal could be deemed illegal under Premier League rules.

Concern among clubs

The fear of other teams is clear: if Manchester City manages to remove or weaken this regulation, it opens the door for richer clubs to artificially increase their revenues through inflated sponsorship. This would give them an unfair competitive advantage, as it would allow them to spend more on players and wages without violating financial fair play.

In fact, Chelsea was recently investigated for a similar operation. The London club sold two hotels to a company linked to owner Todd Boehly for £76 million, raising suspicions that the transaction was used to balance the club's losses and comply with financial regulations. However, Chelsea was cleared by an independent commission.

Larger dispute on the horizon

It should be noted that this matter is not directly related to the 115 financial breaches of which the Premier League is accusing Manchester City and whose trial recently began in London. This case is another legal front in which City is involved and could have more serious consequences if it is proven that the club has violated financial rules on a large scale.

For the moment, Manchester City has won an important victory by forcing the Premier League to reconsider the rules on sponsorship, but the battle is far from over. If City can prevail in this litigation, it will not only have won in court, but could also change the rules of the game in the Premier League, allowing clubs with millionaire owners more flexibility in their finances.

This partial victory could be just the beginning of a series of changes that, if they finally materialise, could alter the financial landscape of English football forever.