Breaking News: Man City damages, PSR chaos, Arsenal issue – what next for Premier League

The implications of Manchester City’s victory in several significant areas of their legal dispute with the Premier League may be extensive.

Khaldoon Al Mubarak, chairman of Manchester City

Following an unprecedented legal win that has left all 20 Premier League clubs in need of clarification, Manchester City could not be the only team suing the Premier League for damages.

After facing months of backlash for their audacity in challenging the Premier League over Associated Party Transaction (APT) regulations, City was ultimately vindicated by a powerful panel of judges. In addition to their conceptual objections to the commercial strategy, City could cite actual instances in which the regulations had restricted its capacity to generate profits.

Now that the court has ruled in their favor, City can sue the league for financial damages for unjust treatment. Furthermore, since APTs have been declared illegal, other teams could be able to prove they were harmed by similar instances.

In that regard, City might have made some new allies in the Premier League—those who would have benefited from the Blues taking a straight shot at the league but were afraid to do so themselves. Newcastle and Chelsea, who backed City’s appeal, were not the only clubs to oppose the 2023 APT rule amendment. The goodwill towards City may stretch beyond these two teams.

It’s also possible that City destroyed the Profitability and Sustainability rules, which have plagued teams like Everton, Nottingham Forest, and Leicester. The arbitration panel, evaluating the establishment of APTs, found it incomprehensible that although transactions involving affiliated parties were subject to intense oversight, club owners were permitted to inject capital through loans that fell short of their fair market value.

“We once more make reference to the Written Opening Submissions of the PL, which assert that “owner funding is subsidization, just like state aid.” This is especially true if access to other outside funding sources is restricted. We concur with that assertion,” the pertinent section of the study states.

“The PSR’s main goal is to make sure that no club can artificially raise revenue or cut expenses. We believe that allowing owner funding through shareholder loans that are not at FMV while requiring other kinds of funding to meet the FMV criteria is a blatant distortion of competition between clubs, especially in light of the economic and legal environment and the goal of the APT Rules.

“Whether the distortion results from a non-FMV transaction with an owner or a related party has no bearing on the distortion of competition. Therefore, we draw the conclusion that the exclusion of shareholders causes enough harm to qualify as a restriction on competition by object.”

Although UEFA’s financial regulations expressly prohibit owners from directly funding their clubs (leading to 115 penalties), the Premier League permitted this practice in spite of its strict enforcement of agreements made between owners and related entities. You can’t tell the two apart in the panel’s view.

When stating that Arsenal was one of the key winners from this, City included one of their fiercest opponents in their case. “MCFC alleges that there is a potential for distortion in this market by reason of the fact that the APT Rules do not apply to shareholder loans and will therefore incentivise shareholders to make loans as opposed to purchasing new equity, which favours clubs with better access to loans from shareholders,” the report states.

“Those incentives could result in a material distortion, given that £1.5b out of £4b total borrowings (some 37%) are made to clubs by shareholders, including all of Arsenal’s borrowing and almost all of Brighton’s borrowing.”

The Premier League dismissed the painful decisions, saying in a statement that “the league and clubs can quickly and effectively remedy these elements.” The Premier League will continue to use the current APT system while taking the tribunal’s conclusions into consideration.

The Premier League could have done without this major difficulty as it tries to hold onto control of its clubs, but it won’t have the game-changing effects that the 115 hearing should. Some people now seek answers, while others had unexpected queries.