Man City’s Legal Action Win: Champions and Newcastle’s Influence

The Premier League was rocked on Tuesday evening by the news that Manchester City have launched their own legal action against the division. 

It comes against the backdrop of some 115 alleged charges that have already been levelled at the club of breaching Premier League financial rules, an ongoing case that has continued to boil on in the background of City’s continued domestic dominance. 

While no specific date has been set for this highly-anticipated trial to take place, it is believed that a hearing is due in November, lasting around six weeks. 

The club has continued to vehemently deny the charges, but a case of that size has seen plenty of speculation as to what a negative outcome could lead to – including the possibility of City being stripped of their titles. 

City are arguing that the league’s Associated Party Transaction rules (APT), which prevent clubs from determining the price of deals with companies linked to their owners, are unlawful. 

The Premier League have already charged Man City with 115 alleged breaches of financial rules (pictured: Premier League CEO Richard Masters)

City have filed a 165-page legal document claiming they are the victims of ‘discrimination’ and that regulations approved by rivals they feel are aimed at curtailing their success are the ‘tyranny of the majority’.

A two-week private hearing starts on Monday and its verdict could have wide-ranging ramifications on the 115 charges aimed by the Premier League at City for alleged breaches of its rules on accounting.

They have hit out at the ‘tyranny of the majority’ – reference to the fact that all Premier League votes need a two-thirds majority – but what would happen if City were to win their suit? 

Well, in short, a removal of the two-thirds majority rule to the Premier League voting process could lead to unfettered changes in the division. 

Aside from the fact that nation state-funded clubs like City and Newcastle would be able to make unregulated sponsorship deals with companies connected to their state owners, votes put forward would ultimately require less opposition to pass. 

This is easier for those two teams than it is for, say, a Brentford or an Ipswich, who might find it harder to find a sponsorship deal at short notice. 

The downside of this is that removing the APT rules means that the value of deals between the club and sponsors connected to their owners would be unregulated, allowing for sums as little or as large as the club decide fit. 

They also question the independence of analytics firm Nielsen Sports, who are tasked with assessing Fair Market Value on deals (FMV), pointing out they have been retained by the Premier League for more than two years. 

Man City owner Sheikh Mansour (right) next to Pep Guardiola (centre) and chairman Khaldoon Al Mubarrak (left), pictured in 2023

City also want damages from the Premier League for the losses they claim to have suffered as a result of the rules. 

The prospect of Premier League games being played in the US could become more likely if the two-thirds majority rule is abolished

Moreover, the majority of clubs have American owners, for example, who may want games played in the USA, or to introduce rules from American sports leagues such as closed leagues or how TV revenue is dealt out between the teams. 

A move to have, for argument’s sake, five Premier League games played in the US would need only 11 votes to pass if all clubs stake their vote, rather than the 14 currently mandated by the two-thirds majority rule.

It is worth noting that these rules would only have an impact in the Premier League, with UEFA competitions relying on their own rules, though a change in domestic regulations could see a club’s financials sky rocket, which could of course have an impact on the competitive spirit of the Champions League. 

Perhaps more importantly, though, is the precedent that a successful suit could set for the rest of the league; what’s to stop teams from calling on a complete change to Profit and Sustainably Rules (PSR)? 

‘If a challenge to the legality of these ATPs can succeed, then it is not inconceivable that someone might try to challenge the overarching profit and sustainability rules more generally,’ said Daniel Gore, a senior associate at law firm Withers, who specialises in competition law and arbitration.

Gore adds: ‘[The two-thirds majority rule] is a common threshold for corporate procedure and means that there is a reasonable and transparent process.

‘It is hard to see how effective governance could take place without a threshold such as this, so Manchester City’s challenge could plunge the Premier League’s governance structure into chaos and make it harder for any decision to take place.’

City’s lawyers are set to make the case that the rules are designed to ‘stifle commercial freedoms’ for those teams that are funded by states such as themselves and Newcastle, as well as that the regulations ‘restrict economic competition’.

Newcastle and Chelsea both have big money sponsorships with related parties and are likely to support City’s suit (Pictured: Newcastle co-owner Amanda Staveley and Chelsea owner Todd Boehly)

They are also believed to argue that the regulations favour London-based teams that are able to charge higher ticket prices due to the higher average wage in the capital, and therefore make more money on gate receipts. 

The likes of Newcastle and Chelsea are believed to be likely to support City’s suit, with both clubs already having big-money sponsorship deals with related parties. 

Newcastle, majority-owned by Saudi Arabia’s Public Investment Fund, have a shirt sponsorship deal with Saudi rights company Sela while Chelsea have a similar agreement with Infinite Athlete, a company that lists the club’s joint owners Todd Boehly and Behdad Eghbali among its investors.