The Premier League was shocked on Tuesday evening by the scale of Manchester City’s legal action against the top team.
It comes against the backdrop of 115 alleged allegations of breaching Premier League financial rules already leveled against the club, an ongoing case that continues against the backdrop of City’s continued domestic dominance.
Although no specific date has been scheduled for this highly anticipated trial, the hearing will begin in November and last approximately six weeks.
The club continues to vehemently deny the allegations, but in a case of that magnitude there has been much speculation about what a negative outcome could lead to, including the possibility of City being stripped of their titles.
In a separate case, City argue that the league’s Associated Party Transaction (APT) rules, which prevent clubs from setting the price of deals with companies linked to their owners, are unlawful.
Manchester City has taken ‘unprecedented legal action’ against the Premier League’
The Premier League has already charged Man City with 115 alleged breaches of financial rules (photo: Premier League CEO Richard Masters)
City have filed a 165-page legal document claiming they are victims of ‘discrimination’ and that regulations adopted by rivals they say are aimed at limiting their success are the ‘tyranny of the majority’.
A two-week private hearing begins Monday. The ruling could impact the 115 charges the Premier League has brought against City for alleged breaches of accounting rules.
They have tackled the ‘tyranny of the majority’ – a reference to the fact that all votes in the Premier League require a two-thirds majority – but what would happen if City won their case?
Major impact on transfers
Some fear a City victory would open the door to underpriced deals and huge player spending.
Jack Grealish is one of several players City have spent big on since taking over
Removing the APT rules means that the value of deals between the club and sponsors linked to their owners, such as City and Newcastle, would be unregulated, meaning amounts could be as small or as high as the club deems appropriate . Both teams would become extremely powerful.
This would essentially allow clubs to generate as much money as they want, which they could then spend on players.
APT rules are intended to ensure that teams cannot inflate such agreements to their own advantage. City’s lawyers will argue that the rules are intended to ‘suppress commercial freedoms’ for teams funded by states such as themselves and Newcastle, and that the rules ‘restrict economic competition’.
Newcastle, majority owned by Saudi Arabia’s Public Investment Fund, has a shirt sponsorship deal with Saudi rights company Sela, while Chelsea has a similar deal with Infinite Athlete, a company owned by the club’s joint owners Todd Boehly and Behdad Eghbali , among its investors.
City claim the Premier League will become less competitive, and in a sense they are right. Those teams lucky enough to be state-backed or have lucrative partnerships with companies close to their ownership will be able to spend money freely, potentially altering the competitive balance in a competition that has seen City in six of has won over the past seven years, could further disrupt.
A chaotic structure – and scrap PSR altogether?
Major changes to the Premier League rules require 14 of the 20 clubs to vote in favor of the deal, but that could all change if City prevail in arbitration.
City’s lawsuit directly challenges the competition’s democracy. Daniel Gore, a senior associate at law firm Withers, said The Athletics that any changes to the current regulations could plunge the structure of the competition into ‘chaos’.
Is the precedent a successful lawsuit could set for the rest of the league; What’s stopping teams from calling for a complete change to the Profit and Sustainably Rules (PSR)?
Man City owner Sheikh Mansour (right) next to Pep Guardiola (centre) and chairman Khaldoon Al Mubarrak (left), pictured in 2023
“If a challenge to the legality of these ATPs is successful, then it is not inconceivable that someone would seek to challenge the overarching profit and sustainability rules in general,” said Daniel Gore, a senior associate at competition law firm Withers. law and arbitration.
Gore adds: ‘[The two-thirds majority rule] is a common threshold for business procedures and means that a reasonable and transparent process is in place.
‘It is difficult to imagine how effective governance could take place without such a threshold, so the challenge from Manchester City could throw the Premier League’s governance structure into chaos and make it more difficult to make any decision.’
Simply put, tabled votes – such as the motion tabled by Wolves to scrap VAR next season – would ultimately require less opposition to pass.
Playing abroad?
Speaking of votes, a City victory in the Premier League could provide a boost to owners looking to host regular season matches abroad.
For example, the majority of clubs have American owners, who may want matches to be played in the US, or implement American sports league rules such as closed leagues, or how TV revenue is shared between teams.
A move to, for the sake of argument, have five Premier League matches played in the US would only require eleven votes if all clubs cast their ballots, rather than the fourteen currently required by the two-thirds majority rule.
The prospect of Premier League matches being played in the US could become more likely if the two-thirds majority rule is abolished
Newcastle and Chelsea both have big money sponsorships with related parties and are likely to support City’s lawsuit (Photo: Newcastle co-owner Amanda Staveley and Chelsea owner Todd Boehly)
And what about the 115 charges?
Opinion appears to be divided on whether there would be any impact on City’s other outstanding case against the Premier League.
On the one hand, the rules that City are challenging in their latest legal action predate the financial regulations they are alleged to have broken.
The APT rules were only introduced in December 2021. The 115 charges against City by the Premier League, which were denied by the club, date from the 2009/10 season to the 2017/18 season.
However, others suggest that City’s suing the league over rules regarding sponsorship deals, a key part of the Premier League’s case against them, could be significant.
If the APT rules are found to be illegal, City’s case in contesting the 115 charges could be strengthened.
