Manchester City’s legal challenge against Premier League financial rules will be heard over the next two weeks, which could have hugely significant consequences for the English top flight.
The Premier League champions are challenging the league’s associated party transaction (APT) rules in a hearing starting on Monday which is set to last until June 21.
It is believed City will challenge the validity of the rules under UK competition law.
The Times, which first reported details of City’s claim last Tuesday, said the club were seeking to scrap the rules, which were first introduced in December 2021 following the Saudi-led takeover of Newcastle and were most recently strengthened in February.
The rules are designed to ensure any commercial deal or player transfer between a club and entities with links to that club’s ownership are conducted at fair market value, so that club revenues are not artificially inflated.
If an arbitration panel declares the APT rules invalid, then clubs would effectively be free to do any commercial deals they wished without any independent judgement being made on whether those deals were for fair market value.
That could then in turn help clubs boost their declared revenue and give them greater leeway on transfer and wages spending under financial sustainability rules. There are fears it could lead to the clubs whose owners have the deepest pockets – City and Newcastle – effectively being in a league of their own in terms of spending.
The Times said City’s lawyers had claimed in their submission that the club had been the victims of discrimination and subjected to “a tyranny of the majority” as a result of these rules.
That has raised fears of a potential governance crisis for the Premier League should there be any successful challenge to its rule-making process, which currently requires a 14-club majority vote for any motion to be approved.
The Times reported that between 10 and 12 clubs had offered their support in some form or other to the Premier League’s defence of this case, while one club had submitted a witness statement in support of City.
It is unclear what, if any, bearing this claim could have on the separate matter of the 115 charges brought by the Premier League against City over alleged breaches of the league’s financial rules. A hearing in that case is expected to begin in the autumn. City strenuously deny any wrongdoing.
There is also no provision in Section X of the Premier League’s rules, under which this arbitration process is taking place, stating that the outcome of such claims must be made public.
It seems certain however – given what could be at stake – that it will not stay secret for long once the arbitration panel has issued a ruling.
Neither City nor the Premier League has made any comment on the matter.