Manchester City v the Premier League

Associated Party Transactions include commercial arrangements, such as sponsorship agreements, between (a) clubs, players, managers, or senior officials, and (b) persons associated with the club (e.g., third parties that are in the same group of companies as the club, have common ownership etc.). Pursuant to the APT Rules, such deals need to be of 'fair market value' (the "FMV Requirement"). The APT Rules seek to ensure, inter alia, "fairness amongst Clubs, so that Clubs are not able to derive an unfair advantage over domestic competitors by increasing revenues or reducing costs via arrangements with entities linked to a Club’s ownership that are not at FMV". However, shareholder loans are not subject to the FMV Requirement.

City challenged the APT Rules by way of arbitration (in accordance with Rule X.2. of the League's 2024/25 Handbook which requires all disputes between clubs and the League to be resolved through arbitration). City sought a declaration that the APT Rules are unlawful on the basis that they are: (a) in breach Chapters I and II of the Competition Act 1998, and/or (b) procedurally unfair. City also sought to overturn two of the League's prior decisions that City's proposed sponsorship agreements did not satisfy the FMV Requirement (with (a) First Abu Dhabi Bank ("FAB"), and (b) Etihad Aviation Group ("EAG")).

The private hearing of the arbitration took place in June 2024 at the International Dispute Resolution Centre. The tribunal consisted of High Court judge Sir Nigel Teare, Monckton Chambers’ Christopher Vajda KC, and former Supreme Court Justice Lord Dyson.  

A redacted version of the award can be found here. The publication of the tribunal's decision in this case, albeit a redacted version, highlights a difference in approach which can generally be seen with regards to the confidentiality of commercial arbitrations (where awards are typically not publicly available) in comparison to sports-related arbitrations regarding regulatory matters (where there is more likely to be (albeit not always) a wider public interest in favour of publishing the award). For instance, Rule X.31. of the League's Handbook states that "[w]here the award contains decisions on points of law or interpretation that the Chair of the Judicial Panel considers to be of wider application or use to the Board and Clubs, with the agreement of the parties to the arbitration, they may [emphasis added] produce and circulate to the Board (for distribution to Clubs) an anonymised summary of the award".

In summary, in relation to the alleged breaches of competition law, the tribunal agreed with City in respect of two of its grounds. The tribunal found that: (a) the exclusion of shareholder loans from being subject to the FMV Requirement, and (b) a number of the technical changes to the APT Rules (which were introduced in February of this year following a vote by the League's shareholder clubs – including changes to the pricing aspects of the FMV determination), both constituted a restriction of competition by object (i.e. by their nature they reveal a sufficient degree of harm to competition that it is not necessary to demonstrate that they had any actual anti-competitive effects). The provisions were therefore found to breach the Chapter I prohibition (i.e. the competition law prohibition on anti-competitive agreements). On the basis of a separate finding that the League is dominant in the market for its organisation, promotion, and commercialisation, the tribunal also found these provisions to amount to a breach of the Chapter II prohibition – i.e. an abuse of the League's dominant position. In relation to public law requirements as to procedural fairness, the tribunal determined that comparable transaction data relied on by the League should be provided to clubs for comment prior to the League making its assessment as to the FMV Requirement (rather than at the appeal stage, as is currently permitted subject to certain restrictions). Such findings will necessitate amendments to the APT Rules.

With regards to the two decisions which City sought to set aside, the tribunal identified a number of procedural inadequacies. In relation to the EAG deal, City should have been given an opportunity to respond to analysis of the transaction prior to the League making its decision, and it should have been provided with certain data held in relation to part of the transaction. In respect of the FAB deal, the League should have similarly provided City with certain data prior to its final determination. The tribunal also found that the League had taken an unreasonable amount of time in reaching its decision regarding the FAB transaction (as well as in relation to an additional transaction with Emirates Palace, which City did not seek to set aside).

In terms of remedies, in addition to giving declaratory relief, the award reserves the tribunal's jurisdiction to grant injunctive relief and/or damages (with the tribunal noting that "the Parties should have the opportunity to consider what, if any, further relief is appropriate in light of our conclusions").

Both parties released statements following publication of the award (see the League's statement and City's statement). In its statement, the League confirmed that it was "conducting a process that can allow the League and clubs to enact those specific changes quickly and effectively". It has been reported that the League's proposed changes were considered by two of its working groups last week, and subsequently presented to the League's shareholder clubs earlier this week. Following these meetings, the League is now said to be developing its proposals further before recirculating these to the clubs.

Enactment of changes to the League's rules requires at least two-thirds of its clubs (i.e. 14/20) to vote in favour of any proposal. If amendments to the APT Rules regarding the exclusion of shareholder loans are to be proposed on a retrospective basis, some clubs who have received such loans at zero or preferential interest rates could be in danger of breaching the League's Profitability and Sustainability Rules. The likelihood that the required number of clubs would therefore support such a proposal is not conclusive. 

However, the alternative (in which the FMV Requirement is only applicable to future shareholder loans) may be challenged by City. City's General Counsel reportedly wrote to the League's 19 other clubs warning that a "knee-jerk reaction" to the tribunal's verdict "would be likely to lead to further legal proceedings with further legal costs".  Whilst it is understood that City did not specify who might bring these proceedings, further legal action (including possible action relating to the correct application of any rule change regarding shareholder loans) is clearly not off the cards. City could also attempt to seek damages for any losses suffered in relation to the League's initial decisions in respect of the FAB and EAG sponsorship agreements. Further, other clubs who have also had proposed deals curbed, as a result of the APT Rules which have now been declared unlawful, may also be able to pursue similar claims.

More broadly, these proceedings indicate an increased willingness for legal action in the Premier League, which mirrors the overall rise in sports disputes in the UK and, specifically, the use of arbitration to resolve such disputes (with many sporting bodies providing for this forum of dispute resolution within their governing rules (such as Section X of the League's 2024/25 Handbook, as discussed above)). The case also illustrates the increasing trend towards the use of competition law arguments in challenges against governing bodies in the sports field.

Spectators of this particularly high-profile case will have to wait and see what happens next, including the consequences of the League's proposed changes to the APT Rules and whether City decide to pursue any further relief in respect of the award, but it would appear that the final whistle on this dispute is yet to have been blown.