Manchester City has filed a lawsuit against the English Premier League.
According to The Times, City is attempting to terminate the Premier League’s Associated Party Transaction (ATP) regulations.
The ATP rules are primarily aimed at governing commercial and sponsorship agreements with companies that are owned or linked to the owners of the same club.
These regulations state that such transactions must be independently assessed to confirm their compliance with fair market value criteria.
In a 165-page legal document, City argues that the rules are “unlawful” and that they are being unfairly treated as “victims of discrimination.”
The rule was introduced in December 2021 following Newcastle’s acquisition by the Saudi Arabian Public Investment Fund.
According to Sky Sports News chief reporter, Kaveh Solhekol, this could potentially have major consequences for the future competitive balance of the Premier League.
Solhekol said, “What is being reported is unprecedented. We’ve got a situation where a Premier League club, Manchester City, the champions of the Premier League, are basically suing the Premier League.
“What City are going to argue at this arbitration hearing, which will start on Monday, is that some of the league’s financial rules are unlawful and they are incompatible with UK competition law. The rules they are talking about are the Associated Party Transaction rules.
“These were brought in in 2021 and they are designed to make sure that if a club signs a commercial deal with a company that is linked to its owners that it has to be a fair value, and that is checked to make sure that it is of fair value.
“So, if you are the owner of a Premier League club and you have another company, say an airline or an energy company, and you want to get that company to sponsor your club – because that is a good way of bringing revenue into your club – that deal has to be checked by independent auditors to make sure it is of fair value.
“You cannot just make up a number and say the deal is worth £100m, £200m or £300m as a way of bringing money into your club. It has to be of fair value.
“But City are going to argue that these rules are unlawful and obviously, this could have big, serious ramifications for the future competitive balance of the Premier League.”
The legal dispute will be resolved in a two-week arbitration hearing starting on Monday, June 10.
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