English Premier League (EPL) soccer champions Manchester City have taken the extraordinary step of launching significant legal action against the competition over its commercial rules.
This comes with both sides preparing for a hearing in November, at which the 115 charges levied against City – owned by Abu Dhabi United Group, controlled by the royal family of that Emirate – over alleged breaches of the EPL’s profit and sustainability rules (PSR) between 2009 and 2018 will be heard.
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City’s legal action against the league (which is essentially made up of its 20 members and a small executive team), will be heard over the next two weeks at an independent tribunal. It was first reported by The Times yesterday and is not necessarily directly related to the 115 charges.
It has been reported that the Manchester club filed a multi-faceted legal claim against the EPL in February – as was publicly threatened at that time – and that the other 19 clubs were informed of the matter in March. City secured their sixth EPL title in seven seasons in late May.
One part of the legal challenge focuses on current rules around associated party transactions (APT), through which clubs strike commercial deals with brands owned by (or linked to) the entities that control the teams.
Earlier this year, EPL clubs voted in tougher rules around how these deals are valued, making it a requirement that fair market value be independently assessed before such tie-ups are approved.
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By GlobalDataEssentially, this was done to stop teams from banking vast amounts through inflated sponsorship deals that are not at fair market value, and then using this revenue to avoid breaching PSR.
These regulations were argued against vehemently at the time by City, who have said it goes against competition law. They are believed to be looking for financial compensation from the league, money they argue would been secured from sponsorship tie-ups that were instead halted by the new regulations.
City’s owners also have majority interests in several major Abu Dhabi companies, and the club’s main shirt-front sponsor (and stadium naming rights partner) is UAE airline Etihad.
APT rules have been under the spotlight since late 2021 when EPL club Newcastle United was taken over by a group backed by the sovereign wealth fund of Saudi Arabia.
Another element of City’s claim reportedly revolves around the structure of the league’s voting rules – 14 of the 20 teams (a two-thirds majority) must vote for any new motion for it to be adopted.
City has been quoted as saying this rule ensures and preserves “the tyranny of the majority.”
The Times has reported that it has seen a 165-page document filed by City claiming they are victims of discrimination and that the aforementioned amendments were brought in by the other clubs to “stifle” City’s on-field success.
One club has been reported as providing statements and testimony in support of the weighty City claim, while all the other 19 sides have been given the chance by the league to make witness statements.
The 115 charges against City were issued in February last year, with some of the alleged breaches relating to income secured by City reported as being from various Abu Dhabi-linked sponsors.
Some of the charges date back to 2009, and between them cover every season consecutively between 2009-10 and 2017-18.
Since being taken over by the Abu Dhabi United Group in 2008, City has become one of Europe's most powerful sides, having won the league six times, with the club’s first-team squad estimated to have a value in excess of £1 billion ($1.27 billion).
City has always denied any wrongdoing whenever the subject of the investigation has raised its head and continues to state its innocence.
Last November, City disclosed their 2022-23 accounts, unveiling record revenue of £712.8 million for the financial year ended 30 June 2023. This helped them post a profit of £80.4 million.
Commercial income for the year was £341.4 million, an increase of £32 million, or 10.3%.
