Why Premier League ‘welcome’ tribunal ruling despite Man City claims of victory | OneFootball

The Premier League feel they have been vindicated by a tribunal’s ruling following their legal battle with Manchester City over the league’s Associated Party Transaction (APT) rules.

This is despite the fact that the club claimed victory in the dispute after an arbitration panel published their decision. They had brought the challenge after two of their commercial deals were rejected for not being Fair Market Value (FMV).

Man City said they had “succeeded with its claim”, that the “Premier League was found to have abused its dominant position” and that “the APT rules were found to be unlawful”.

The league, on the other hand, say that the tribunal’s findings “endorsed the overall objectives, framework and decision-making of the APT system”.

Read – Man City claim win in APT case against Premier League

They added that it “upheld the need for the APT system as a whole and rejected the majority of Manchester City’s challenges”.

The Premier League did concede that two aspects of the rules do not currently comply with competition and public law requirements. In its 175-page document, the tribunal ruled that shareholder loans should not be excluded from the scope of APT rules and that some amendments made in February by the league should not be retained.

However, the Premier League say that these rules can be remedied soon and the 20 clubs are likely to vote on amendments in the coming weeks. The league has called a meeting for next week to discuss the implications of the judgement.

APTs are aimed at the value of sponsorship deals with companies linked to clubs’ owners.

Premier League statement on tribunal ruling in Man City dispute:

The decision of an Arbitration Panel has been published (click here) following a legal challenge by Manchester City FC against the Premier League’s Associated Party Transaction (APT) Rules.

The Premier League welcomes the Tribunal’s findings, which endorsed the overall objectives, framework and decision-making of the APT system. The Tribunal upheld the need for the APT system as a whole and rejected the majority of Manchester City’s challenges. Moreover, the Tribunal found that the Rules are necessary in order for the League’s financial controls to be effective.

The decision represents an important and detailed assessment of the APT Rules, which ensure clubs are not able to benefit from commercial deals or reductions in costs that are not at Fair Market Value (FMV) by virtue of relationships with Associated Parties. These Rules were introduced to provide a robust mechanism to safeguard the financial stability, integrity and competitive balance of the League.

The Tribunal did, however, identify a small number of discrete elements of the Rules which do not, in their current form, comply with competition and public law requirements (more information below). These elements can quickly and effectively be remedied by the League and clubs.

In the meantime, the Premier League will continue to operate the existing APT system, taking into account the findings made by the Tribunal.

While the Arbitration process is confidential, the Premier League and the Club have agreed to make public a redacted copy of the decision, withholding only confidential and commercially sensitive information.

Summary of the decision

Competition law

Manchester City brought a wholesale challenge to the legality, design, framework and implementation of the APT Rules. The club was unsuccessful in the majority of its challenge. Significantly, the Tribunal determined that the APT Rules are necessary, pursued a legitimate objective and were put in place to ensure that the Profitability and Sustainability Rules (PSR) are effective, thereby supporting and delivering sporting integrity and sustainability in the Premier League.  The Tribunal noted that “it is difficult to see how the PSR can be effective” without the APT Rules, including the ability to restate transactions.

In particular, it found that there was sufficient evidence to justify that the previous regime (whereby “related party transactions” could only be restated by the Premier League Board to FMV where they had first been identified in the club’s audited accounts) was ineffective in controlling APTs. Therefore, it was necessary to move to a system that allowed for assessment, by the Board, at the point of the transaction itself.

The Tribunal rejected a range of arguments put forward by Manchester City relating to the framework of the APT Rules including: – It agreed with the Premier League that if the price of an APT is evidently not at FMV, competition will be distorted as the club would be benefitting from a subsidy. – It found that the APT Rules include appropriately detailed criteria as to the determination of FMV and that the process for assessment of FMV is a clearly defined, transparent and non-discriminatory one (as required by competition law). – It rejected Manchester City’s argument that the object of the APT Rules was to discriminate against clubs with ownership from the “Gulf region”. – More generally, except in two respects only (addressed below), it found that Manchester City’s arguments were unfounded, including on any alleged inconsistency in approach as between certain types of clubs

The Tribunal made two findings in favour of Manchester City: – That Shareholder loans should not be excluded from the scope of the APT Rules. By way of background, the exclusion of Shareholder loans from the APT Rules was a choice by the majority of clubs who wished to encourage transparent investment and 19 of them (including Manchester City) voted in favour of this approach. – Second, that a limited number of amendments introduced to the APT Rules earlier this year should not be retained. In particular, the Tribunal found that the removal of the additional word “evidently” from the basis on which the Board will find an APT not to be at FMV, amendments to the definition of FMV, and shifting the burden of proof to a Club to show a transaction is at FMV could, when considered together, increase the risk of an APT being restated when a restatement is not, in fact, warranted (referred to in the decision as “false positives”).

The Tribunal emphasised in its decision that it is only these two aspects of the Rules that are not compliant with competition law requirements.

Public law

Manchester City also challenged the procedural fairness of the APT Rules, both on a structural basis and in respect of its application to a number of specific Manchester City transactions. The Tribunal found in the Premier League’s favour on the majority of the points, including the following: – The Tribunal recognised that the APT Rules are a carefully drafted scheme which were the product of detailed negotiations by the clubs. – It noted that the use of an independent assessor, selected for its expertise and independence, confirmed the fairness of Premier League’s general approach to the FMV process. – It rejected Manchester City’s arguments that it should be entitled to directly access the Databank at any stage through its external advisers as part of the FMV Assessment process, and it also rejected Manchester City’s arguments that the League’s Regulatory Team lacked the necessary independence or were “biased”.

However, the Tribunal made one finding in favour of Manchester City: – The Premier League Board should provide clubs with Comparable Transaction Data relied upon by the Board when undertaking FMV Assessments, prior to the Board making a final determination that a transaction is evidently not at FMV (rather than at the Section X appeal stage).

Application of the Rules to Manchester City transactions

The Tribunal was asked by Manchester City to consider decisions taken by the League in respect of the FMV of two of its commercial transactions where the Board, after conducting the assessment required by the APT Rules, had found those deals to be evidently not at FMV.

The Tribunal dismissed the majority of Manchester City’s challenges in this respect. In doing so, it recognised that the Premier League Board had assessed these transactions carefully and conscientiously and applied the correct legal test.

The Tribunal also concluded that the Board’s FMV Assessments of those transactions were not unreasonable. Nonetheless, from a procedural perspective, it identified certain information that should have been provided to Manchester City at an earlier stage of the assessment process. Manchester City has already been provided with this information in respect of these transactions and has been invited to make further submissions in relation to it. Although the Tribunal noted that these FMV Assessments should have been conducted more speedily, it recognised that the delays had been due to a number of constraints which the League’s Regulatory team and the independent FMV assessor were working under and have been resolved.

Next steps

As the Tribunal has concluded, the APT Rules must now integrate the assessment of Shareholder loans and remove some of the amendments made to APT Rules earlier this year. Otherwise, the Premier League rulebook has been found to comply with competition and public law standards and is an effective and necessary system for assessing the FMV of APTs to ensure the integrity of the League’s Profitability and Sustainability Rules. We are conducting a process that can allow the League and clubs to enact those specific changes quickly and effectively.

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