Manchester City’s strategies in the Premier League battle are evident. Sue until they win.

Club took it upon themselves to challenge APT rules and failed, but expect further legal challenges until, hopefully, they get their way.

The tribunal case between Manchester City and the Premier League in June was mostly around one disputed commercial arrangement: the club’s new 2023 partnership with Etihad Airways, the Abu Dhabi carrier whose name appears on City’s shirt and stadium.

According to independent valuers Nielsen, the Premier League’s regulatory team used a single arrangement with an unusually broad scope of rights to determine the fair market value of such an agreement. Indeed, the rights package City planned to sell to Etihad was “as large as the rights that some clubs would grant across all of their sponsorship agreements with multiple counterparties”.

It was arranged in early last year between City, which is controlled by an Abu Dhabi royal, and Etihad’s parent firm, the Abu Dhabi state, and thus falls under the Premier League’s associated-party transaction (APT) rules. Over 30 pages of the arbitration tribunal decision, issued this week, the three panelists determined that the Premier League was not unreasonable in valuing the Etihad deal beyond fair market value. The city’s challenge had failed.

The redactions unfortunately obscured what the Etihad arrangement was worth to City, how long it would last, and how it compared to all other commercial income. However, given that it was the sale of the club’s top commercial real estate and the subject of a lengthy legal battle, one might expect it to be the most profitable in the portfolio.

City dislikes the APT rules, which emphasize the financial controls – profit and sustainability rules (PSR) – that underpin the Premier League competition. So the club attempted to question APT regulations during the tribunal, but failed. They gained some wins, according to City lawyers, by bringing shareholder loans under the APT regulations, as well as a handful of procedural hits.

The city will challenge anything it doesn’t like.
The Premier League agreed that those changes needed to be made. Since Monday, clubs have submitted details on shareholder loans to the Premier League, with a preliminary meeting scheduled for Thursday. City contacted the 19 other clubs and informed them, through their general counsel Simon Cliff, that the Premier League’s analysis was incorrect. That the APT rules were now void and that there was no need to alter them.

It would likely help the City if there was a perception that there were no APT guidelines and therefore no effective PSR. However, if 14 clubs vote for the revisions in the next weeks, the APT rules will be altered nonetheless.

Do City have another six allies? Only time will tell, but the letter addressed to clubs implied that their legal dispute would continue indefinitely. Every time City comes across something they don’t like, they will challenge it, and the challenge will be lengthy and expensive. That was certainly how Cliff’s letter was interpreted when he advised against a “knee-jerk reaction” to altering the APT guidelines.

“Such an unwise course,” he states, “would be likely to lead to further legal proceedings with further legal costs.”

This is where the Premier League is today. In City, a club wants its fellow 19 shareholders to follow their lead and defy the advise of the Premier League, in which they all have an interest, its legal regulatory team, and its board. For the time being, the league must presume that any attempts to fine City or fail to give fair market value to their commercial arrangements will result in a judicial challenge.

This was a sporting tournament with its own set of rules, which the Premier League’s owners, the 20 shareholders, followed. But not anymore. It’s a unique circumstance for the world’s most successful single-nation football competition. It also makes you wonder what life is like inside the City hierarchy in Manchester. How much pressure are the club’s executives under to deliver a result?

The tribunal report occasionally provides stunning insights into the character of the judicial conflict. As the Etihad fair market value debate progressed, City’s attorneys obtained updated valuations of the agreement to back up their case, submitted by a third party between December 18 last year and February 27. They gave them to the Premier League on March 23.
The tribunal ruled that the assessments were “unexpected and substantial” and caused “considerable difficulty” for the already overburdened Premier League regulatory team. In order to analyze them, the league had to make 96 additional clarification requests. It requested two extensions to the time for the board to make its decision. The City opposed both requests.

The club’s legal team is unfazed.
The tribunal discovered that communications were frequently sent “very late at night”. In April, City responded to the Premier League’s request for a deadline extension at 11:15pm. Mai Fyfield, the league’s non-executive director and a “candid and engaged” witness, was up until 4 a.m. perusing documents.

At one point, she was asked to review the so-called details of a contract with a non-associated entity that City’s attorneys had submitted in support of the Etihad deal valuation. She declared that the terms submitted did not constitute a completed transaction at all. “In the contract, those things are 40 pages,” Fyfield told the tribunal. “This [similar deal] is a page. There’s certainly some detail to figure out.” She stated that the evidence from City was not a negotiated final agreement. It was more about what the potential partner might pay “to get in the room”. The tribunal found no error in her decision.

This case felt like it was being fought on a massive scale by City, with whatever resources were available, and in the wee hours of the undergraduate essay crisis. Their main argument, that the Premier League board had been “unreasonable” – the legal threshold – in determining that the Etihad transaction was not at fair market value, was unsuccessful on all but one procedural point.

Nonetheless, City’s legal staff remains unfazed. It wishes for the Premier League not to change the rules that have allowed it to win since doing so would be like healing tiny wounds. One could have assumed that was the issue of contention. To reach an agreement, adjust properly, and move forward. But City simply threatens more of the