Arsenal and Chelsea are set to be hauled into the Man City vs Premier League legal battle after verdict was made to the landmark case.
Man City and Premier League were in a legal battle to resolve issues regarding the implementation of the associated party transaction rules (APT). After a four month long wait the verdict for the case was made on Monday. Anyway, there are no clear victors here because both parties have not lost their case. Before getting into the details of the case we have to make it clear that this case is totally different from the 115 financial fair play breach case that we are all hearing of. So, the verdict here might cause some grave issues for clubs like Arsenal, Chelsea, Brighton and Everton.
MAN CITY VS PREMIER LEAGUE
City challenged the Premier League for various issues regarding the associated party transaction rules that are implemented by the league. The rule was made actually to prevent clubs from striking lucrative sponsorship deals between the club and a company that is associated with the owners of the club. This was intended to bring financial balance among the clubs. This was on the back of the deal that saw Saudi welfare fund the PIF bought Newcastle United in a hugely lucrative deal.
So the rule works like this: If you are a club and want to strike a sponsorship deal of any kind with a company that is associated with the owners of the club. They need to abide by the fair market price. For that the club needs to submit the details of the deal to the Premier League panel which then compares it with a data bank to measure the lucrativeness of the deal. The board will then get back to you with the results.
Man City had two potential deals with airline Etihad and the First Abu Dhabi Bank which were blocked. Anyway, City argued that these deals were unfairly denied. They also argued about the existence of a certain biased behavior by the league authorities due to its gulf ownership. The case bothered a vast area of concern to the entire APT rule. City felt that the rule was unlawful, and it should be amended. It also touched on other areas like the non-inclusion of shareholder loans in the APT rules and the delays they faced during the procedures.
THE VERDICT
The verdict was made on Monday by a panel of three judges. It wasn’t a clear victory for Man City over the Premier League in fact both actually had victories and losses. The court actually sided with the Premier League over the true intentions of the APT rules. Anyway, City had their own victories in proving some of the regulations and procedures were flawed and should be amended. The court’s verdict said that the benchmark which the PL authorities used to measure the fairness of the deal should be shared with the clubs. It also said that the delays in decision making have actually violated some of the league’s own rules.
The most important one is the ruling that deemed shareholder loans to be included in the APT rules. So this one should land clubs like Arsenal, Chelsea, Brighton and Everton into some huge problems.
WHAT IT MEANS TO ARSENAL AND CHELSEA AND OTHER PREMIER LEAGUE CLUBS?
The verdict actually tells the Premier League that they have to amend some of their APT rules. And facilitate the addition of shareholder loans to it. So, the shareholder loans means that if you own a club, then the shareholder can provide loans to clubs. These loan deals are highly lucrative and at low interest rates or zero interest. Man City says that these loan deals should also be regulated by the APT rules which will hand the Citizen’s some parity with their fellow clubs. So, when the APT rules are amended there is a huge risk that some of the PL clubs might breach the profit and sustainability regulations of the club.
As per the Athletic, as of 2022-23 Arsenal have borrowed £259m as loans from owners Kroenke Sports & Entertainment. Chelsea have taken around £146m as shareholder loans in their first season. Likewise, Brighton owner Tony Bloom has lent £400m interest free loans to the club. Everton amid all the financial crisis stands on top with £450m. So now as per the verdict it is certain that there will be tweaks made in the existing rules. The huge number of borrowings made by these clubs are now at risk of breaching PSR rules. Now Arsenal and Chelsea should make some amendments in their bills to abide with the new Premier League rules.
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