Man City accuse Premier League of ‘misleading’ clubs

Manchester City have accused the Premier League of being “misleading” over the verdict in its landmark legal case on rules over commercial deals.

City have written to top-flight clubs criticising the league’s summary of the case verdict, saying it contains “several inaccuracies”.

The letter to the 19 clubs and the league, seen by the BBC, was sent by City’s general counsel Simon Cliff on Monday.

Both sides have claimed victory after the decision of an arbitration panel was published on Monday following a legal challenge by City against the league’s associated party transaction (APT) rules.

City, who are owned by the Abu Dhabi-backed City Football Group, had some complaints upheld, with two aspects of the APT rules deemed unlawful by a tribunal.

They have claimed their legal action had “succeeded”.

However, the Premier League also welcomed the tribunal’s findings, saying it rejected the majority of Manchester City’s challenges and “endorsed the overall objectives, framework and decision-making of the APT system”.

APTs are aimed at sponsorship deals with companies linked to clubs’ owners, ensuring they are of fair market value.

City are not commenting on the letter.

The Premier League has also declined to comment, but a senior source has told BBC Sport that it rejects any view that its summary of the ruling was misleading or inaccurate.

A consultation with the clubs is now under way. They are meeting next Thursday to discuss the fallout, but there will be no vote at that stage.

This case is not directly related to the Premier League disciplinary commission, which will hear 115 charges against City for allegedly breaching its financial regulations, some of which date back to 2009. City deny wrongdoing.

In the letter, Cliff offered “clarifications” to “assist member clubs with their understanding” in response to a summary of the panel’s ruling by Premier League chief executive Richard Masters.

“Regrettably, the summary is misleading and contains several inaccuracies,” Cliff claims.

“The tribunal has declared the APT rules to be unlawful. MCFC’s position is that this means that all of the APT rules are void,” the letter states.

“The decision does not contain an ‘endorsement’ of the APT rules, nor does it state that the APT rules, as enacted, were ‘necessary’ in order to ensure the efficacy of the League’s financial controls.”

The Premier League, in its summary, said that the tribunal identified “a small number of discrete elements of the rules which did not in their current form comply with competition and public law requirements” and that these could “quickly and effectively be remedied”.

However, the league’s position that City were unsuccessful in the majority of its challenge is described by Cliff as “a peculiar way of looking at the decision”.

He added: “While it is true that MCFC did not succeed with every point that it ran in its legal challenge, the club did not need to prove that the APT rules are unlawful for lots of different reasons. It is enough that they are unlawful for one reason.”

Cliff added that it was “not correct that the tribunal’s decision identifies ‘certain discrete elements’ of the APT rules that need to be amended in order to comply with competition and public law requirements”.

He added: “On the contrary: the APT rules… have been found to be unlawful, as a matter of competition law and public law. This means that they are void and not capable of enforcement. This has very significant consequences for APTs that have been entered into to date and APTs that are currently being negotiated by clubs.

“Of even greater concern, however, is the PL’s suggestion that new APT rules should be passed within the next 10 days.”

The Premier League is seeking to amend its rules within the next fortnight so that they comply with competition law.

The tribunal – in a 175-page document – ruled that low-interest shareholder loans from owners to their clubs should not be excluded from the scope of APT rules, and that some amendments to toughen up the rules in February by should not be retained.

However Cliff warns that it is “remarkable that the Premier League is now seeking to involve the member clubs in a process to amend the APT rules at a time when it does not even know the status of those rules”.

He added: “We will be writing separately about this to the Premier League but in the meantime, given the findings in the award, this is the time for careful reflection and consideration by all clubs, and not for a knee-jerk reaction.

“Such an unwise course would be likely to lead to further legal proceedings with further legal costs. It is critical for member clubs to feel that they can have trust in their regulator.”

This letter – and the incendiary language contained in it – represents an escalation in the remarkable dispute between English football’s most dominant club and the competition they have won six years out of the past seven.

It also shows that this bitter row is potentially far from over. The Premier League has said that it is confident that it can amend the APT rules in order to make them comply with competition law. But Cliff’s warning that any “unwise” attempt to make such changes without “careful consideration” are “likely to lead to further legal proceedings with further legal costs” will not have gone unnoticed by those clubs already concerned about the league’s spiralling legal bill.

The exclusion of low-interest loans from owners to their clubs – shareholder loans – from the scope of the current APT rules was deemed unlawful by the panel. The Premier League will now seek to change its rules so such loans are included. It is working on a premise that such loans will only come into the scope of APT once the rules are amended, and will not be applied retrospectively.

However, City’s lawyers believe that it would be unfair to continue to subject previous sponsorship deals to APT rules that have now been found to be partly unlawful, while choosing not to subject previous shareholder loans to the same regulations. They may even seek an injunction to prevent the Premier League from trying to doing so.

Cliff’s letter will also increase speculation that City may take further legal action to claim compensation for any losses they argue they have suffered as a result of the rules.

Despite the tone of City’s letter, the Premier League privately remain bullish, insisting they have now spoken to all the other clubs, and remain confident of securing the support needed to vote through the required amendments to their rules. Some at the league say they have grown accustomed to such an approach from City during years of disagreement with the champions over financial rules.

But there will still be concerns from some of the league’s members that any weakening of the APT rules could allow some rivals to boost their commercial revenues and gain an advantage. And it will lead to more questions over whether this case could have an impact on the outcome of the ongoing arbitration hearing into the 100+ charges that City are contesting for alleged financial rule breaches.

What is certain is that the APT verdict has exposed widening divisions among the clubs, and proven once again how difficult it has become for the league to uphold its financial rules.