S Poddar
Manchester City seems to have a great win in the fight with the Premier League. According to The Times, the team achieved that victory when they halted a proposed vote on changes related to the rules of Premier League’s associate-party transaction, something that would actually have a far-reaching effect for clubs like Newcastle United.
The APT rules were devised as a response to the high-profile acquisition of Newcastle United by the Saudi Arabian Public Investment Fund (PIF) for £305m in October 2021. These rules were aimed at making sure that clubs are prevented from gaining commercial deals with companies associated with their ownership, citing unfair competition in the league.
For Newcastle United, new ownership meant the ability to tap into the vast commercial portfolio, and the APT rules have directly affected this as an opportunity. Although PIF is interested in all spectrums of business, they have infringed a bit on the club’s ability to explore new sponsorship deals and agreements. Since most of these restrictions had suspending effects on new deals, clubs are still expected to bring up all deals regarding sponsorship for individual consideration to confirm that they indeed reflect “fair market value.”
Responses to these changes, Amanda Staveley, one of the owners of Newcastle back then, voiced frustration that the rule adjustment was in response to the PIF takeover said that the restriction being placed on Newcastle would not enable it to compete commercially with other top clubs in the Premier League.
Manchester City now has challenged the Premier League over these rules. The club has argued that APT regulations are not just restrictive but unconstitutional. They want compensation for the financial losses that they incur as a result of these restrictions. This case, though different from the ongoing investigation into City’s alleged 115 breaches of the Premier League’s financial regulations, marks an important milestone for the club. In case of a win, the case may allow City and other clubs to heighten their commercial activities without further scrutiny from outside.
Newcastle United will also smile after this court victory by City. As the Magpies signed lucrative sponsorship deals with PIF-owned companies, amongst which included Noon as their sleeve sponsor and Sela as their principal shirt sponsor, such deals had to be analyzed on their own to ascertain whether they represented fair market value to the parties involved. A successful challenge by City could mean that such deals will have turned out to be judged differently down the line, and this might make it easier for Newcastle to enter such deals without this layer of scrutiny.
The result of this case will change how the different clubs in the Premier League treat and handle their commercial deals, especially for those who have owners that have very well-endowed coffers. With the increase of commercial revenue to the highest rungs, Newcastle will find its new obstacle removed on its way with the result of the legal case of Manchester City.
While things go for Newcastle, apart from Manchester City’s epic battle with the Premier League for the relaxation of their financial regulations, the situation does reflect a larger trend in the way commercial deals and sponsorship agreements can be approached going forward. For Newcastle and their quest to want to challenge the “big six” orthodoxy, any relaxation on associate-party transactions would go a long way to help them ascend in their desire to increase their global profile and thus get them the financial influence they need.
Then, of course, there are the likes of Manchester City and Newcastle-they being the two at the forefront of this argument, with their owners wanting to use their financial muscles to extract the highest value from the clubs they own. A successful legal challenge by Manchester City to prevent it from being put through a valuation check by the commission may open up similar avenues for Newcastle and other clubs owning ties in capitalizing more freely without having to undergo valuation checks by external commissions.
This is but one battle in Manchester City’s long legal tussles with the Premier League, but for now, the suspension of the vote on APT rule changes presents an important step forward and for now, a temporary victory as they gear up for more battles through other litigation.
This has implications that trickle out of Manchester and into clubs all around the Premier League at large, with this case offering a template for future sponsorship deals and commercial partnerships among these clubs.
