Man City defeat Premier League in legal battle over sponsorship deals in landmark ruling

7 October 2024, 15:29 | Updated: 7 October 2024, 16:11

Manchester City have scored a major victory over the Premier League after rules blocking their sponsorship deals were deemed unlawful.

This landmark decision, which is separate from the 115 charges Manchester City are facing, has declared the club were unfairly blocked from agreeing two massive sponsorship deals last year.

This could allow the ten-time champions, owned by the Abu Dhabi group, to strike even larger sponsorship deals with brands such as Etihad, who sponsor their stadium and shirts.

It could also see Manchester City seek damages from the Premier League for abusing its position. Other clubs could now potentially do the same.

An independent panel made up of three retired judges declared the Premier League’s actions unlawful, pointing to their failure to take into consideration interest-free loans which shareholders lend to clubs.

Manchester City argued that these loans should be taken into account when determining whether a team has stayed within the Premier League’s Profit and Sustainability rules (PSR).

Premier League clubs that breach PSR are subject to harsh punishments, including points deductions.

Crucially, many of the biggest Premier League clubs rely heavily on these loans from their owners, with rivals Arsenal owing £200million to their shareholders.

City, on the other hand, have received no cash from their owners in the form of interest-free loans.

115 Charges

Elsewhere, the Premier League have hit City with 115 charges of financial wrongdoing over a nine-year period from 2009 to 2018.

The secret hearing into the alleged wrongdoing began in mid-September.

It is thought the club, who are also accused of failing to cooperate with an investigation, could face a range of punishments including a severe points penalty or even expulsion from the Premier League if found guilty.

The case will be heard by an independent commission at an undisclosed location and could take 10 weeks to complete, with a verdict not announced until 2025.

City were charged by the league in February 2023 after a long investigation into allegations published by German magazine Der Spiegel in autumn 2018.

The club deny any wrongdoing and have previously said they have a "comprehensive body of irrefutable evidence" to support their stance.

City's financial affairs have come under regular scrutiny since their takeover by Sheikh Mansour's Abu Dhabi United Group in 2008.

In 2020 they were banned from European competition after being found guilty of breaking UEFA's Financial Fair Play rules, but successfully challenged that ruling at the Court of Arbitration for Sport.

If found guilty, City face a range of punishments, including expulsion from the Premier League, a points deduction that could see them relegated or significant financial penalties.

That alleged practice was suggested as a way for City to meet UEFA's Financial Fair Play rules, introduced in 2011, and the Premier League's Profit and Sustainability rules, which became effective a year later, with both sets of regulations limiting the losses clubs can make.

City were also accused of further financial irregularities, namely payments to former manager Roberto Mancini and some players, that did not go through the club's official accounts, enabling them to comply with spending restrictions set by the authorities.

Yet if City are successful in clearing their name, questions will be asked of the Premier League and its ability to enforce its strict financial regulations and ensure all clubs adhere to them.