Manchester City is currently engaged in a legal dispute with the Premier League regarding alleged violations of financial regulations. The club, backed by the United Arab Emirates (UAE), faces 115 charges related to breaches of the Premier League’s profit and sustainability rules (PSR), with a hearing expected to commence in mid-September. Simultaneously, Manchester City has initiated legal action against the Premier League concerning associated party transaction (APT) rules. The outcome of these legal battles could have significant implications for the financial landscape of the Premier League.
The charges against Manchester City encompass a range of alleged offenses, including the failure to provide accurate financial information and a lack of cooperation with league investigations between 2009 and 2018. Specifically, 54 of the 115 charges relate to the provision of inaccurate financial data, while 14 pertain to inaccurate details regarding player and manager payments. An additional 35 charges are connected to a failure to cooperate with Premier League investigations initiated in 2018. An independent panel hearing is anticipated to last approximately two months and aims to provide clarity on these charges by the end of the 2024-25 season.
Manchester City’s legal challenge to the Premier League’s APT rules stems from the club’s historical opposition to such regulations. The club’s sponsorship structure is closely linked to the City Football Group (CFG), with Etihad Airways, the UAE state airline, serving as a prominent example through its jersey and stadium deals. The club is owned by the Abu Dhabi United Group (ADUG), a private equity firm with strong ties to the UAE government. While ADUG maintains the separation of these entities, Mohamed Al Mazrouei held positions as chairman of Etihad until August 2021 and served on the City board until early 2022.
The Premier League’s decision to tighten APT rules was partly driven by concerns over potential inflation of sponsorship deals by clubs with state-backed ownership, such as Newcastle United. New regulations were implemented in February, mandating that all associated-party deals undergo a fair market value test. This requires clubs to demonstrate the financial justification for their deals. Manchester City’s chairman, Khaldoon al-Mubarak, has expressed concerns about excessive regulation and emphasized the importance of maintaining a balanced approach within the league.
The outcome of Manchester City’s legal challenges could significantly impact the competitive balance within the Premier League. A successful outcome for City could enable clubs with similar ownership structures, such as Newcastle United, to pursue more lucrative sponsorship deals, potentially providing them with a financial advantage in the transfer market. Conversely, a defeat for Manchester City could reinforce existing financial regulations and potentially impact clubs already facing scrutiny for PSR breaches, such as Everton, Nottingham Forest, and Leicester City. The implications extend beyond the men’s team, potentially affecting the club’s women’s team and community outreach programs.
