Premier League sponsorship rules 'void' says tribunal

Manchester City had taken legal action against the Premier League's APT rules

The Premier League's rules governing sponsorship deals from the period between 2021 and 2024 are "void and unenforceable", a tribunal has ruled.

Last year, an independent arbitration panel found against aspects of the league's Associated Party Transaction regulations (APTs) after a lawsuit instigated by Manchester City.

The Premier League says the tribunal's ruling does not impact the "valid operation" of current APT rules, which it believes are still "valid and enforceable" and remain in "full force".

The rules were formed by the Premier League to prevent clubs from profiting from commercial deals with companies linked to their owners that are deemed above "fair market value".

In November, the Premier League voted through amendments to the rules despite opposition from Newcastle, Nottingham Forest and Aston Villa, as well as City.

Friday's ruling is not in judgement of the November amendments which still stand but are the subject of a legal challenge.

The conclusion of the tribunal reads: "In the first partial final award it was declared that the APT rules and amended APT rules were unlawful in three respects.

"There now arises for decision the question whether those three respects can be severed from the remaining APT rules so that those remaining APT rules are valid and enforceable.

"The three respects in which the APT rules and amended APT rules were unlawful cannot be severed with the result that the APT rules as a whole are void and unenforceable."

'A huge blow to the Premier League'

This decision is a huge blow to the Premier League and effectively it means their APT rules up to November 2024 were unenforceable.

Any club who had a case heard under their rules is now in a position where they could launch a damages claim.

One source has suggested this could make the Premier League – and effectively therefore its clubs – liable for tens of millions of pounds.

This will also put a focus on chief executive Richard Masters, who confirmed the changes in November despite being cautioned against implementing them by City and Aston Villa amongst others.

What has the Premier League said?

In a statement the Premier League said: "This decision expressly does not impact the valid operation of the new rules.

"The tribunal has made no findings as to the validity and effectiveness of the new rules. The tribunal states that whether its decision has any benefit to the club, therefore, depends on whether the new APT rules are found to be lawful as part of the second challenge issued by the club last month.

"The League continues to believe that the new APT Rules are valid and enforceable and is pressing for an expeditious resolution of this matter.

"The new APT rules are in full force and clubs remain required to comply with all aspects of the system, including to submit shareholder loans to the Premier League for fair market value assessment."

How did we get here?

APTs are commercial deals involving clubs and companies to which they have close ties. Restrictions on fair market values (FMVs) were introduced in December 2021, shortly after a Saudi-led takeover of Newcastle.

The Premier League has the right to assess the value of such deals to ensure they have not been inflated, which could give clubs more to spend under current financial rules.

Last year, a tribunal ruled that low-interest shareholder loans should not be excluded from the scope of the APTs. It also ruled that changes made to toughen up the regulations also breached competition law.

Following the ruling, City criticised the Premier League's "misleading" suggestion the regulations could be swiftly amended and said there should be no vote on changes before a further determination by the panel.

However, in November, the Premier League voted through the amendments.

The Premier League said the rule changes related to "integrating the assessment of shareholder loans" and "include the removal of some of the amendments made to APT rules earlier this year".

Earlier this month, City launched a fresh legal challenge, claiming the amendments are "unlawful".

It could get worse for those in charge of the Premier League - analysis

The Premier League has already had to spend tens of millions of pounds on legal bills due to a range of recent disputes over its financial regulations.

Now it faces the threat of further costs after a significant defeat that could lead to some clubs seeking compensation for what some sources believe could be dozens of commercial deals undervalued or rejected as a result of rules that have now been deemed to be unenforceable.

While City feel vindicated by this ruling, the league's governance and ability to uphold its rulebook will now come under renewed scrutiny. But it could get worse for those in charge of the top-flight.

If the same arbitration panel decides that the amended set of rules are also void, the league could face a crisis.

There could be little preventing clubs like Abu Dhabi-backed Manchester City and Saudi-owned Newcastle United from signing more lucrative deals with state-linked companies. While such clubs would welcome less restrictions on sponsorships and loans with 'associated parties', some rivals fear the league's competitive balance would be on the line.

English football is already braced for a potentially seismic ruling in the Premier League's separate disciplinary case against City.

The champions, who are facing 115 charges of alleged Premier League financial rule breaches, deny any wrongdoing.

But the next few weeks could now feature another legal decision that also has a profound impact on the league's future direction.