Manchester City are trying to overturn Premier League regulations on Associated Party Transaction rules over the next few weeks.
A top story in The Times detailed how the Blues have described the rules around fair market value for sponsorship deals with companies linked to club owners as unlawful and anti-competitive, although unfortunately it does not state what exact rules City have the problem with. Given the fact that there was little dissent when they were first introduced in 2021 and that UEFA have introduced similar proposals, it would be more credible to believe City’s problem is with the latest measures introduced in February this year.
One of many interesting points around what is in isolation a very dull topic is the idea of competition, and which side teams fall on it. City are in favour of less regulation and more freedom, but reportedly have very little support from other Premier League clubs.
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That would tally with a similar proposal on anchoring: an idea put forward that top clubs would only be able to spend a multiple of the revenue generated by the bottom club in the league. It would punish clubs for generating more revenue than they were able to spend, but the restrictions would make the league more competitive.
Sixteen clubs voted to put this to further analysis in a vote at the end of April, with City one of the minority voting against. If it looks a surprise to see other leading teams happy to put themselves at a disadvantage, it becomes less unusual when factoring in that Chelsea, Liverpool, United and Arsenal all have majority owners from the United States – a country where some form of fair play rules can be found across sporting leagues.
“It’s interesting. It depends on the league and the sport as to how it would be monitored but certain leagues have revenue shares,” explained Irwin Kishner, co-chair of the Sports Law group with New York law firm Herrick. “In baseball you have revenue sharing where the big teams that have a lot of revenue and spend a lot of money on salaries get taxed on it and that tax goes to the smaller market clubs. Basketball has similar rules as does hockey.
“We could talk about football or baseball but there are absolutely fair play rules in the US so that you do try to equalise the big clubs, the haves and the have nots and condense that so there is competition and some kind of parity among the leagues. Certain leagues do better than others because of the way they are structured.
“Football has media rights shared equally between all 32 clubs so very often you will see smaller market clubs competing with bigger market clubs. Some bigger market clubs – the New York Jets, for example – haven’t won a championship in over 50 years. It’s worked.
“Other sports haven’t done it quite to that level because there are different rules regarding the nationalisation of media rights but they’re always wary of creating a monolith or a super league within the league.”
Anyone investing in something wants to protect their money as much as they can – it’s why no relegation exists in many US sports and was a key part of the doomed European Super League, because it removes the jeopardy that would otherwise come about from poor performance. The more external variables you can control, the easier it is to plan for success.
But at what point does the push for equality come at the cost of quality? How much should players and teams and owners who want the best be stopped from trying to reach that goal?
Current financial fair play rules are designed to be an acceptable balance, although the rules that were happily signed through by clubs last season were then vocally opposed when they were actually put into action. And despite the anchoring being opposed by the majority of clubs, the Premier League announced this week that it would only be introduced next season as a trial on a non-binding basis after the Professional Footballers’ Association obstructed on the basis that it would be unlawful and anti-competitive.
As much as the upcoming hearing over APT rules has been billed as a potentially game-changing hearing, in legal terms it seeks to set or move the needle for a fair and competitive balance. Will it nudge towards the more free trade approach of City’s Abu Dhabi owners or be confirmed as the increasingly protectionist model that many of the US-owned clubs want?
“One of the tenets of all leagues is that you want to have competition. You don’t want some big-market club able to outspend smaller-market clubs in resources and presumably get the better players. That creates dynasties which are sometimes fun to watch but if it’s always a lop-sided contest it makes it a lot less fun,” said Kishner.
“I think these rules are rooted in the idea of trying to foster competition appropriately. In the specific case, the question is: is fair market value being transferred for what they’re getting?
“There is some subjectivity but that generally can be done on an objective basis. There are markets for these and you have third party experts that can value that. The question becomes is it fair or not?
“You can understand why you would try to limit – especially Manchester City after winning the Premier League four times in a row, when and how and where does it stop? The rules are well-meaning but the question is: is the application equitable, fair, and just?”