Man City damages, PSR chaos, Arsenal issue - what next for Premier League

Manchester City may not be alone in seeking damages from the Premier League after an extraordinary legal victory that leaves all 20 Premier League clubs wanting answers.

City challenged the Premier League over Associated Party Transaction (APT) rules that they believed to be unlawful and - after months of criticism for daring to do it - were proved correct by a heavyweight panel of judges. Not only did City have a philosophical grievance with the commercial strategy, they could also point to real-life examples where the rules had curbed their ability to make money.

With a verdict in their favour, City can now seek money from the league for being untreated unfairly. And given that APTs have been deemed unlawful, other clubs may also have their own examples that will point to them being wronged.

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In that respect, City may have some new friends in the Premier League - those who were unwilling to go up against the league directly but will benefit from the Blues doing so. Six clubs opposed the amending of APT rules in 2023 so the good will towards City may extend beyond Newcastle and Chelsea, who supported City's claim.

City may also have made a bonfire of the Profitability and Sustainability regulations that have also been the bane of clubs including Everton, Nottingham Forest, and Leicester. In assessing how APTs were established, the arbitration panel could not fathom why deals with associated parties were so closely monitored but club owners were allowed to pump in money through loans that were below a fair market value.

"We refer again to the Written Opening Submissions of the PL which state that 'owner funding, like state aid, is subsidisation. That is particularly so when other sources of external funding are not permitted.' We agree with that statement," reads the relevant passage in the report.

"The whole point of the PSR is to ensure that no club is able artificially to inflate its income or reduce its costs. In our view, having regard to the economic and legal context and the objective of the APT Rules, to permit owner funding via shareholder loans that are not at FMV, while subjecting other forms of funding to the FMV test, is a clear distortion of competition between clubs.

"The distortion of competition occurs regardless of whether the distortion arises from a non-FMV transaction with an owner or a related party. Thus, we conclude that the shareholder exclusion amounts to a sufficient degree of harm for it to be categorised as a restriction of competition by object."

Whereas UEFA's financial rules specifically exclude the ability for owners to pump money into their clubs (which brought us to 115 charges), the Premier League allowed it despite cracking down on deals struck between owners and associated parties. In the view of the panel, you cannot separate the two.

In making their point, City brought one of their biggest rivals into their argument by pointing out that Arsenal were one of the main beneficiaries from this. "MCFC alleges that there is a potential for distortion in this market by reason of the fact that the APT Rules do not apply to shareholder loans and will therefore incentivise shareholders to make loans as opposed to purchasing new equity, which favours clubs with better access to loans from shareholders," the report reads.

"Those incentives could result in a material distortion, given that £1.5b out of £4b total borrowings (some 37%) are made to clubs by shareholders, including all of Arsenal’s borrowing and almost all of Brighton's borrowing."

The Premier League brushed off the bruising verdicts, adding in their statement that "these elements can quickly and effectively be remedied by the league and clubs. In the meantime, the Premier League will continue to operate the existing APT system, taking into account the findings made by the tribunal."

It certainly won't be the game-changing consequences that the 115 hearing should bring, but this is a big headache the Premier League could have done without as it seeks to maintain its control of its clubs. Some have questions they weren't expecting, and others now want answers.