MANCHESTER City and the Premier League have resolved their dispute regarding regulations governing commercial sponsorship agreements.
The club has formally accepted that the current rules for associated party transactions are both valid and binding.
City had initiated arbitration proceedings against these regulations on January 20, which aim to ensure fair market value in deals between clubs and entities connected to their ownership.
The challenge reportedly included objections to how the Premier League treated shareholder loans under these rules.
Both parties have agreed not to make any additional comments regarding the settlement.
The associated party transaction rules were first implemented in December 2021 after Newcastle’s Saudi-led takeover earlier that year.
City successfully challenged these original rules last year when a tribunal deemed them unlawful on multiple grounds, including the exclusion of shareholder loans from fair market value assessments.
This led the Premier League to consult with clubs and amend the rules, with 16 teams voting in favour of the revised regulations last November.
City’s acceptance of the amended rules resolves a potentially disruptive issue that could have significantly impacted the league’s financial framework.
Without these regulations, entities linked to club owners could potentially overvalue sponsorships to artificially boost club revenues.
Such practices would strengthen a club’s position under profitability and sustainability rules, allowing greater spending on transfers and player wages.
The amended rules now incorporate fair market value assessments for shareholder loans, though these provisions are not applied retroactively.
These assessments only apply to ongoing and future loans rather than past transactions.
Both City and the Premier League continue to await the outcome of an independent commission hearing regarding more than 100 financial rule breach charges against the club.
The hearing occurred between September and December last year following charges brought by the Premier League in February 2023. – AFP
