Manchester City reached a settlement with the Premier League on Monday in relation to their dispute over the rules governing associated party transactions (APTs).
City had been involved in a legal challenge against the rules, which are in place to ensure deals between clubs and entities linked to their ownership are not above a fair market value.
Under the settlement, City accept that the current rules governing APTS are “valid and binding”.
City have accepted the rules governing APTs are valid and binding
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Here, Standard Sport talks to football finance expert Kieran Maguire about what Monday’s ruling means…
What was does the ruling mean?
Kieran Maguire: The exact details of the settlement between Manchester City and the Premier League are unknown.
But my understanding is that Manchester City are certainly happy with the settlement and that the Premier League have also saved some face, in the sense that City are not going to pursue them any further with regards to the legitimacy of having APT rules.
Both sides can claim a victory.
It would appear that City are now in a strong position to finalise a deal with Etihad for stadium naming rights, front of shirt rights, training ground rights, who knows what – and that would be a substantial increase on the deal it is replacing.
Why is it significant for Manchester City?
It is significant for Manchester City because City earn a greater proportion of their revenue from commercial activities than any other Premier League club.
They don’t charge the same prices as some of the other big brands in the Premier League, they have got more of a local based fan base and they don’t want to rip them off, and the fans don’t want to be ripped off. So, the [ticket] prices reflect that.
Therefore City have to work that much harder in terms of commercial income and that’s why they have got so many partners, both from Abu Dhabi and elsewhere.
For Manchester City, they no longer have to justify the price to the same extent that they did under the initial attempts by the Premier League to impose these rules.
What does it mean for other clubs?
In theory, the rules apply to all clubs in the Premier League.
In that sense, I think the institution itself, the Premier League, has to concede that trying to determine what is a fair market value for something which is abstract – a shirt sponsorship deal – the value of that is very much in the eye of the beholder.
It is the same as how much is the value of a painting? How much is the value of a race horse? How much is the value of a unique piece of property?
Any unique relationship is very difficult to nail down in terms of a definitive value.
It is not like me popping down to my local Apple Store and saying: ‘Oh, I want an iPhone’. It is £799. It is £799 if I get it from John Lewis or Currys or elsewhere.
When it comes to shirt sponsorship, a relationship between a club and a commercial partner can have different values depending on where that partner is based.
Therefore, that is perhaps why we are seeing some very lucrative deals as far as Manchester City are concerned for their commercial partners back in Abu Dhabi.
Should Manchester City’s title rivals be worried?
I don’t think City’s rivals should worried.
There is no doubt that City have a competitive wage budget and a competitive transfer budget, but people forget they must also comply with UEFA’s rules.
And remember, it was Chelsea and Aston Villa that breached UEFA’s rules and have been fined and are having to abide by a business plan – not Manchester City.
So, Manchester City will keep a close eye on making sure that they are within the SCR (Squad Cost Rules) limits that are applied by UEFA, as much as their relationship with the Premier League is concerned going forwards.
