The legal battle between Manchester City and the Premier League has highlighted the game’s existential crisis. Is it too late to save it?
The problem with existential threats, from the climate crisis to Conquistadors to Covid, is that they always seem distant, somehow unreal. People are always predicting the end of the world, which makes it easy to dismiss the doom-mongers. When we’ve had so many warnings of the apocalypse, why should anybody listen now? But some day one of those prophets is going to be right. Nothing is eternal.
Football has never been so popular. Crowds in England are at the highest they have been for half a century and, if you include non-league football, probably ever. The global television audience is vast. It is an all-consuming universal. And yet that is its very problem; football is so magnetic that it has drawn the interest of too many who see it not as a sport, not as cultural expression, but as an entity from which they may profit.
Other sports, while never having quite football’s global appeal, have been unassailably popular in the past, only to decline: no one goes to the arena to watch gladiatorial combat any more, chariot-racing is defunct, cockfighting has had its day, even cricket – once England’s national sport – feels locked in a perpetual battle to survive, the rash of cash-boosting short-form tournaments reducing the schedule to unfathomable irrelevance. Football’s structure is different, but as new competitions are invented and existing ones expanded, its calendar does increasingly feel packed with content for content’s sake.
Football has proved extraordinarily resilient for 150 years but the existential threat is there. As fans and pundits and media have quarrelled over the past week about just who “won” the Premier League v Manchester City legal battle over associated party transactions (APT), taking up their pre-assigned positions behind the barricades, it’s all a bit Fuji and Kodak fighting a sales war 20 years ago: er, have you heard of digital?
The sport is now in the hands of states, oligarchs and private equity funds, none of whom, it’s fair to say, are likely to care much for the long-term good of the game. They are all rich enough to pursue hugely expensive litigation that could cripple football’s administrators, a point made explicitly in the email published by Der Spiegel purportedly from City’s general counsel, Simon Cliff, that quoted the club’s chairman, Khaldoon al-Mubarak, threatening “the destruction of [Uefa’s] rules and organisation” by suing them “for the next 10 years”.
For a long time it’s been problematic that those who govern the game also run and derive profit from competitions, creating a nexus of interrelated incentives that has led to clientelism – but this is worse. What future does any organisation have if a member has the power effectively to decide that it doesn’t have to obey regulations voted for by the others, the “tyranny of the majority”, to use another phrase used by City?
What the case seems to have established is that financial regulation is necessary to prevent successful clubs becoming a self-perpetuating elite, and that loans from shareholders to their clubs should incur interest at market rates so as not to count as a subsidy for the purposes of profitability and sustainability calculations. All of that seems entirely reasonable – and was already part of Uefa financial fair play regulations.
City, it could be argued, have done the game a favour by closing a loophole that ensures tighter financial controls. However, if that were their aim, it seems odd that they would describe the Premier League’s plan to update the regulations accordingly as “an unwise course”, which “would likely to lead to further legal proceedings with further legal costs”.
The broader issue now is whether they have isolated a procedural flaw that could undermine the Premier League’s 130 charges against them (they, of course, deny them all). There are those, often cloaked in free-market dogma, who argue there should be no restrictions on what clubs can spend. But then the rich win, generate more revenue, buy the best players and win even more.
That’s why, until 1983, home teams in the English league paid the away team a levy and why a maximum wage was implemented in 1901. The maximum wage soon proved exploitative but the significant point was the rationale behind it: there has to be regulation to prevent the richest clubs developing what would in effect become monopoly positions – a principle that would be accepted by all but the most libertarian free-marketeers.
No one ever seems to consider how the game should look. In an ideal world, how many points would the average Premier League champions get? What is a club? What happens when the investment funds of authoritarian states with command economies start dabbling in a free market?
The issues are complex, global and would require an enormous, perhaps impossible, amount of consultation and collaboration to resolve – but these are questions that are not even asked. Everyone is wrapped up in their own self-interest, driven by their own greed. And that brings danger. Already at certain clubs there is a clear preference for high-spending occasional fans over regulars.
Tournaments are bloating. The Champions League is a footstep from being a Super League. There is more and more content and less and less of it means anything. Financial bullies, celebrated by fans and partisan cheerleaders, seek the right to bully financially. Football is being dragged away from the communities that fostered it.
What if the global appetite dwindles? What if this new audience moves on, to MMA or esports, or something else? If English football has ostracised its base, it might find there isn’t much left, and the self-absorbed mega-rich aren’t going to hang around to bail out the decades-old institutions they own; the medium-to-long term isn’t in their thinking. What if an infinitely rich owner bankrupts the Premier League?
How might football end? Through the greed and monstrous self-interest of those who never really cared for that game, and the complacency of those who allowed it to happen. Winter may already be here.
In a letter sent by chief executive Richard Masters - and seen by BBC Sport - he hints at a possible delay to a key meeting to discuss the situation, advising there could be an “impact on the scheduling”.
Both sides claimed victory after the decision of an arbitration panel was published on Monday following a legal challenge by City against the league’s associated party transaction (APT) regulations.
APT rules are in place to ensure sponsorship deals with companies linked to clubs’ owners represent fair market value.
City had some complaints upheld, with two aspects of the rules deemed unlawful by the tribunal.
The tribunal said low-interest shareholder loans should not be excluded from the scope of APT rules, and that changes made in February to toughen up the regulations also breached competition law.
In its initial response on Monday, the Premier League said the panel “endorsed the overall objectives, framework and decision-making of the APT system”, adding it would seek to amend its rules “quickly and effectively”.
Its Financial Controls Advisory Group and Legal Advisory Group are due to meet next Tuesday, with a full meeting of the clubs following on Thursday.
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However, in his latest correspondence to clubs, Masters says: “There have been many club conversations over recent days, with constructive and informative feedback provided.
“We now have a comprehensive set of information and data which is helping to inform our recommended approach and rule amendment drafting.
“We are taking the necessary time to develop our proposals and the associated draft rule amendments for club consideration.
“We will circulate these to clubs when fully considered and ready, which may impact on the scheduling of our planned meetings with Financial Controls and Legal Advisory Groups, and all clubs next week.”
Earlier this week, City claimed the Premier League‘s summary of the panel’s ruling was “misleading” and contained “several inaccuracies”, in an escalation of the dispute.
In a letter sent to top-flight clubs and the Premier League, City wrote that the rules were now “void”, that the club had “concern [over] the Premier League's suggestion that new APT rules should be passed within the next 10 days”, and signalled possible further legal action if there was a “knee-jerk reaction”.
The league declined to comment.
Clubs approached by the BBC have expressed different views over the situation. One referred to “general concern at the potential destabilising effect of this ongoing dispute”.
Another said: “We want to move forward… there will obviously be modifications to the rules and it needs to be done in a thoughtful way and we go on. We want to focus on the football.”
Several others declined to comment.
The league has also written to the tribunal panel to get further clarity on the status of the APT regulations.
This case is not directly related to the Premier League disciplinary commission, which will hear 115 charges against City for allegedly breaching its financial regulations, some of which date back to 2009. City deny wrongdoing.
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© 2024 BBC. The BBC is not responsible for the content of external sites. Read about our approach to external linking. The Premier League’s reputation could take a major hit from their ongoing legal battle with Manchester City - and it's likely their domestic rivals will be affected too
Premier League clubs have been warned that the cost of the civil war that threatens to tear the top-flight apart could be huge.
Mirror Football understands that a growing number of teams are now supporting Manchester City’s bid to have current Associated Party Transaction rules declared illegal following a ruling by an independent tribunal that the current framework does not meet with UK competition law.
City are also fighting the Premier League over 115 allegations of failing to supply accurate financial information in a separate case that began three weeks ago and is expected to last at least another two months.
And last season, both Everton and Nottingham Forest were docked points for failing to meet Profit and Sustainability Rules in two more expensive legal battles.
Top sports lawyer Simon Leaf, a partner with international law firm Mishcon de Reya, believes the world’s richest domestic football league could pay a heavy price when it comes to negotiating future deals with broadcasters and potential sponsors.
Leaf said: “If the Premier League is seen fighting constant legal battles with its member clubs then that does serious damage to the brand.
“This is a league that is seen as one of the country’s crown jewels. It is the envy of all the other leagues around the world.
“The damage might not happen overnight, but when the game is being played out in court rooms rather than on the pitch then it isn’t the kind of thing that sponsors and broadcasters will want a piece of.
“There will be damage to the brand that you can’t put a number on at the moment. It is often said that there is no such thing as bad news - but ultimately when it comes to external sponsors, especially from overseas, looking at who they want to partner with there maybe more of a temptation now to perhaps go with La Liga rather than the Premier League.
“A civil war like this really isn’t good for business. It brings the Premier League into disrepute.”
The Premier League currently banks more than £3.5 billion-a-year from world-wide TV rights.
A new domestic deal with Sky and TNT worth £6.7 billion over four years kicks in next season. That is £2 billion more than La Liga currently earns and almost £3 billion more than the Bundesliga.
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Manchester City challenged the legality of the Premier League's Associated Party Transaction rules (APT) with a tribunal deeming some of the regulations as unlawful and procedurally unfair as they did not cover loans made to clubs by shareholders
Sky Sports News Chief Reporter
Saturday 12 October 2024 09:18, UK
An emergency shareholders' meeting has been called for next Thursday after an arbitration tribunal declared that some of the Premier League's Associated Party Transaction (APT) rules were unlawful and procedurally unfair.
Manchester City had challenged the legality of the APT rules after they were tightened following a vote of the 20 member clubs in February.
The Premier League has written to its 20 member clubs to tell them they will be updated on Monday about next week's plans.
In a 175-page report published this week, the tribunal of three retired judges determined the APT rules were unlawful because they did not cover loans made to clubs by shareholders.
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Clubs have provided the league with details of their shareholder loans over the past few days as proposals are drawn up to amend the APT rules.
The rules were introduced in 2021 to stop clubs boosting their revenue by signing inflated commercial and sponsorship deals with companies connected to their owners and shareholders. Clubs, including City, voted against incorporating shareholder loans in the rules.
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City believe all the APT rules are now void following the tribunal's findings, while the Premier League says the panel of three retired judges “endorsed the overall objectives, framework and decision-making of the APT system”.
The league thinks it can comply with competition and public law by changing the existing rules but City have warned against such a course of action.
Next week's meeting is likely to see the 20 clubs divide into the same groupings which lined up behind City or the Premier League at the two-week arbitration hearing in June.
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Chelsea, Newcastle and Everton acted as witnesses for City in the hearing, while the Premier League was supported by Arsenal, Manchester United, Liverpool, Tottenham, Brighton, West Ham, Brentford, Bournemouth, Wolves and Fulham.
The hearing into City's alleged 115 breaches of the Premier League's financial rules is continuing at the International Dispute Resolution Centre in St Paul's.
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© 2024 Sky UK Exclusive: Six-year limitation on breach of contract claims could force clubs to open legal proceedings in search of damages
Claims for breach of contract generally have a six-year limitation and, with allegations of Manchester City rule-breaking emerging in Der Spiegel in November 2018, there is a feeling inside the league that clubs must act to reserve their rights while football’s so-called ‘trial of the century’ continues.
City have always denied breaking any rules but, such has been the time it has taken for the Premier League to investigate and bring charges, it is understood that clubs are taking legal advice on the issue before deciding how to proceed.
Any eventual arbitration between Premier League clubs is private but City will soon have a much better idea of who intends to seek damages if an ongoing independent commission finds serious wrongdoing in its investigation of more than 100 alleged rule breaches.
“It is not something clubs would want to do before knowing the outcome of the commission but they may very well feel that they have no choice,” said one lawyer, who has advised Premier League clubs. “Clubs who have been competing with City for major trophies and European qualification would potentially have most at stake but it all ultimately depends on what the commission finds and the result of any appeal, so this could go on for many months yet.”
A reservation of rights letter is typically served where a party has become aware of facts which may amount to breach of contract, but needs time to investigate and consider its options, and wishes in the meantime to reserve its rights.
The 1980 Limitation Act sets out a six-year period from being aware of any potential breach with reasonable diligence. It is a point in time that could be open to interpretation given City’s consistent denials and how allegations first surfaced via Der Spiegel’s reports of the Football Leaks documents on November 5, 2018.
City say they have “irrefutable evidence” to support their innocence over alleged breaches and that they “look forward to this matter being put to rest once and for all.”
The hearing – which concerns Premier League rules relating to financial information, acting in good faith and providing information – began last month in St Paul’s and is expected to last around 10 weeks. It follows a separate arbitration tribunal that heard City’s challenge over the associated party transaction (APT) rules in June, and for which findings were published by the two sides this week.
With both the league and City continuing to claim victory, executives from both sides are understood to have written to the tribunal panel to gain full clarity on the status of the APT regulations. The three-man panel, all retired senior judges, are expected to issue further written clarification in days, if not weeks. However, it is unlikely there will be any definitive response prior to next Thursday’s emergency meeting to discuss the consequences for clubs.
The APT rules seek to ensure that commercial deals between clubs and entities linked to their ownership are done at fair market value (FMV), to avoid such deals being artificially inflated to boost revenue.
City argue the APT rules are all void because the judgment found certain aspects of them to be in breach of competition law. The Premier League’s position is that the judgment was on the whole an endorsement of the APT rules and the principles behind it, and therefore only those aspects found in breach need revising.
