MANCHESTER CITY have reached a peace deal in their attempt to have Prem financial rules declared invalid.
But League bosses have agreed to let City complete a massive new deal with main sponsors Etihad.
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In a move that ended fears that the entire fabric of the Prem regulations over “Associated Party Transactions” would be declared null and void, the club and League bosses simultaneously issued a surprise statement.
“The Premier League and Manchester City FC have reached a settlement in relation to the arbitration commenced by the club earlier this year concerning the Premier League’s Associated Party Transaction (APT) Rules and as a result the parties have agreed to terminate the proceedings.
“This settlement brings an end to the dispute between the parties regarding the APT Rules. As part of the settlement, Manchester City accepts that the current APT Rules are valid and binding.
“It has been agreed that neither the Premier League nor the club will be making any further comment about the matter.”
The latest phase of the long-running dispute had seen City challenge the APT rules approved – despite a threat of legal action – by the top flight clubs in November, against City’s wishes.
City launched their legal claim in February, arguing the new regulations, designed to curb the amount clubs could receive in sponsorship and other income from companies they are associated with, were “unlawful”.
The club wanted an Arbitration Tribunal, set to convene to hear the case next month, to declare the rules “void”.
City had engaged super lawyer Lord Pannock KC to conduct their arguments with the club making a particular reference to revised rules on “shareholder loans” made to clubs by owners and directors.
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Soon after the contentious vote -which saw Chelsea and Manchester United switch sides and only Aston Villa, Nottingham Forest and Newcastle voting alongside City against them – the previous version of the rules was declared “invalid” by senior lawyers.
But Prem bosses were insistent, despite City’s challenge, that the revised rules had superseded the previous ones.
They saw tweaks to not only shareholder loans – often at low or zero interest rates – but also the process by which the League’s “databank” of financial information was shared and a wording change to some amendments.
Simon Cliff, City’s general counsel, had warned rivals that the Premier League’s interpretation of the tribunal’s ruling was “not correct” and suggested further legal action would likely follow.
City claimed the option for owners to convert shareholder loans of up to £400m-plus into equity stakes was also unlawful, giving rivals an unfair advantage.
They specifically pointed to Arsenal, where such loans stood at £259m in 2022-23, Brighton, Everton and relegated Leicester as examples of clubs handed an unfair advantage.
City’s stance was that unconverted loans were subject to a “discriminatory” Fair Market Value test because clubs in receipt can retain the loans without paying market rate interest over a three-year cycle.
Had City succeeded in the planned legal case, it would have opened the floodgates for state-backed clubs in particular to enjoy huge extra funding from companies related to their owners.
Defeat would have been a further embarrassment for Prem boss Richard Masters.
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But by reaching a deal that will allow City to benefit from a new Etihad deal, the dominant on-field club of the past decade will be able to improve their financial power as well.
The case is separate to the ongoing allegation of “115” breaches of financial rules – actually 130 charges – of financial impropriety which City have vehemently and consistently denied, with the judgement from a three-man commission eagerly awaited.
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