Super League and cheating by ManCity and PSG

[gary69]

Man City won part of its' case against PL regarding Associated Party Transaction (APT) rules.

So Man City can now sign more lucrative sponsorshp deals and be awarded compnsation from PL for lost income because they were not allowed to do these deals earlier.

From Fabrizio Romano: "

Rules deemed unlawful because they did not take into consideration interest-free loans from shareholders to clubs
Likely change in the regulations could lead to City striking more lucrative deals and seeking damages from the Premier League
Clubs with high levels of borrowing now in danger of breaching of Profitability and Sustainability Rules
Arsenal, City’s title rivals, have borrowing of more than £200million made up entirely of shareholder loans"

"Manchester City have inflicted a potentially damaging defeat on the Premier League after the rules governing commercial deals between clubs and related companies were declared unlawful.
In a landmark decision that could have huge ramifications for England’s top flight, it was ruled that City were unfairly blocked from agreeing two huge sponsorship deals earlier this year.
It opens the door for the English champions, majority-owned by Abu Dhabi, to strike significantly higher sponsorship agreements with associated parties than previously allowed — including with Etihad, their stadium and shirt sponsor — and to pursue compensation and costs from the Premier League for abusing its position. Other clubs could also now seek damages should they believe they have been impacted."

Even more interestingly shareholder loans must be paid back and be charged at market value interest, which could mean breach of sustainability rules for some clubs like Arsenal.

"The decision will spark huge concern among a number of City’s Premier League rivals — who rely heavily on such loans — and is likely to lead to the rules being changed.
The panel states that, of the £4billion in total borrowing across the Premier League, £1.5billion is in loans from club owners and shareholders. If the rules are altered and commercial loan rates are now applied to these interest-free loans and have to be included in a club’s profitability and sustainability calculation, many clubs could find they are in breach of Profitability and Sustainability Rules (PSR).
City had argued that such payments were unfair and not at market value because they were interest-free and, in some cases, did not have to be repaid at all. For a club such as Arsenal, with borrowing of more than £200million made up entirely of shareholder loans, that is a potentially seismic development."

PL has issued a statement on the verdict:

Premier League statement

 

[bluesfan94]

Man City won part of its' case against PL regarding Associated Party Transaction (APT) rules.

So Man City can now sign more lucrative sponsorshp deals and be awarded compnsation from PL for lost income because they were not allowed to do these deals earlier.

From Fabrizio Romano: "

Rules deemed unlawful because they did not take into consideration interest-free loans from shareholders to clubs
Likely change in the regulations could lead to City striking more lucrative deals and seeking damages from the Premier League
Clubs with high levels of borrowing now in danger of breaching of Profitability and Sustainability Rules
Arsenal, City’s title rivals, have borrowing of more than £200million made up entirely of shareholder loans"

"Manchester City have inflicted a potentially damaging defeat on the Premier League after the rules governing commercial deals between clubs and related companies were declared unlawful.
In a landmark decision that could have huge ramifications for England’s top flight, it was ruled that City were unfairly blocked from agreeing two huge sponsorship deals earlier this year.
It opens the door for the English champions, majority-owned by Abu Dhabi, to strike significantly higher sponsorship agreements with associated parties than previously allowed — including with Etihad, their stadium and shirt sponsor — and to pursue compensation and costs from the Premier League for abusing its position. Other clubs could also now seek damages should they believe they have been impacted."

Even more interestingly shareholder loans must be paid back and be charged at market value interest, which could mean breach of sustainability rules for some clubs like Arsenal.

"The decision will spark huge concern among a number of City’s Premier League rivals — who rely heavily on such loans — and is likely to lead to the rules being changed.
The panel states that, of the £4billion in total borrowing across the Premier League, £1.5billion is in loans from club owners and shareholders. If the rules are altered and commercial loan rates are now applied to these interest-free loans and have to be included in a club’s profitability and sustainability calculation, many clubs could find they are in breach of Profitability and Sustainability Rules (PSR).
City had argued that such payments were unfair and not at market value because they were interest-free and, in some cases, did not have to be repaid at all. For a club such as Arsenal, with borrowing of more than £200million made up entirely of shareholder loans, that is a potentially seismic development."

PL has issued a statement on the verdict:

Premier League statement

Fabrizio Romano doesn't know what the hell he's talking about. The downside of basing one's "analysis" on whatever PR a club source feeds you.

There are basically two actually ramifications here:
1) The burden of proof is on the EPL and not the club to demonstrate FMV of affiliate sponsorships. That likely means that City/Newcastle/*insert club here* can probably get a little more money out of their affiliate sponsorships.

2) The financing charges on shareholder loans will be considered losses and must be at FMV. Previously, shareholders could loan money to clubs with essentially no interest and there would be no loss. That's not the case anymore. Now there will have to be FMV for interest. That doesn't mean the whole value of the loan is on PSR. More importantly, if it actually be came an issue, those loans could just be converted to equity and would go away.

To be clear - don't mean to come after you for this, but when football reporters report on legal cases without (1) being lawyers and (2) reading the entire ruling (which, it's 175 pages and Fabs/others tweeted before the whole thing was available), it's more likely than not wrong/misunderstood.

 

[gary69]

The interesting question is what will happen regarding any amendments to rules, as they stiil need to be voted on amongst the clubs. Will be an interesting meeting.

 

[gary69]

Fabrizio Romano doesn't know what the hell he's talking about. The downside of basing one's "analysis" on whatever PR a club source feeds you.

There are basically two actually ramifications here:
1) The burden of proof is on the EPL and not the club to demonstrate FMV of affiliate sponsorships. That likely means that City/Newcastle/*insert club here* can probably get a little more money out of their affiliate sponsorships.

2) The financing charges on shareholder loans will be considered losses and must be at FMV. Previously, shareholders could loan money to clubs with essentially no interest and there would be no loss. That's not the case anymore. Now there will have to be FMV for interest. That doesn't mean the whole value of the loan is on PSR. More importantly, if it actually be came an issue, those loans could just be converted to equity and would go away.

To be clear - don't mean to come after you for this, but when football reporters report on legal cases without (1) being lawyers and (2) reading the entire ruling (which, it's 175 pages and Fabs/others tweeted before the whole thing was available), it's more likely than not wrong/misunderstood.

No problem, I took no offence from your post.

Can't be bothered to read the tribunal's ruling nor am I lawyer, so I just read what others have written and wait to see how & when the rules might actually be chanced.

 

[spintheblackcircle]

My .02, ManCity didn't win very much. What they won is that now the PL have to investigate the clubs who have been loaning themselves money. They still have dozens of charges pending.

 

[1865]

As a kid growing up in Nottingham in the 90's, you really *hated* Man Utd. They won everything and you either supported them (regardless of where you're from) or loathed them with every ounce of your being.

It's a weird time now because it's all so different with City. Them winning the league is met with such apathy because nobody really cares. Is it because it is all artificial? None of their success has been "earned" as such, it's just oil money thrown at the wall until it worked. There is a unanimous dislike across the other 91 of their obvious cheating, but you get the feeling people are OK with City winning the league every year because you don't really know any of their fans and at least it isn't Liverpool or United doing it again.

Nobody truly expects the PL to be able to prove these charges, City will keep throwing money at lawyers until it all goes away. They'll just keep punishing the Forests and Evertons of the world instead, like a man bullied at work who goes home and kicks his dog.

 

[Scandale du Jour]

My .02, ManCity didn't win very much. What they won is that now the PL have to investigate the clubs who have been loaning themselves money. They still have dozens of charges pending.

They won't be punished. Everton will lose 10 points instead.

 

[bluesfan94]

I think this lawsuit’s results makes it very likely that City gets the book thrown at them.

 

[Scandale du Jour]

I think this lawsuit’s results makes it very likely that City gets the book thrown at them.

I'll believe it when it actually happens.

Too much diplomatic implications for them to get what they really deserve.

That's why state ownership of sports club sucks so much...

 

[hatterson]

I think this lawsuit’s results makes it very likely that City gets the book thrown at them.

I'm still half expecting something stupid like a big fine, a retroactive points deduction that magically doesn't change any title results, and some sort of "they promised to be better moving forward" cop out.

 

[Duchene2MacKinnon]

https://x.com/i/web/status/1843695545803784277

Yeah pep is goner. This is the first dominion

 

[gary69]

City doubling down on other PL clubs by sending them a letter of what the verdict means as they interpret it:

"The tribunal has declared the APT rules to be unlawful. MCFC's position is that this means that all of the APT rules are void,"

"The decision does not contain an 'endorsement' of the APT rules, nor does it state that the APT rules, as enacted, were 'necessary' in order to ensure the efficacy of the League’s financial controls."

"While it is true that MCFC did not succeed with every point that it ran in its legal challenge, the club did not need to prove that the APT rules are unlawful for lots of different reasons. It is enough that they are unlawful for one reason."

"the APT rules... have been found to be unlawful, as a matter of competition law and public law. This means that they are void and not capable of enforcement. "

"City's lawyers believe that it would be unfair to continue to subject previous sponsorship deals to APT rules that have now been found to be partly unlawful, while choosing not to subject previous shareholder loans to the same regulations. They may even seek an injunction to prevent the Premier League from trying to doing so."

PL clubs will be meeting on Thursday, but there will be no vote on the matter yet.

Man City accuse Premier League of 'misleading' clubs over tribunal verdict

 

[Jersey Fresh]

Classic strong arm tactic. These UAE royals really think they’re bigger than the league itself.

 

[S E P H]

Classic strong arm tactic. These UAE royals really think they’re bigger than the league itself.

Can you blame them? They pretty much were groomed from very young ages to be essentially royalty. Of course, they want things done their way. It's the same thing with Taylor Swift, she pretty much has gotten praise for being who she is for the last ten to fifteen years and it goes straight to your head.

 

[maclean]

Classic strong arm tactic. These UAE royals really think they’re bigger than the league itself.

Agreed, but I'm also worried that they actually are

 

[hatterson]

Yea City's letter is just a bunch of scare mongering with some loosely disguised "either fold to our demands or we'll keep you in court forever and cost you millions and millions of dollars doing it"

It wasn’t a clear win for the PL, but it was far closer to a win for them than for City.

The Tribunal held that APT rules as constructed were largely fine apart from the shareholder loan thing. They ruled the small update to the rules recently went a bit too far because it removed the buffer zone for false positives, but none of the deals City was complaining about as being rejected were rejected under the amended rules.

The easy fix for the PL is to undo the amended rule and address the shareholder loan thing via requiring potential interest to count against PSR.

The interest thing might be a bit difficult to get through the member clubs since many of them use shareholder loans, but there’s very healthy appetite for having APT rules so I think most clubs would rather deal with 5-15M extra against PSR a year for those loans than not have any APT rules.

 

[bluesfan94]

Can you blame them? They pretty much were groomed from very young ages to be essentially royalty. Of course, they want things done their way. It's the same thing with Taylor Swift, she pretty much has gotten praise for being who she is for the last ten to fifteen years and it goes straight to your head.

What a wild comparison

The easy fix for the PL is to undo the amended rule and address the shareholder loan thing via requiring potential interest to count against PSR.

The interest thing might be a bit difficult to get through the member clubs since many of them use shareholder loans, but there’s very healthy appetite for having APT rules so I think most clubs would rather deal with 5-15M extra against PSR a year for those loans than not have any APT rules.

Also, existing loans can easily be converted into capital if necessary.

 

[gary69]

Also, existing loans can easily be converted into capital if necessary.

Isn't that only allowed up to 105M per 3-year period (so called secure funding) and even less by UEFA for the clubs participating in their competitions (60 -90 M per 3-years).

 

[spintheblackcircle]

Can you blame them? They pretty much were groomed from very young ages to be essentially royalty. Of course, they want things done their way. It's the same thing with Taylor Swift, she pretty much has gotten praise for being who she is for the last ten to fifteen years and it goes straight to your head.

Sounds much more like Elon Musk

 

[bluesfan94]

Isn't that only allowed up to 105M per 3-year period (so called secure funding) and even less by UEFA for the clubs participating in their competitions (60 -90 M per 3-years).

Maybe? I don't know about that rule specifically, but I thought secure funding was about the way losses are funded, not about converting existing debt into equity.

 

[hatterson]

What a wild comparison


Also, existing loans can easily be converted into capital if necessary.

Yea this is largely true for almost all of the existing situations. There's minor cases where a non-complete owner has given an interest free loan and it's not easily convertible into shares due to issues with diluting other owning stakes, but that really won't impact anyone significant.

And it's not like the amounts would be back breaking even if nothing got converted. For basically all the teams it's something like 5-8m/year that they're "benefitting" and most have decent leeway between the allowed losses and where they are, so adding those losses won't make a big difference.