City launch legal action against the Premier League | Club & PL reach settlement | Proceedings dropped (p1147)

Chris in London said:
Perhaps it's easier to break it down into what I know and what I think.

Here's what I know:

(a) the Premier League has no unilateral power to change the rules without giving due notice of any proposed rule change and receiving the support of a 2/3 of the clubs present and voting. So a behind the scenes rule change has simply not happened. It would be as unlawful as the original APT rules.

(b) The joint statement confirms that the entire dispute between the club and the league has been settled. Since as well as APT 2 there were also outstanding issues from APT 1 concerning the costs of the two hearings (which will run to tens of millions), compensation and even injunctive relief, it follows that all these elements have been settled also.

(c) City had something of a slam-dunk case for costs arising from APT 1. They would be unlikely however to recover less than about 60% and more than about 80% of their total outlay. So there was an area of doubt as to the exact figure, but the broad parameters of what they were going to recover were known.

(d) City had a solid claim for damages if they could show there was a loss which flowed from sponsorship deals being thwarted by unlawful rules. But the precise measure of their loss depends on what happened afterwards, which we don't know.

(e) City had probably no realistic chance (nor even any reason) to seek any sort of injunction.

(f) City have plainly got some ongoing deal with Etihad, because their name is still being printed on the front of the shirt. What we don't know is on what basis that ongoing sponsorship has been agreed.

(g) Compensation works by replacing what you should have had if the wrongful act had not been done. So if you haven't lost out, there is no right to compensation even if someone has done something unlawful.

Okay, now on to what I think,

(a) City won't have known specifically how much they would recover towards their costs, but as I say would have had a pretty good idea. So a compromise that included a figure of £X for costs probably doesn't give City anything that they wouldn't have got anyway.

(b) Much the same point can be made in relation to damages. If the Etihad deal passes as originally agreed, what loss have City actually incurred? Likewise, if the press rumours are bollocks and City will only be able to be sponsored up to the tune of £X by Etihad, and not £Y, they have a fairly easily quantifiable claim for damages by being prevented from entering into a deal by the application of unlawful rules. Again, we don't quite know what the loss City have suffered in relation to not just the Etihad deal but also (say) the First Abu Dhabi Bank deal being rejected, but it will not be difficult to work out.

(c) I can't see any legal or commercial reason why we would have settled the APT 2 case for the sorts of things - costs and damages - that we were going to get anyway. It seems to me that there has to be something tangible which the PL was (a) able to offer, and (b) did offer.

(d) Whilst from City's perspective there might not be too much difference between getting the full value of the Etihad deal from Etihad, and getting a lower deal approved plus damages from the PL, from the PL's perspective, there is a huge difference between the two. Using the future growth issue as an illustration, if we had agree 6% future growth with Etihad and the PL said "you can't have more than 5%" over the 10 year lifetime of a £1.5bn deal that adds up to quite a lot.

Which, if the Etihad deal was wrongfully impeded, the PL was on the hook for.

Which seems to give them quite an incentive in terms of agreeing a settlement that doesn't block the Etihad deal.

From City's perspective, they would much rather have the certainty of the deal with Etihad proceeding without further hiccup, and from the PL's perspective they would sooner not be on the hook for a substantial damages claim. (I think that in relation to some other aspects of the claim, eg the delays in the FMV assessments, they are on the hook anyway but those will be for much more manageable sums.)

We don't know, but what I think is that City had the PL between a rock and a hard place. I simply can't imagine why we would have settled all the aspects of the deal if it wasn't overall something we were satisfied with. It certainly wasn't some undisclosed rule change, and a promise by the PL to apply their rules fairly in the future is scarcely worth the paper it's written on. They were under an obligation to do that anyway, and City failed to prove that they hadn't done so.

Trust the club. This is a win even if its not immediately obvious what the win actually was.
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what a excellent post. I think you are very close to the truth.
 
Chris in London said:
On this specific point, No is the answer. The only deals the PL has the power to assess and re-value if necessary are the deals between a club and an associated party.

(Slight tangent, the associated party rules were substantially introduced because the rules the PL initially adopted didn't cover the relationship between City and Abu Dhabi based companies like Etihad and Etisalat.)

So it is only where the league can say "they are only paying £X because of this relationship between the club and the sponsor." That is where the League can step in and say "the fair market value of the rights this club is selling to that sponsor is £Y, and we will exercise our right to block any deal that is in excess of £Y."

However that right to revalue the contract only arises where it relates to a deal between a club and an associated party. So far as we can tell, there is no association between City and Puma so even if they had been willing to pay City £5bn to be a sleeve sponsor on the away shirt only, the League would not have had the right to re-value that contract.

What we know is that the club has to submit any deal for assessment before they can enter into it, but that does not mean the League go straight to the FMV stage. The assessment process is (a) to determine whether the sponsor is a related party and (b) if so, only then to determine what the fair market value of the transaction would be. As far as we know, the Puma deal has gone through, so either the League accepted that Puma was not a related party, or accepted that the deal was for a fair market value. I don't know, but I assume the former.
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The definitions and interpretation of an ‘Associated Party’ in the Premier League handbook are written in such a way that virtually every major company in Abu Dhabi and the UAE qualifies as an ‘Associated Party’ to Manchester City.
 
Keith Moon said:
The definitions and interpretation of an ‘Associated Party’ in the Premier League handbook are written in such a way that virtually every major company in Abu Dhabi and the UAE qualifies as an ‘Associated Party’ to Manchester City.
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Hang on, I thought the APT challenge was a major win for City?
 
halfcenturyup said:
People are confusing the club "accepting" the validity of the November 2024 rules with them being found to be lawful. There has still been no determination of the legality of those rules. They are still open to challenge.

Imho, if we look at APT 1 and 2 together from the point of view of the club: the February 2024 rules, which added more onerous requirements, were thrown out and will not be repeated in any future rules; in a hugely embarrassing judgment for the PL, the rules from 2021 to October 2024 were declared null and void because of the exclusion of shareholder loans, which consequently had to be included in the new rules causing a number of clubs to change their financing structure; and the club has apparently achieved approval of the Etihad deal or, at least, negotiated amended terms which are acceptable to it.

If we look from the point of view of the PL, they have confirmation that APT rules, are, in principle, lawful, something City never challenged until the February 2024 changes; and they have November 2024 rules the legality of which hasn't been determined yet.

I know who I think has come out of it all in better shape, and it's not the PL by a long distance.
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The simple fact that City have had the majority of their legal costs settled by the PL, tells us who the "winners" are in this dispute.

Winners don't pay costs, losers do.
 
Keith Moon said:
As I see it, the goal wasn’t to abolish the APT rules (one should remember that they also protect City); the goal was to push through the new AD agreements, and if they managed that, it was a major win for City.
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Well that was not City's argument in the case which unequivocally sought a declaration that APTs were unlawful completely. So it is a stretch to argue City did not seek to abolish APT.
1757525087003.png

City laid out 6 arguments for the APT regime being unlawful by object.

1757525469265.png

So, the premise of your conclusion is that the settlement waived through the Etihad agreement which is really extremely unlikely - the PL would have abused its own rules to do so. No rule changes affected any of EAG, ADFB or the hotel deal anyway as they were all original APT considerations.

Not sure what other AD agreements you are referring to.
 
SouthStandStander said:
@slbsn will we ever find out what we've won / gained from this settlement. As in.. will it show in the accounts?
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There might be a post balance sheet event note about it (and then a fuller explanation in the following year) but I am not sure what the materiality measure is for that. It is hard to see how a significant payment of costs or compensation to MCFC would not get a mention in either the PL or MCFC's accounts but I will leave it for the accountants to give you a definitive guide to whether both parties could keep it secret. Obviously if the financial aspects were very small, that would probably not be disclosed.
 
slbsn said:
Well that was not City's argument in the case which unequivocally sought a declaration that APTs were unlawful completely. So it is a stretch to argue City did not seek to abolish APT.
View attachment 169105

City laid out 6 arguments for the APT regime being unlawful by object.

View attachment 169107

So, the premise of your conclusion is that the settlement waived through the Etihad agreement which is really extremely unlikely - the PL would have abused its own rules to do so. No rule changes affected any of EAG, ADFB or the hotel deal anyway as they were all original APT considerations.

Not sure what other AD agreements you are referring to.
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Could the PL not have accepted or requested changes to the assumptions on which the FMV calculations are based, without having to change any of the actual rules or the valuation methodology?
 
foggy1974 said:
But you said that no club could be retrospectively punished under a psr breach which eerily sounds like the crux of the 115 charges
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Firstly, I said nobody could realistically be retrospectively punished for a PSR breach caused by costs that were excluded by the rules at the time ie it would be punishing a club where they did nothing wrong per the rules at the time - that would be ridiculous. There could be no better mitigation of any breach in those circumstances that the rules at the time didn't require such costs to be deducted.

Second, the core of the City case is concealed wrongdoing. So it is very different.
 
halfcenturyup said:
Could the PL not have accepted or requested changes to the assumptions on which the FMV calculations are based, without having to change any of the actual rules or the valuation methodology?
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Any knowing move like this would just be a breach of the PL rules by the PL.Whether in a settlement or not, they would just be exposed to a claim from other clubs. I think it is highly unlikely to have happened like that.

The most obvious thing that happened is City (as they envisaged being able to do) provided sufficiently compelling data and responses to the benchmarking data to garner approval under the process already in place. This was the whole reason they wanted the determination on EAG set aside and reopened.

On FAB, if City came back and got the PL to agree the original deal and City then found they were unable to get FAB to pay the original deal, then City had a loss and probably had a claim that was, perhaps, settled in the settlement.

But on each I'd put very good money that City played the game in revisiting the original rejection with data and expert evidence as to FMV.
 
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