Sensemaker Daily
Two weeks of arbitration are about football, fairness and what money can buy.
Starting today, English football’s Premier League champions are launching an unprecedented legal action against the league they just won for the fourth time in a row.
So what? Manchester City wants to be able to spend even more than it already does. At stake in its action are the league’s commercial rules, the clubs’ ability to spend and the fabric of English football.
If City wins in an arbitration hearing expected to last two weeks it could
- usher in an era of unregulated spending by top clubs;
- turn the already vast gap between the haves and have-nots into a chasm; and
- strengthen the argument that the rich write their own rules, in football as in life.
Guardrails. For now, the only limits on unrestricted club spending are football’s Financial Fair Play rules and the Premier League’s Profit and Sustainability Rules (PSR). These prevent clubs accumulating more than £105 million in losses in a three-year period. To some extent this levels the spending playing extent across the Premier League.
But…
- These rules haven’t prevented 115 charges of financial irregularity being brought against Manchester City in a separate case being heard in November (City denies the charges).
- Clubs that are able to raise money through big commercial and sponsorship deals are able to spend more.
- Such deals are governed by the league’s “associated party transaction” (APT) rules – designed to stop owners giving blank cheques to their clubs via companies they own or run – and Manchester City is now challenging those rules.
“Tyranny.” A good example of the kind of deal the APT regime is meant to regulate is City’s sponsorship by Etihad Airways, which has links to the club’s owners. But in a 165-page complaint seen by the Times, City claims it is the victim of “discrimination”. It describes the APT rules as the “tyranny of the majority” – a phrase popularised in John Stuart Mills’s 1859 book On Liberty – owing to the fact that its fellow Premier League clubs approved the rules and that all such changes require the assent of 14 of the 20 clubs.
If City is successful in the arbitration, it would allow clubs to value sponsorship deals without independent assessment, raising the amounts they can earn and spend on players and contracts, which in turn is likely to lead to greater success on the pitch.
Really? Yes. There is a strong correlation between player wages and league position.
- Exhibit A: City, which has spent almost £2 billion in transfer fees alone and won eight league titles since being bought in 2008 by a group controlled by Sheikh Mansour, a member of the Abu Dhabi royal family.
- Exhibit B: Chelsea, which hadn’t won the league since 1955 when bought by Roman Abramovich in 2003. In the next 19 years he spent more than £2 billion on signings and the club won five league titles and two Champions Leagues.
To prevail in the arbitration, City has to prove the APT rules are anti-competitive and have prevented it from signing bigger deals in more lucrative markets around the world.
A little history. The rules were tightened following a vote by clubs in February, and were introduced in response to concerns over Newcastle United’s takeover by the Saudi Arabian Public Investment Fund. City’s action accuses rival clubs of “discrimination against Gulf ownership”. The Times claims at least one club has submitted a witness statement in support of City.
What’s more… An independent football regulator would have been perfectly placed to intervene in a case like this and was virtually guaranteed to be created by parliament – until parliament was dissolved for the UK election.
