Why Chelsea will be supporting Manchester City stance against Premier League

When Premier League chiefs meet next week in London with the 20 member clubs, it is likely to be a tense affair.

At present, the Premier League appears on the brink of civil war after the league and Manchester City went toe-to-toe in a tribunal hearing relating to whether or not associated party transaction rules (APT) were lawful.

City had been blocked by APT rules earlier this year from landing big commercial deals with Etihad and First Abu Dhabi Bank. The tribunal that heard the ATP case sided with City on the issue that these particular deals had been unfairly blocked.

But while both sides tried to get ahead of the curve and shape the narrative in the immediate aftermath of the decision, the reality was that neither side could claim glory on the matter. The tribunal rejected 23 of the 25 legal challenges City put forward, but of the two that were upheld, the issue around interest-free shareholder loans to clubs from owners having to be part of PSR was potentially impactful, as was the potential for rules around fair market value to be revisited for sponsorships.

City claims the APT rules are void based on what the tribunal decided, while the Premier League point to a number of tweaks that are required which they don’t deem problematic. It won’t be until the full findings of the tribunal are published, which is expected to happen in the next fortnight, where the matter becomes clearer.

. The Blues were one of three sides to submit evidence in support of City’s case, which is separate from the 115 charges for alleged historical breaches of financial controls that the Premier League and City are currently in the throes of in front of an independent commission. The other two sides were Newcastle United and Everton.

READ MORE:

READ MORE:

The stance of Newcastle is unsurprising given that owners, the super-wealthy Saudi Arabian Public Investment Fund (PIF) want to be able to leverage their relationships with big business in the Gulf and turn it into major commercial deals for the Magpies to allow them to spend more on investing in what happens on the pitch without getting caught cold by PSR. Everton, whose battles with the Premier League and PSR have been well documented, also believe that they should have the ability to deliver more from commercial partnerships.

For the tone is similar to that of Newcastle’s. The Blues’ owners have plenty of other business interests where leverage could be applied when it comes to hiking up the value of commercial deals, and they want to be able to realise that value.

Last year the club had a drawn-out affair when it came to the front-of-shirt sponsorship deal with Infinite Athlete, with the Premier League having questions about whether its value was in line with the APT rules around fair market value. In the end it was deemed acceptable, but Chelsea began last season with no front-of-shirt sponsor while the deal was assessed, and that resulted in a loss of income from such a value sponsorship inventory.

This season, Chelsea have started the season with no sponsor on their shirts. The agreement with Infinite Athlete, a company part-owned by Chelsea ownership, was for last season only, and with Premier League rules forbidding more than one front-of-shirt sponsor to be agreed upon per shirt, per season, the club have opted to wait until a deal can be struck at the value that the club places on the inventory.

Agree a deal at a lower price, and for a shorter period of time, means that Chelsea runs the risk of diminishing the value of the sponsorship deal moving forward.

That’s why the club have been so keen to support City’s APT challenge, with Chelsea being the potential beneficiaries of being able to lean into more lucrative deals through the leverage they possess thanks to ownership as a result of City successfully challenging the APT rules the Premier League has in place.

It is likely that Chelsea will continue to bide their time when it comes to securing a new shirt sponsor, but they will be mindful of tying up a deal within the current financial year so as to aid their PSR position, which is ultimately the goal of wanting to be able to get as much money as they possibly can for the sponsorship space.

Next week’s Premier League meeting will likely be a fiery affair, with plenty of clubs understood to be less than pleased with Manchester City’s approach. But Chelsea are likely to be in the corner of the Premier League champions once again and sympathetic to their views, because they see the financial value in doing so.