Manchester City v The Premier League: What happens next in the “115 charges” litigation?

Who are the parties?

City is a company owned by His Highness Sheikh Mansour bin Zayed Al Nahyan, a founding member of the Premier League and has remained a member since promotion in May 2002.

The Premier League is a company owned equally by the competition’s member clubs and the Football Association (the FA). Its principal activity is the promotion and management of the league competition and enforcing the Rules. 

City was charged by the Premier League in 2023 for breaches concerning its accounting practices covering a nine-year period between 2009 and 2018 and for failure to co-operate with investigations between 2018 and 2023 (cumulatively, the Relevant Period). City denied the breaches. The Club’s mechanism to appeal the Premier League’s charging decision is to bring a claim in arbitration against the Premier League.

How are the Rules enforced?

The Rules constitute a binding contract between the Premier League, FA and the member clubs. This is made explicit in Rule B.14 of the Rules. 

Article 11 of its Articles of Association provide that the Rules may be amended by a shareholder vote. The Premier League’s shareholders are:

• The 20 member clubs participating in the league competition from time to time, who each hold equal ordinary shares and voting rights; and
• The FA, which holds one preference share which reserves certain decisions to be approved by the FA, such as the appointment of the Premier League’s directors.

The member clubs can vote on changes to the Rules at the Premier League annual general meeting. Changes need a two thirds majority vote of those in attendance. By not resolving to abolish Rule B.14 in their capacity as shareholders, it is implied that the member clubs collectively intend to be bound by the Rules.

If the Premier League determines that a club has failed to comply with the Rules, Rule W.6 provides the Premier League with the power to reprimand, sanction or refer the matter to an independent commission to decide an appropriate sanction.

How to challenge a charging decision under the Rules

If a club challenges Premier League decision it can refer the matter to a final and binding arbitration in accordance with provisions of the Arbitration Act 1996.

Arbitration is a process by which a legal dispute can be referred to and finally resolved by an independent tribunal. Arbitration usually involves a judicial process by which both parties have a reasonable opportunity to present legal arguments and evidence. The outcome (called an “award”) is final in the sense that, subject to narrow exceptions, it cannot be appealed and can be enforced through the courts. 

Arbitration is generally confidential as between the parties. There is always a tension in high-profile Premier League arbitrations between the duty of confidentiality and public interest in the proceedings. To provide some public transparency, the Premier League announced which Rules City is said to have breached and when each breach occurred. No other details were released. Further information will only be made public if the parties agree or the tribunal directs disclosure (probably after the final award).

Breakdown of legal challenges: The story so far

City referred the Premier League’s charging decision to arbitration (probably seeking a final declaration that it was not in breach of any of the Rules). 

In addition to the Premier League’s 115 charges, City also issued separate proceedings to challenge the lawfulness of certain Associated Party Transaction (APT) Rules. The APT Rules were introduced in December 2021 address whether Related Party Transactions (RPTs) (commercial transactions entered into between clubs and companies linked to their owner) were entered into at “fair market value” (i.e. the value that would have been paid if the parties were not related). See our explanation of the PSRs here.

In June 2024, Manchester City asked an independent tribunal to declare that the APT Rules were unlawful. The Club also sought an order to set aside two previous Premier League decisions that its sponsorship agreements with First Abu Dhabi Bank and Etihad Aviation group were not made at fair market value. 

This tribunal was likely dealt with first with the agreement of both parties as it related to the Rules in force at the time. The outcome, however, may have also provided clarity on Manchester City’s reporting requirements prior to the APT Rules’ implementation and informed some of the arguments that City put forward in relation to its alleged Rule breaches.

City argued that the Premier League’s methodology to assess fair market value was procedurally unfair and that the Club had a right to comment on the data before the Premier League made any decision.

The tribunal found that while it was fair for the Premier League to use comparable evidence of the value of similar transactions to assess fair market value, it should have given Manchester City (a) a chance to see the data, and (b) make comment before decisions were made. This is significant to the charges because the Premier League may have to disclose its comparative data to Manchester City and hear the Club’s representations with respect of all transactions during the Relevant Period which the Premier League deems below fair market value. 

The Club also argued that certain APT Rules breached the Competition Act 1998 (the 1998 Act). Under the 1998 Act, agreements that harm competition in the UK or abuse market power are prohibited. City claimed that the Premier League, as a de facto monopoly in its market, was in breach of the 1998 Act in its implementation of the APT Rules.

The tribunal ruled that shareholder loans should not have been excluded from the scope of the APT Rules. This led to a further decision that the APT Rules as a whole were void and unenforceable under s2(4) of the 1998 Act as at least some of the Rules were in breach of competition law. This outcome shows that if any aspect of the Rules are found to be in breach of competition law, whole sections of the Rules in place throughout the Relevant Period may be declared void. This would provide Manchester City with a complete defence to any or all of the alleged breaches.

The 115 charges

In September 2024, a 12-week hearing commenced before an independent tribunal. As the outcome of the tribunal is yet to be handed down, the details of the facts and arguments presented are not publicly known.

It is public record that City’s alleged breaches of the Rules can be categorised as follows:

1. failure to provide, in the utmost good faith, accurate financial information that gives a true and fair view of the Club’s financial position, in particular with respect to its revenue (including sponsorship revenue), its related parties and its operating costs;
2. failure to include full details of manager and player remuneration in its relevant contracts with its manager and players;
3. failure to comply with UEFA’s regulations, including UEFA’s Club Licensing and Financial Fair Play Regulations; 
4. failure to comply with the PSRs; and 
5. failure to co-operate with, and assist, the Premier League in its investigations, including by providing documents and information to the Premier League in the utmost good faith.

Why has there still been no ruling?

A year on since the arbitration reached a substantive hearing, the tribunal has still not issued its decision and, as far as the public is aware, there is no set date when a decision will be handed down. A number of factors may have caused delays, including:

• Arbitration procedure: Once the tribunal was established, a procedural timetable would set out key stages in the process, including (i) written submissions about their respective cases; (ii) answer to requests from each other to exchange documentary evidence; (iii) witness statements and expert reports; (iv) hearings. Given the complexity and contentious nature of the proceedings, there were probably also numerous interim hearings to decide on procedural and discrete substantive issues as they arose. 
• APT Rule Tribunals: As noted above, City’s legal challenges to the APT Rules appears to have severely impacted key dates in the timetable of the dispute relating to 115 charges. 
• Volume of issues and evidence: By any measure, the volume of charges means that the proceedings are complex. It is reported that there have been as much as 50,000 pieces of evidence produced by the parties. This is documentary evidence deemed relevant and refined by the parties’ representatives from a larger document universe. It is now for the tribunal to assess the evidence against each of the 115 distinct charges covering14 years including accounts, expert opinions by forensic accountants and various other witness statements.
• Novelty: This is not the first time a club has faced charges relating to its accounting practices, either in England or elsewhere in Europe. In 2020, City had a UEFA decision overturned by the Court of Arbitration for Sport. Many of UEFA’s charges failed as they were prosecuted outside of their limitation period. The remaining charges failed due to a lack of substantive evidence. The nature and scale of the present proceedings, however, are unique. 
• Cost: It has been reported that the Premier League have now spent more than £200 million in legal fees enforcing the Rules. The Premier League will also be conscious that failure to secure a positive outcome could seriously damage its credibility and probably lead to the Premier League (and in effect, the other member clubs) having to meet City’s legal costs. At various points throughout proceedings, the Premier League will have assessed the strength of its case against these costs. This may have led to delays while both the Premier League and the Club considered other commercial options, possibly including settlement.

When may we expect a ruling

While an award is expected imminently, there is no indication as to precisely when the decision will be handed down.

The full details of the outcome are unlikely to be publicly disclosed immediately (unless leaked to the public, as has occasionally happened in the past). The default position is that the award is confidential until the parties agree to disclosure. Sometimes the tribunal, in consultation with the parties, directs disclosure of a summary due to public interest. 

Clearly, some disclosure is likely to be made shortly after the decision has been handed down as the sanctions are likely to impact the league competition itself. The public, however, may never see a fully reasoned copy of the tribunal’s decision. Other member clubs, as shareholders in the league, are likely to see the award in whole or in part.

Can City appeal the decision

A common misconception is that arbitral awards can be appealed to the courts or a superior tribunal. In fact, there is only a limited set of circumstances under the Arbitration Act 1996 (the 1996 Act) which allow any challenge or appeal of an arbitral award. A key benefit of arbitration is that it is an alternative to court proceedings and is intended to result in finality.

In England & Wales there are two mandatory grounds by which an award may be challenged:

• Section 67 of the 1996 Act on the basis that the tribunal did not have substantive jurisdiction to determine the issues in dispute (this ground is highly unlikely to apply in any Premier League arbitration); and
• Section 68 of the 1996 Act on the basis that there was a serious procedural irregularity affecting the tribunal, the proceedings or the award and the party must show that this irregularity caused prejudice. In practice, the bar is set very high to demonstrate such prejudice.

Additionally, section 69 of the 1996 Act allows parties to appeal to the court on a point of law, but this is not mandatory and Rule X.38 provides that member clubs agree not to issue such an appeal. 

As such, the outcome of the tribunal is overwhelmingly likely to be the final decision. 

Implications: Sanctions available against Manchester City

Ultimately, the tribunal can exercise a broad discretion as to any penalty imposed. In doing so, it will probably consider the balance between reaching a fair and proportionate punishment taking into account the need for deterrence and to maintain the integrity of the league competition. 

Rule W.55 contains a list of sanctions available to the commission, which includes (among other things):

• An unlimited fine;
• Suspension from playing in league matches;
• Points deduction;
• Expulsion from the league; and/or
• Payment of compensation to another person or club.

It is presently unclear precisely what sanctions the Premier League will seek. Credible reports suggest that the Premier League seeks a sanction that is more serious than a fine. The Premier League has historically sought fines even for serious offences where they relate to off-field matters, seemingly because of a concern that more serious sanctions (e.g. points deductions, expulsion) could impact on integrity of the competition itself. However, this trend has changed in recent years after the introduction of PSR regulation with points deductions having been imposed on clubs found to have breached those rules.

Ultimately the Premier League is a commercial enterprise. City was the highest revenue generating Premier League club in 2023/24 (€838 million), at least €67 million higher than Manchester United, and so the Premier League may be pragmatic in the sanction it seeks.

There is also uncertainty about the period in which non-financial penalties might be imposed. For instance, would any points deduction be imposed during the current season or would it apply retrospectively in relation to the period when the offences occurred. If the latter, would that then retrospectively impact upon the final league table such that honours and finishing positions are altered? 

Redress

The other member clubs of the league will be watching the outcome of the arbitration with particular interest. 

If City breached the Rules, it is possible that other clubs might conclude that those breaches caused them harm in relation to their relative performance in the league. Such clubs may ask that the Premier League seeks redress on their behalf in the current arbitration by seeking an order that City pay compensation. 

More likely is that other member clubs may be aggrieved by the decision may choose to bring their own actions against either City or the Premier League. 

Precedent shows that third party member clubs can challenge disciplinary decisions in an arbitration. This was demonstrated when Sheffield United brought proceedings against the Premier League in 2007 challenging the adequacy of sanctions imposed on West Ham United for breaching third-party ownership rules. In that case, the tribunal held that the decision to impose a fine did not meet the standard of being either irrational or perverse and therefore, could not be set aside. It refused to re-decide the award given that the decision to impose a fine only was within the disciplinary board’s discretion.

It is, however, unlikely that the arbitral award issued in against City would be prone to a challenge by the other clubs. This is because, unlike in the Sheffield United case, City has effectively left any sanction to be decided by an independent arbitral tribunal (and not by a Premier League disciplinary panel) thereby making it final and binding under the 1996 Act. 

The most likely remedy for other clubs would therefore be to bring a claim directly against City. This is what happened in the case of Sheffield United against West Ham. Sheffield United had an independent cause of action against West Ham for breach of the Rules and was able to seek compensation for the breach, resulting in a private settlement for compensation between those parties. 

Each club has contractually agreed that they must each comply with the Rules and so any breach of those Rules is, on its face, an actionable breach of contract vis-à-vis the other member clubs. They have also all agreed to submit to arbitration in relation to all such disputes. The onus will be on the claimant club, however, to prove (i) causation (i.e. that the beach of the Rules caused it loss and damage); and (ii) the amount of such damages.

Proving the loss

It is difficult, but not impossible, for a club to demonstrate that a rule breach by another club caused it actionable losses. Particular difficulty arises when the breach is said to have upset the competitive balance of the league such that the breaching party obtained an on-field advantage.

In such cases, the claimant club must demonstrate that, were it not for the breach, results in the league would probably have been different such that it impacted upon the guilty party’s league position (and hence the position of all the other member clubs). Any club defending such a claim will point to the uncertainty inherent in football – where matches can be decided by a myriad of factors including tactics, selection and substitutions, red cards, poor refereeing decisions and injuries to players. 

In such cases, claimant clubs may rely on expert evidence to demonstrate the effect of breaches on league outcomes. For instance, there is a strong correlation between high-paid players being better players and hence clubs with a higher wage bill ending in better league positions relative to other clubs with more modest wage bills. Claimants may claim for a “loss of chance” of achieving a better league position (and subsequent prizes and prize funds) if they can demonstrate that the club that breached the rules obtained an advantage in being able to spend more money on better players than they otherwise would have been entitled to.

To have a successful cause of action, each prospective claimant club would have to demonstrate both factual causation and legal causation, i.e.:

• But for Manchester City’s breaches, the claimant club lost the chance to have finished in x place in the league in a respective league season and, therefore, attain higher prize revenues and/or honours; and 
• The losses that the claimant club suffered were in reasonable contemplation of the parties.

The viability of such claims may turn on the circumstances of each club’s final position in the league in each respective season. The possible permutations are fascinating.

• Manchester United, for example, were runners-up to Manchester City twice during the Relevant Period. Manchester United may find it easier to prove legal causation relating to the 2011/12 season (where it lost the title on goal difference) than in the 2017/18 season (where it fell short of centurion Manchester City by 19 points).
• For some clubs, Manchester City may have a compelling case to show that there was a break in the chain of causation. Portsmouth FC, for example, who have not been in the Premier League since the 2009/10 season, entered administration during that season, suffering a 9-point deduction, and falling short of safety by 21 points. 

Clubs that may especially wish to test how far remoteness stretches may include clubs relegated during the Relevant Period; that failed to qualify into either the UEFA Champions League or UEFA Europa League via their league position during the Relevant Period; and that were runners-up in seasons that Manchester City won the league during the Relevant Period.

Below is a table of clubs who may have claims based on the scenarios described above (in the years of substantive breach only (i.e., not failure to co-operate)).

Clubs could also consider arguing that they missed out on attaining more lucrative sponsorship deals which can be influenced by a club’s performance on the pitch. The scenarios above arguably adversely affected other clubs’ bargaining power in respect of very significant revenue streams (for example, Liverpool’s recent kit partnership with Adidas is valued at £60 million per year over a five-year period).

Damages

The extent of the prejudice a respective club has suffered will also be highly fact specific. The onus will be on the claimant club to assess and demonstrate its damages before a tribunal.

The High Court hearing of Sheffield United v West Ham United confirmed that, despite those practical difficulties, clubs are prima facie entitled to recover damages for breach of contract where another member club has breached the Rules. Additionally, arbitrators will hear submissions on any other proposed remedy if damages are inadequate.

To the extent that a monetary reward can compensate a club who suffered damages as a result of Manchester City’s alleged breaches, the award would vary greatly depending on the extent to which the claimant club can provide its losses.

For example, while clubs receive a different merit-based prize depending on its league position, the quantum is contingent on broadcast agreements in place and commercial revenues at the time. This figure has grown enormously since the start of the Relevant Period.

Member clubs of the league prior to the 2013/14 season would be entitled to a much smaller quantum for damages calculated against the Sky Sports and Setanta/ESPN broadcasting deals in place at the time. Clubs which have been in the league during the Sky Sports and BT era would likely be entitled to much higher damages.

Limitation

Under section 2 of the Limitation Act 1980 (the 1980 Act), Manchester City has a defence if another club fails to bring a cause of action within six years of the relevant breach of contract.

However, the usual limitation period may be extended if the nature of the breach was unknown to the claimant until much later. Claimants have three years to issue a claim from when they attain knowledge of material facts about the damage. This is subject to a long-stop period, however, of 15 years of the breach.

City may argue that any breaches prior to the 2010/11 season at least are already out of time. They may also argue that other member clubs had the requisite knowledge from 2020, when the Club entered arbitration with UEFA on similar matters, or 2023, when the 115 charges were announced. But the member clubs may argue that due to the confidentiality of proceedings, it does not have knowledge of the breach (nor if there has been any breach at all) until the panel’s judgment. They can also argue that there was no breach of the Rules until the date when Manchester City is sanctioned.

NRF credentials

Please get in touch if you would like to discuss any of the points covered in this article. 

NRF experience includes:

• Advising an English football club in relation to an arbitration against another Premier League club under the FA arbitration rules in relation to claims associated with player registrations and the impact that third-party owned players on the competitive balance of the competition.
• Advising on a challenge to the Premier League’s Profit and Sustainability Rules including appeals, sanctions and potential follow-on claims.
• Advising an English football club in relation to an emergency arbitration against the FA Premier League under the Rules challenging various regulatory decisions imposed on another member club for breaches of Premier League Rules.
• Advising an English football club in English High Court proceedings aimed at challenging the jurisdiction of the regulator.
• Advising the English football League (EFL) in connection with the insolvencies of a number of its member clubs.

With thanks to Alex Jones for his assistance with this post.