Premier League clubs face sanctions for inflating sponsorship deals
Premier League’s much tougher revised rules aim to stop clubs securing inflated deals with companies, organisations or other teams connected to their owners
www.thetimes.co.uk
Premier League clubs will face sanctions if they try to secure inflated sponsorship or transfer deals with companies, organisations or other teams connected to their owners, new rules published in the top flight’s handbook have revealed.
The revised rules, which caused a bitter split in the league last month, are much tougher and aim to block clubs bypassing financial controls by earning unfair amounts via means such as sponsorship from a company linked to an owner, or by signing a player cheaply from another club in the same ownership group.
The detail of the new rules helps explain why some clubs were pushing strongly for them — and why state-connected clubs such as Manchester City and Newcastle United, or those in multi-club ownership models, were so fiercely opposed.
The updated Premier League handbook states that the rules “seek to ensure the long-term financial sustainability of clubs by extinguishing reliance on enhanced commercial revenues received from entities linked to the club’s ownership”. It adds that the rules are aimed at “fairness amongst clubs, so that clubs are not able to derive an unfair advantage over domestic competitors by increasing revenues or reducing costs via arrangements with entities linked to a club’s ownership”.
The burden of proof is now on clubs to show deals with associated companies or organisations are of “fair market value”. The deals include sponsorship agreements with connected companies, or transfer of players between clubs in the same ownership group. The rules put the onus on the clubs to ensure they do not try to push the limits on the fairness of deals.
Clubs such as Liverpool, above, Manchester United, Woolwich and Tottenham, part of the traditional elite, voted in favour of the new rules
GETTY IMAGES
Clubs are also now required to provide a declaration from a director of the associated party that they consider the deal to be fair market value.
A vote on the new rules went through last month — it was thought to be the closest in the Premier League’s history, with 12 clubs voting for the changes and six against, with two abstaining, which just passed the threshold of a two-thirds majority. After the new rules were voted through, some clubs were furious, with sources claiming it indicated a fractured relationship and a lack of unity within the league.
The “old guard” such as Liverpool, Manchester United, Woolwich and Tottenham Hotspur, who voted in favour of the new rules, have been outstripped by Manchester City in terms of commercial income. City’s sponsorship deals for 2022-23 were worth 13.6 times more than they were at the time of the Abu Dhabi takeover in 2008 — growing from £25 million to £341.4 million.
During that same period of time, United’s have gone up 4.7 times to £302.9 million and Liverpool’s five times to £272 million.
In 2017, before City had overtaken their English rivals, La Liga made a complaint to Uefa pointing out the club had “uncommonly high commercial revenue”, with several sponsors being companies “directly controlled by the United Arab Emirates”.
The Premier League’s changes include:
⬤ the “burden of proof” is now on the club to demonstrate that a deal is of fair market value;
⬤ each club submitting an associated party transaction (APT) shall procure “a declaration by a director (or equivalent) of the relevant associated party by way of confirmation that they consider the [deal] to be at fair market value”;
⬤ new breaches of the rules include “failure by a club to use all reasonable care to ensure that an APT is at fair market value” and “failure by a club to use all reasonable care to ensure it does not arrange or facilitate a transaction between a player, manager or senior official of that club and a third party that is not at fair market value”; and
⬤ the Premier League can demand evidence that a club has “effective procedures and processes (being clear, practical, accessible, and effectively implemented and enforced)” in place for ensuring an APT is at fair market value and “evidence of such procedures and processes being followed”.
