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Premier League tightens rules on sponsorship deals with related parties

The Premier League has implemented stricter regulations aimed at preventing clubs from inflating sponsorship and transfer deals with entities linked to their owners, according to the Times

These revised rules were approved by a narrow majority last month and will address concerns about Profit and Sustainability Rules and maintaining a level playing field within the league.

Clubs could previously circumvent financial controls by securing inflated deals with affiliated entities, such as sponsorships from owner-linked companies or player transfers between clubs under the same ownership group. 

For example, Newcastle United announced a £25 million-per-year front-of-shirt sponsorship deal with Saudi Arabian events company Sela. The club and Sela are owned by the same organisation – Saudi Arabia’s Public Investment Fund (PIF).

The new rules address this problem by requiring clubs to exercise all reasonable care to ensure such deals are conducted at fair market value.

The burden of proof now falls on the clubs to demonstrate the legitimacy of these transactions. They must provide a declaration from an associated party director confirming their belief in the deal’s fair market value. 

An independent commission can impose a range of sanctions for any breaches. The severity of the offence will determine the penalty.

The new rules became a hot topic after clubs such as Liverpool, Manchester United, Arsenal and Tottenham Hotspur, who voted in favour of the rules, saw their commercial income outpaced by Newcastle and Abu Dhabi-owned Manchester City. 

City’s sponsorship deals in 2022/23 were more than 13 times higher than the numbers they recorded when Abu Dhabi United Group took over in 2008.

The Premier League claims these revisions will ensure long-term financial sustainability while promoting fairness amongst clubs as they try to prevent other clubs from gaining an unfair advantage through non-market practices.

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