Newcastle United named 15 times in Man City v Premier League ruling as 'truth' revealed & emergency talks set

Both the Premier League and Man City released statements appearing to claim some form of legal victory over the other. Man City succeeded in proving the APT rules introduced shortly after the Newcastle United takeover were ‘unlawful’ but failed in several other cases.

Newcastle, Manchester City and the 18 other Premier League clubs have been invited to an emergency meeting held by the Premier League to discuss potential changes to APT Rules further.

Leading sports law expert and King’s Counsel barrister, Nick De Marco declined media interviews on the matter but instead offered a detailed statement to sum up the situation.

He wrote: “We have finally been able to read the written reasons in the MCFC v PL arbitration about the legality of the PL’s Associated Party Transaction Rules (‘APT’) and their application.

“As is often the case with lawyers, both sides have declared victory. The truth is somewhere in between, with each side winning on different issues.

“The fact, however, that parts of the PL’s APT Rules have been declared unlawful is significant. Just a few days after the European Court found parts of FIFA’s RSTP were unlawful, and coming not long after the ESL case in Europe (finding FIFA and UEFA rules to be unlawful), and the decision of an FA Rule Arbitral Tribunal that The FIFA and FA’s cap on football agents fees was unlawful, the case represents another example of the increasing tendency of courts and tribunals to hold sports regulators to closer scrutiny than has previously been the case the – in particular where economic activity is involved and where issues of freedom of movement and competition law arise.

“In addition, some of MCFC’s ‘wins’ in the APT case were based on English public law principles of procedural fairness.

“Many of the clients I advise will have various issues and interests that will arise from the decision, so it would be inappropriate for me to speak about it now, or express my own opinion.

“All that I can say is we are living in the most exciting time for sports law. I have never myself been one to celebrate the greater commercialisation and therefore legalisation of sport and its regulation, but it is a real fact of life and economic activity, such that this tendency for greater scrutiny of sports regulation is inevitable.

“It does perhaps also lend further support to the calls for greater independence, and transparency, in the regulation of sport.”

De Marco who represented Newcastle in the club’s battle with the Premier League regarding a potential takeover. Shortly after the takeover was completed, the Premier League introduced APT rules that would ultimately stifle the club’s ability to generate significant commercial revenue.

Newcastle voted against the rules at the time with Man City abstaining and the other 18 Premier League clubs voting in favour.

The written reasons from Man City and the Premier League’s arbitration case confirm that Newcastle’s takeover was the ‘catalyst’ for the discussions that led to the rule change. A representative of Newcastle also provided a written statement to be used as evidence in the case.

‘Newcastle Untied’ was mentioned 15 times in total in the official document published on Monday, October 7.

• On 7 October 2021 Newcastle United was acquired by an investment group led by the Saudi Arabian Public Investment Fund. 21. On 12 October 2021 emailed the PL on behalf of his club and 10 other clubs in the League. In that email requested that notice be given of: - a vote in five days time (sooner if permitted) to introduce a short term ban on any related party transactions of any kind. This rule should have the widest possible definition of a “related party” perhaps using the Takeover Code definitions when applied to companies like those in the Gulf region.
• On 18 October 2021, before the shareholders’ meeting, there was a meeting of the Legal Advisory Group (“LAG”), which was a long-standing working group of inhouse lawyers from certain of the clubs, whose meetings were attended by representatives of the PL. This meeting lasted from 0830 to 0910. The minutes record the following: “He [ ] asked whether the recent takeover of Newcastle United FC ('NUFC') and the subsequent reaction from other Clubs had accelerated the PSRs consultation process (while accepting that the Premier League had advocated for one previously). JH [Jamie Herbert] and KP [Kevin Plumb, General Counsel of the PL] acknowledged that the takeover has highlighted that we now have a spectrum of owners of Clubs with some complex structures and corporate relationship. Therefore, it is an appropriate time to assess whether these Rules are still fit for purpose. The Premier League had been looking at the PSRs since 2018 particularly as regards to achieving financial sustainability and maintaining the competitive balance of the Premier League competition.
• 18 clubs voted to suspend APTs until 30 November 2021, Newcastle United voted against and MCFC abstained.
• On 21 October 2021 the Financial Controls Advisory Group (“FCAG”) was set up with representatives of 8 clubs, including Newcastle United and MCFC. There were detailed terms of reference which stated that FCAG was to: “Make recommendations to Clubs at the 11 November 2021 Shareholders' Meeting to arrive at new Rules that safeguard the financial stability, integrity and competitive balance of the league competition and the game, in a manner that is transparent and certain, and that strikes a fair, reasonable and proportionate balance between competing interests.”
• By an email dated 2 November MCFC set out its views and Newcastle United set out its views by an email dated 4 November. The PL obtained legal advice on the lawfulness of the Recommendations, principally but not exclusively under competition law from Helen Davies KC and Richard Blakely on 7 November. Counsel “consider[ed] that “the Recommendations regarding the treatment of RPTs have at least a good prospect of resisting any sustained legal challenge.”
• At the shareholders’ meeting on 11 November 2021 all these Recommendations [fair market value, FMV, commercial deals] were approved with 19 members, including MCFC, voting in favour and Newcastle United abstaining.
• On 14 December 2021 the shareholders’ meeting took place. There was a vote on (i) the proposed amendments to the Rules, (ii) the FMV Protocol and (iii) the Databank terms and conditions. They were all passed. 18 clubs were in favour and MCFC and Newcastle United voted against. Following the approval of the rule changes by the FA on the same day, the new APT Rules came into effect. MCFC reserved its right to challenge the lawfulness of the rule changes and the FMV process.
• MCFC’s case, as put to Mr. Herbert, in cross-examination, was that there was no evidence before the PL of the ineffectiveness of t h e PSR, of the necessity for, or proportionality of the APT Rules, and there were no documents recording consideration of the PSR until the takeover of Newcastle United in October 2021.
• The evidence on which the PL relied in order to introduce the APT Rules was said to be i) disputed allegations about historic deals done by MCFC, ii) misplaced references to one administrative procedure of one PL club 14 years ago, and iii) fear mongering about the takeover of Newcastle United at the end of 2021.
• We accept that the acquisition of Newcastle United by an investment group led by the Saudi Arabian public investment fund on 7 October 2021 was the catalyst for the consultation process leading up to the APT Rules which led to the setting up of FCAG on 21 October, and the imposition of a moratorium on APTs agreed at the shareholders’ meeting on 11 November 2021.
• We do not, however, find that the APT Rules were targeted specifically at clubs owned by companies in the Gulf region but were rather intended to apply to any club that might use APTs. [Name omitted] was called to give evidence by the PL and was cross-examined. Although his email dated 12 October 2021 was said by counsel on behalf of MCFC in closing submissions to be evidence that the APT Rules were targeted at certain clubs, in particular, those in “the Gulf region”, it was clear from his evidence that it was not so targeted save in the sense that at the time the email was sent there was concern that Newcastle United might be about to enter into APTs with entities in Saudi Arabia.
• [Name omitted] explained that “the takeover of Newcastle United heightened those concerns again and encouraged the clubs to seek action.” We were satisfied that, whilst it was the takeover of Newcastle United which caused him to send his email when he did, [Name omitted]’s concern related to any club that might use APTs.
• Witnesses of fact called by the Claimant: [Name omitted] Newcastle United Football Club.
• Written statements put in evidence by the Claimant: [Name omitted] of Newcastle United Football Club.