Saudi Arabia could bail out FIFA and boost Man City with £1bn deal
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Man City appear to have won the battle but not yet the war with the Premier League following the bombshell announcement of the outcome of the APT case earlier this week.
City had challenged the Premier League’s rules on associated party transactions (APTs) in the courts, arguing that they were anti-competitive and unfairly enforced.
They have succeeded with several elements of their claim, although it should be noted that the Premier League have also claimed victory.
The dispute has sparked something of a civil war within England’s top flight, with clubs split on the APT rules themselves and both the Premier League and City’s handling of case.
TBR Football spoke exclusively to Liverpool University football finance lecturer and industry insider Kieran Maguire, who explained the intricacies of the case as well as other City finance matters.
The truth about the APT case
There is a degree of ambiguity about the outcome of the APT case, with early suggestions that City had ‘won’ brushed aside by some legal experts.
The truth, as Maguire explains, is more nuanced.
“I think City will probably be the more pleased of the two parties, it is not a knockout blow.
“They will take the greatest solace for page 164, the award and declare, where it does appear that they were justified in pursuing this action because.
“The laws were deemed unlawful and procedurally unfair. The delay in the reaction of the Premier League to the Etihad deal was unfair. The Premier League had unreasonably deferred making decisions.
“My understanding is that City are now also reasonably certain that it will be difficult or maybe even retrospective punishments to take place in terms of stripping them of former titles given that, under the basis of these rules, interest-free loans to clubs from owners have been put in the same bag as sponsorship arrangements from associated parties.
“The Premier League will take some solace from the fact that the committee said they understand the need for cost control.
“How the Premier League managed to persuade them that the cost control rules are good for competitive balance is beyond me. They are nothing to do with competitive balance. That made me scratch my head a bit.
“The Premier League has gone away and licked its wounds. There is an emergency meeting of Premier League executives next week, but my understanding is that it’s going to be setting out where they stand.
“They aren’t going to rush anything. They rushed through the APT rules following the takeover of Newcastle by PIF.
“While they approved the deal, they didn’t think it would go through within 48 hours. It has resulted in a huge legal bill that will now be shared between all the other clubs.”
New and improved Etihad deal imminent
In the APT case, it was revealed that the Premier League had blocked two Man City commercial deals – with Etihad and Abu Dhabi First Bank – as they failed to meet fair market value criteria.
However, the tribunal found this to be unlawful as the Premier League did not disclose their full reasoning, depriving City of the conditions to launch an appeal.
City’s current deal with Etihad is worth £67.5m and includes both front-of-shirt and stadium naming rights, and it now looks as though they will find it easier to push through a renewal at a higher price.
There was also potentially significant news from Spain recently too, with Atletico Madrid’s new £240m stadium naming rights deal giving City a valuable benchmark for fair market value assessment.
So what might be the fair market value of the Etihad deal now, after City have won the treble and enjoyed a decade of sustained success on the pitch?
“I think they were asking for £80m – that is my understanding. That doesn’t seem unreasonable,” said Maguire.
“If you look at United’s front-of-shirt deal, that’s in the region of £60m. City can offer the Premier League title to sponsors, plus there is the naming rights element.
“Man United were more than happy to announce a £90m-a-year deal with Adidas. City’s asking price with Etihad is lower than that.
“If Chelsea can get £40m for a nine-month deal with Infinite Athlete… That was essentially a distressed asset because, just as they have done this season, they started the campaign without a front-of-shirt sponsor.
“When you put those factors together, I think £80m sounds about right. They have won the Premier League in four consecutive seasons.
- READ MORE: Why Manchester City thought Arsenal were going to receive a punishment from the Premier League
The finances of the Club World Cup
Next summer, City will represent the Premier League alongside Chelsea in the maiden edition of a revamped Club World Cup.
Organised by FIFA, the tournament had been promised to deliver huge prize money for participants, with some early estimates putting the figure as high as £84m.
However, FIFA have so far failed to get a TV deal for the Club World Cup, with their initially asking price of around £3.5bn scoffed at by broadcasters.
Apple are the only company to have submitted a bid, which was worth £750m. And world football’s governing body have now lowered their asking price.
Maguire has echoed reports that suggest that Saudi Arabia’s Public Investment Fund, who own Newcastle United, could bail FIFA out and stump up the cash for a TV deal.
“The tournament isn’t very popular,” he said.
“There is clearly an issue with the lack of interest in the tournament from sponsors and broadcasters.
“I suspect there will be a £1bn broadcast deal done. Perhaps it could be funded by Saudi Arabia.
“They have a good relationship with FIFA, especially with the decision to dual-award the 2030 and 2034 World Cups. It’s going to be one vote for two tournaments.
“Saudi wants to be a success in football. There is scope for that relationship to become a bit closer.
“The tickets will sell. American fans are very keen to watch football.
“One issue is that it might result in some reaction from FIFPro. They might make a statement at this tournament in terms of the demands on players.”
