Premier League Lesson: U.S. Leagues’ Ownership Rules Protect Partnerships

As the U.K.’s top soccer league heads to court next week in a dispute with its most successful club, pro sports sponsors on this side of the pond should be thankful to be sheltered from the potential of a similarly nasty situation arising here.

The Premier League and its Manchester City club have for years battled over the organization’s Profit and Sustainability Rules, which include curbs on spending and other financial restrictions aimed at ensuring stability and instituting a level playing field for all teams.

This time around, Man City is challenging the legality of the PSR’s limitations on what the league calls Associated Party Transactions. First adopted in late 2021 and strengthened with additional sanctions this past February, the rules call for any club that has a proposed agreement worth more than one million GBP with an entity perceived to be linked to the team’s ownership to submit the deal to the league for a determination that it meets fair market value standards.

The restriction was specifically aimed at preventing sovereign wealth funds and similar ownership groups from using their owned or affiliated companies to write inflated sponsorship checks as a way to circumvent the financial fair play rules.

If the APT rules are struck down for violating U.K. anti-competition laws following the two-week closed-door arbitration hearing that begins Monday, the decision will have significance beyond the Premier League and its clubs. If properties are able to sign above-market-value “sponsorship” agreements that hide the true intent of the deal, it diminishes the value of the medium itself in multiple ways.

First, any current or future partnership that is perceived to be a sham will simply give fans and consumers who are already skeptical of sponsorship another reason to be dismissive of relationships between brands and rights holders.

Second, it muddies the waters for anyone trying to determine fair market value for similar types of partnerships. An APT for a shirt sponsorship, for example, cannot be used for comparative pricing purposes without a mechanism such as the Premier League’s current process for vetting such agreements.

Obviously, the potential fallout of a ruling against the Premier League would be felt primarily in the U.K., followed by repercussions across European football and the rest of the continent’s sponsorship sector. U.S. sponsors are protected not only by distance, but also from the chance of a comparable situation occurring here by rules that prohibit ownership or control of North American pro sports franchises by entities most in a position to abuse the privilege.

Regardless, any brand with a stake in sponsorship should pay attention to the case for the possible long-term ramifications it could have on the medium’s ability to continue to deliver value.