Manchester City have launched their latest legal assault on the Premier League – via challenging its attempt to amend sponsorship rules.

Last year, the four-in-a-row champions triumphed over the competition when a tribunal found that Associated Party Transaction (APT) regulations – designed to stop clubs from signing inflated commercial deals with firms linked to their owners and introduced following the Saudi-led takeover of Newcastle United – contravened competition law.

Despite numerous objections from City, clubs voted by 16 to 4 to back Premier League plans to amend rather than rewrite the rules in November.

And City’s expensively-assembled legal team has now emphatically carried through on that promise via another searing attack, which claims that the tweaked regulations continue to ‘discriminate’ and highlighting a host of rivals, including Arsenal, who they say enjoy an unfair advantage.

The same panel which sided with City on their original complaint will again rule on the latest dispute. Should City succeed for a second time it would throw the Premier League’s financial rules into disarray and once again see clubs hit with a hefty legal bill.

The matter is separate from the 130 charges brought against City by the league for alleged breaches of financial rules. However, City are using the same legal team to represent them.

City’s argument, shared with clubs by the Premier League, is broadly two-fold. The original rules were branded unlawful thanks largely to the fact that shareholder loans – funds typically lent to clubs at favourable or zero interest rates by owners – were not subject to the same ‘fair market value’ (FMV) test as commercial deals.

The amended APT rules attempt to deal with that issue by allowing clubs that have benefitted from shareholder loans to see them converted into equity during a ‘grace period’ which ended in January. 

Those not converted are subject to an FMV test which City say continues to be discriminatory because clubs can retain the loan, are not required to pay interest at FMV and only have to account for figures received for the first time in this season’s accounts – which they claim means up to three years of interest expenditure could be excluded.

City say such ‘differential treatment’ means the rule changes ‘do not eliminate but on the contrary perpetuate the discriminatory and distortive treatment previously found by the tribunal’. 

They also highlight the fact that shareholder loans can be paid in full before any FMV assessment is carried out, unlike the 30-day waiting period a deal with an associated party is subjected to offers ‘a substantial cashflow advantage and cost reduction to the club receiving the shareholder loan’. They add: ‘This continued preferential and discriminatory treatment of shareholder loans has the object and/or effect of distorting economic competition between Member Clubs on affected markets.’

In a comprehensive attack, City say the rules as they stand ‘fail to meet the requirements of transparency, objectivity, precision and proportionality … and are liable to distort competition’.

The Premier League interpreted the tribunal’s initial findings as verification of the majority of the APT rules and believed they could simply make a small number of amendments. City urged them not to do so and were supported by others including Aston Villa. 

They asked the Premier League to hold fire until the tribunal had ruled whether all the rules - rather than just certain sections - were null and void. In February, the panel did just that, branding the rules ‘void and unenforceable’ in their entirety. The Premier League claimed the ruling did not impact the amended rules, which they believe are still ‘valid and enforceable’.

But lawyers for City – who issued their first challenge after a wide-ranging deal with Etihad was blocked by the Premier League – say in the second half of their argument that this is not the case and that the amendments are invalid.

‘This voidness means that the amendments are themselves void, because it is not legally possible to amend rules that are themselves void,’ they add.

To illustrate their point, City also delve into the accounts of rival clubs within the 88 pages, pointing out that Arsenal benefited from shareholder loans to the tune of around £259m in 2022-23, that Brighton benefitted from shareholder loans of approximately £406.5m in 2021/2022, that Everton took £450m in 2022-23 and that Leicester received £265m in 2021-22.

Another victory for City would send the Premier League back to the drawing board and pile pressure on chief executive Richard Masters. It would also see clubs revert to the pre-2021 system, which did not include APT rules. Instead there were less rigorous regulations on deals with ‘related parties’.

The Premier League declined to comment.