Premier League could charge clubs for 'inflating sponsorship deals' with major new ruling

Premier League clubs could now be charged by the league for not using 'all reasonable care' when it comes to ensuring sponsorship deals are of fair market value. The Times reports on the new detail which looks to stop clubs inflating deals with parties linked to the sides.

Certain top flight clubs had been pushing for the updated regulations harder than others, such as Newcastle United, Manchester City and those in multi-club ownership models, who may have been most likely to capitalise from inflated deals.

The updated Premier League handbook outlines that the rules prioritise 'long-term financial sustainability' by avoiding situations where clubs are reliant on revenues received from or directly linked to owners. The handbook adds that the rules strive for 'fairness among clubs'.

Deals that will be affected include sponsorship agreements as well as the transfer of players between clubs in the same ownership groups. The burden of proof is on clubs to demonstrate they are working to 'fair market value'.

The Premier League can demand evidence be presented by a club to ensure that 'effective procedures and processes' are in place to abide by the rules and that 'evidence of such procedures and processes' are being followed.

Should any breaches occur, there is no fixed penalty that will be applied. Each case will be heard by an independent commission for an outcome to be decided.

The Times adds that the vote to approve the rules went through last month with 12 clubs voting for and six against - Liverpool, Manchester United, Arsenal and Tottenham Hotspur are believed to have voted in favour of the new rules. Two teams abstained and the change just passed by the two-thirds majority threshold.

An example of the type of deal that could come under scrutiny could be Newcastle United's £25 million annual shirt sponsorship deal with Saudi Arabian events company Sela. The deal was an increase on the club's £6.5 million-a-year deal with Fun88 which was put down to the club's ascent to the top four and rise to the Champions League.

However, Sela is majority-owned by the Saudi Arabia Public Investment Fund, which holds an 80% stake in Newcastle United. Newcastle United Chief Executive Darren Eales said the dal had come about after a 'highly competitive commercial process' at the time.