Man City launch fresh legal challenge against the Premier League over sponsorship deals in latest bombshell development

Manchester City have launched a fresh legal challenge to the Premier League's rules on sponsorship deals – in a further escalation of the war between the competition and its champions. Mail Sport understands that, in the latest bombshell development, lawyers for the club have informed the league that they will seek an arbitration hearing over amendments made to associated party transaction (APT) regulations which have already been at the centre of a long-running legal battle.

City scored a victory over the competition when an arbitration panel found elements of rules on deals with parties linked to clubs were 'unlawful'. However, the Premier League subsequently and swiftly made a number of amendments, which were then voted through by a majority of its clubs. At the time, City legal counsel Simon Cliff raised the prospect of further legal action should new regulations be 'rushed through' in a ferocious letter to clubs - and his employers have now carried through on that threat.

The original panel had found issue with the rules for a number of reasons, not least because they did not subject shareholder loans, from parties with a stake in clubs such as owners, to the same fair market valuations as commercial deals. Manchester City have challenged the Premier League's rules on sponsorship deals again. City chairman Khaldoon Al Mubarak pictured (left) next to club CEO Ferran Soriano in August.

Some of City's rivals, most notably Arsenal and Liverpool, benefitted significantly from such lending. The new rules say existing shareholder loan will effectively be set to one side and not be subject to such valuations, meaning those involved escape having to pay retrospective fees worth millions. City, whose action is once again being led by Lord Pannick KC, say this means the new rules remain discriminatory and unfair.

They also say the fact that clubs can continue to benefit from shareholder loans with only the interest rate subject to a fair market value assessment and can obtain the full value of the loan before such an assessment has taken place is also unjust. The new rules will continue to be in place while the legal challenge rumbles on. No timeframe has yet been set for a hearing, Mail Sport understands. In what is a complex and messy situation, both City and the Premier League are waiting further clarification from the original tribunal panel over whether the whole ATP system should have been declared null and void.

The amendments were voted through by 16-4 in November. City were backed by Aston Villa, Nottingham Forest and Newcastle United. Ahead of the vote, Villa had written to clubs to warn them it was 'abundantly clear that any vote (if passed) will result in immediate further litigation by Manchester City'. City had initially launched a legal challenge last June, after the Premier League rejected a wide-ranging new deal with Abu Dhabi-based airline Etihad, which they ruled was not of fair market value.

City have ended each of the past four seasons as the champions of England's Premier League. The latest act will be discussed at what is expected to be a feisty Premier League shareholder meeting on Thursday. Chief executive Richard Masters wrote to clubs this week to inform them of City's new challenge. 'The Premier League remains strongly of the view that the amendments passed in November were lawful and the APT Rules comply with all competition law requirements,' Masters added.