Manchester City have been successful in their challenge against the ’s APT (Associated Party Transaction) rules, with the rules deemed as ‘unlawful’. The ruling could have a big impact on , and , as well as the wider Premier League.
The case was a separate one to the 115 charges against City currently being heard. A 10-week hearing surrounding charges brought against the club in February 2023 is ongoing.
The impact the APT ruling . The statement of both parties appeared to claim some sort of victory, but our business of football writer Dave Powell has outlined the reality:
“While the Premier League attempted to downplay the importance of the legal victory Manchester City scored on Monday, the fact that there is an emergency general meeting of member clubs scheduled for next week suggests that this is an issue that has caused some significant concern around the league.
“The Premier League claimed in a statement following the tribunal hearing into the League’s associated party transaction rules (APT) that the tribunal had largely backed the current rules and highlighted only a ‘small number of discrete elements’ that do not comply with competition and public law requirements. Manchester City argue that all the rules are now null and void when it comes to APT.
“One of the lines to emerge from the decision was that shareholder loans to clubs that had been done on favourable terms far better than could be achieved in normal market conditions, were deemed anti-competitive and non-compliant with fair market value, something which was a key part of City’s defence.
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“The Premier League’s stance was that it was fair as all clubs were able to rely on such shareholder support should they wish, but City’s legal counsel argued that not all of the club owners and shareholders had the ability to do that. The tribunal agreed.
“What happens now is unclear. There are many Premier League clubs who have been in receipt of significant amounts of shareholder loans, some at zero interest and with no fixed maturity date. The City argument was that shareholder loans shouldn’t be allowed as they currently are under APT as it skews the PSR calculations because an interest-free loan cannot be fair market value.
“For those clubs in receipt of sizeable shareholder loans, including the likes of Arsenal at some £250m, they will want some clarity soon around how this is impactful moving forward, if at all.
“It is important to note that the Premier League regulates itself and sets its own rules, and it takes a majority vote to get things passed. This particular issue will be of concern to around half of the league, but for the other half who feel that they could draw bigger sums from commercial partnerships through leveraging relationships, such as City, Newcastle United, and Chelsea, it may open the door a little to allowing them to lean into the opportunities they can tap into, and free themselves, certainly in the case of Newcastle, from the PSR shackles they have found themselves placed under that have hampered their ability to compete”
So what impact could the latest ruling have on the 115 charges hearing? While it is a separate case, the outcome could potentially aid City in their legal battle, and potentially cause unrest among other clubs.
“The Premier League, currently embroiled in a legal battle with Manchester City over the 115 charges in relation to alleged historical breaches of financial controls, a separate case to the APT tribunal, is risking a potential civil war breaking out as it scrambles to prove that it can regulate itself effectively,” Powell has explained. “However, it is another embarrassing episode in having to face a legal battle with another one of its member clubs, at significant cost.
“The tribunal did reject some of the City challenges, siding with the Premier League when it came to City’s claim that the rules lacked transparency. It also agreed with the Premier League imposing tight restrictions around APT. It did not spell the end of APT rules.
“The shareholder loans issue will be a thorny one for some, especially if other clubs seek to follow that line to try and challenge the Premier League.
“However, it would be hard to see any retrospective action taken against something club’s engaged in within the regulations set out at the time, and with recent changes to legislation, such as the rules around amortisation being capped at five years, any action would likely be to address additional funding in the future. It might be that the Premier League simply tightens up aspects of its legislation for clarity for clubs as opposed to it creating huge fractures across the 20 member clubs.
“Both sides have trumpeted victory in this APT case. That should be somewhat instructive as to how it has actually played out. Nobody has really won, although City will feel that in the wider scheme of things, poking more holes in Premier League legislation will aid their cause when it comes to the main battle with the league over the 115 charges.”
