Richard Masters Premier League
Manchester City has achieved a significant legal victory against the Premier League, challenging the league’s Associated Party Transaction (APT) rules. This victory leaves all 20 Premier League clubs seeking clarity and potentially paves the way for other clubs to seek damages. City argued that the APT rules were unlawful, and a panel of judges upheld their claim after facing months of criticism. With this verdict in their favor, City is now positioned to seek compensation from the league for unfair treatment. The precedent set by the ruling also opens the possibility for other clubs to present similar cases if they believe they’ve been wronged under the APT rules. In related developments, City’s actions may change perceptions within the league. While six clubs opposed the changes to APT rules in 2023, the outcome may foster goodwill toward City from teams that were hesitant to directly confront the league but benefit from City’s challenge.
Of note, Newcastle and Chelsea had supported City’s claim, reflecting a divide among Premier League clubs regarding the APT rules. The ruling may also have broader implications for the Profitability and Sustainability regulations, which have affected clubs like Everton, Nottingham Forest, and Leicester. The arbitration panel examined the foundation of the APT rules and questioned the stringent monitoring of associated party transactions while allowing club owners to infuse money through under-market loans.
In their written submissions, the Premier League stated, “Owner funding, like state aid, is subsidisation. That is particularly so when other sources of external funding are not permitted.” The panel agreed, suggesting the two cannot be separated. Manchester City highlighted that Arsenal benefited from this discrepancy, arguing that the rules incentivize shareholder loans over new equity purchases, leading to potential market distortion. City pointed out, “£1.5b out of £4b total borrowings (some 37%) are made to clubs by shareholders, including all of Arsenal’s borrowing and almost all of Brighton’s borrowing.”
Despite the verdict, the Premier League’s position is that “these elements can quickly and effectively be remedied by the league and clubs. In the meantime, the Premier League will continue to operate the existing APT system, taking into account the findings made by the tribunal.”
While this may not herald game-changing consequences akin to the anticipated 115 hearing, it undoubtedly presents a substantial challenge for the Premier League, which now faces questions and demands for answers from clubs across the league.
