Premier League shelves financial rules change amid imminent Manchester City verdict

The Premier League has shelved a proposed change to its financial rules while clubs wait for a verdict in its landmark legal battle with Manchester City.

The suggested amendment to the ‘associated party transaction’ (APT) rules related to who has access to a databank to which teams submit their commercial contracts.

A vote on that change was not held at Thursday’s meeting of Premier League shareholders amid what was expected to be an imminent verdict in a legal challenge brought by City against wider APT rules.

That challenge is separate to the much higher-profile case in which City are fighting charges relating to 130 alleged breaches of financial regulations.

Premier League clubs were not told during Thursday’s meeting whether there had been a verdict on the APT row, with both City and the League bound by confidentiality over the outcome unless they both agree otherwise.

The decision not to vote on Thursday was viewed by one source as a precautionary measure in case City secured even a partial victory in their legal battle that would render any changes to the APT rules unlawful.

However, another source said the amendment had in fact been shelved following feedback from a number of other clubs. The source added that the non-vote should not be interpreted as an indication City had scored a decisive win in their legal battle.

The Premier League and City both declined to comment.

What are the Premier League’s APT rules?

APT rules address fears that clubs could agree commercial deals with companies connected to their owners that are far in excess of what they could realistically attract elsewhere in order to dramatically increase their spending power within the profit and sustainability (P&S) framework. The rules were updated in February and, in an era of multi-club ownership, further restrictions were placed around loans and purchases of players between clubs.

The Premier League handbook states that the rules seek to ensure both long-term financial sustainability and fairness.

What rule have City challenged?

In February, City launched an unprecedented claim of “discrimination”. City’s challenge was brought according to the league’s arbitration procedure, which has no obligation to publicly announce its findings.

City sought “damages for the losses which it has incurred as a result of the unlawfulness of the FMV [fair market value] rules”, their case said, adding that rival clubs were looking to “safeguard their own commercial advantages”.

The rules were “deliberately intended to stifle commercial freedoms of particular clubs in particular circumstances, and thus to restrict economic competition”, the claim reportedly said.

What are City arguing?

Within a 165-page legal document, City claimed that they are being unfairly targeted by rivals to stifle their success. The club also argues the league’s democratic system of 14 clubs (or a two-thirds majority of votes) being able to implement rule change gives the majority unacceptable levels of control. They called the rules a “tyranny of the majority”.

According to City, the rules were “deliberately intended to stifle commercial freedoms of particular clubs in particular circumstances, and thus to restrict economic competition”.

A source with an understanding of City’s motivations has argued that the rules were created due to club politics and highlighted concern that they were rushed through in 2021 following the Newcastle takeover.

Questions have also been raised more widely about the bureaucracy that has been created by the rules and, in now placing the onus on clubs to prove fair market value for ‘associated’ parties, the divergence with Europe and the potential disadvantage to English clubs.

What do other clubs think?

There are those inside the Premier League who believe that the competition’s very future will be pivotally shaped by what happens to the APT rules. Clubs have always had varying incomes, but some clubs fear that the potential scale of the differences now mean that defeat for the Premier League could destroy its competitiveness and threaten its long-term global popularity.

“Leagues rise and fall in football – look at Serie A – the Premier League is not immune,” said one observer.

They also question what incentives would remain for other investors to stay involved if hugely wealthy owners at Manchester City and Newcastle United were largely freed from the existing financial controls.

Although a two-thirds voting majority of clubs did support the new APT regulations in February, it was a close vote for change and City are not alone in opposing the current system. Links to vastly wealthy investors, as well as multi-club ownership models, are increasingly common.