Manchester City and the Premier League are both celebrating victories following a recent ruling regarding the league’s Associated Party Transaction (APT) regulations. The ruling, delivered by a three-person arbitration panel, declared that the Premier League’s APT rules and subsequent amendments introduced in December 2021 and February of this year are “unlawful” and in violation of UK competition law.
At the heart of the dispute was the exclusion of shareholder loans from the APT rules, which are loans that clubs obtain from their ownership groups, typically interest-free. Manchester City argued that the league’s APT rules, which aim to prevent clubs from using sponsorship deals with entities linked to their owners to artificially boost revenue and enable higher spending, were unfair and against competition law. The tribunal sided with City, stating that the league had abused its dominant position and should set aside two decisions related to the club’s sponsorship deals with Etihad Air Group and First Abu Dhabi Bank.
City’s victory in this case is separate from their ongoing defense against over 100 charges of breaching the Premier League’s Profitability and Sustainability Rules (PSR), which they deny. The ruling highlighted the issue of interest-free shareholder loans and their impact on PSR calculations. Including these loans in the assessment could force many clubs to reevaluate their financial positions to avoid breaching the rules.
The Premier League, on the other hand, welcomed the ruling and acknowledged that certain elements of the APT rules did not comply with competition law. The league stated that it would continue to operate the APT system, taking into account the tribunal’s findings and making necessary adjustments to ensure compliance with the law.
The dispute over APT rules stemmed from concerns about clubs using sponsorship deals with entities connected to their owners to inflate revenue artificially. The rules were introduced following the takeover of Newcastle United by the Saudi Arabian Public Investment Fund, prompting a review of sponsorship agreements and the implementation of market value tests for all APTs.
Manchester City’s significant commercial income, much of which comes from companies linked to their ownership group, raised questions about the fairness of the APT rules. The club’s close ties to the City Football Group ownership and sponsorship deals with entities like Etihad Airways have been scrutinized under the APT regulations.
Ultimately, the ruling in favor of Manchester City has implications for how clubs handle shareholder loans and sponsorship agreements in the future. The Athletic will provide a detailed analysis of the ruling and its repercussions in the coming days.
