Manchester City and the Premier League are both celebrating victories following a recent ruling on the league’s Associated Party Transaction (APT) regulations.
The ruling determined that the Premier League’s APT rules and amendments, introduced in December 2021 and February of this year, are considered “unlawful” and violate UK competition law by excluding shareholder loans, whereby a club borrows money from its ownership group, typically interest-free.
This particular case is separate from City’s defense against over 100 charges for allegedly breaching the Premier League’s profitability and sustainability rules (PSR), which they deny.
In this instance, City argued that the league’s APT rules, aimed at preventing clubs from using sponsorship deals with companies connected to their owners to inflate revenues and allow for increased spending, are unlawful and anti-competitive. The league, on the other hand, contends that the rules are in compliance with the law.
A statement from City stated that the tribunal found the Premier League had “abused its dominant position” and ruled that two decisions regarding the club’s sponsorship deals with the Etihad Air Group and First Abu Dhabi Bank should be set aside.
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The Premier League expressed its “welcome” for the ruling, acknowledging that certain elements of the APT are in breach of competition law but asserting that the system as a whole is endorsed and crucial for maintaining profitability and sustainability in the league.
The Premier League plans to continue operating the APT system while addressing the issues highlighted by the ruling to ensure compliance with competition law.
City have won the last four Premier League titles (Naomi Baker/Getty Images)
The ruling, delivered by a three-person arbitration panel, came after City challenged the league’s APT rules in a case heard in June.
An amendment to the current APT rules was scheduled for discussion at a Premier League shareholders meeting but was preemptively removed from the agenda.
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One key aspect of the ruling centered on shareholder loans and their exclusion from the APT rules, which City argued was unfair. The tribunal agreed that interest-free shareholder loans should be considered within PSR calculations, potentially requiring clubs to adjust their financial arrangements to avoid violations.
Arsenal owe more than £200m to their owner, Stan Kroenke (right) (Glyn Kirk/AFP via Getty Images)
The ruling highlights the need to address shareholder loans and sponsorship deals under the APT rules to maintain fairness and compliance in the league.