Premier League clubs approve changes to sponsorship rules in blow to Manchester City

Premier League clubs approved changes to the league’s Associated Party Transaction (APT) rules, the English top-flight competition said on Friday, in a blow to reigning champions Manchester City who did not want the rules to be changed.

The APT rules aim to ensure clubs cannot benefit from commercial deals or reductions in costs that are not at fair market value (FMV) by virtue of relationships with associated parties.

The rules are intended to maintain the Premier League’s competitiveness by preventing clubs from inflating the value of sponsorship deals with companies linked to their owners.

A two-thirds majority (14 clubs) was required for the changes to be approved and the BBC reported 16 clubs voted in favour.

The Premier League said in a statement that the rule changes addressed findings by an arbitration panel last month following a legal challenge brought by City.

“The Premier League has conducted a detailed consultation with clubs – informed by multiple opinions from expert, independent leading counsel – to draft rule changes that address amendments required to the system,” it said.

“This relates to integrating the assessment of shareholder loans, the removal of some of the amendments made to APT rules earlier this year, and changes to the process by which relevant information from the League’s ‘databank’ is shared with a club’s advisors.”

SHAREHOLDER LOANS

Last month, City had claimed a partial victory over the Premier League after an arbitration panel ruled on APTs that the Abu Dhabi-owned club was blocked from completing.

But the League said at the time the panel’s redacted document endorsed the overall objectives and decision-making of the APT system.

The panel found parts of the league’s APT rules broke British competition law and were also unlawful because clubs were unable to comment on types of data on previous deals the league would take into account when making its FMV assessments.

City had said the rules were found to be discriminatory in how they operated because they “deliberately excluded” shareholder loans, which the club said favoured certain clubs and could distort the market.

“The new rules seek to ensure that there is appropriate parity between the treatment of shareholder loans and other APTs going forward, with transitional rules clarifying the treatment of existing shareholder loans within that framework,” the league said in its statement on Friday.

Any shareholder loans entered after the rule comes into effect will now have to be submitted as an APT, which will be subject to an FMV assessment.

If the Premier League Board finds the loan to not be at FMV, the club must either terminate or vary the loan to reflect FMV and pay any shortfall in interest.