Manchester City have mounted another legal challenge against the Premier League’s associated party transaction (APT) rules.
Richard Masters, the Premier League’s chief executive, informed the top-flight clubs on Thursday that the reigning champions have initiated a fresh arbitration challenge to the amendments that were voted through in November.
Masters’ letter to clubs, which was first reported in The Times, read: “On January 20, 2025, Manchester City FC began a further arbitration to challenge the APT rules.
“As you will see, the new challenge relates to the amendments to the APT rules that clubs approved at the 22 November 2024 shareholders’ meeting. Manchester City FC seeks a declaration that the amendments approved by clubs in November (and therefore the current APT rules in force) are unlawful and void.
“The Premier League remains strongly of the view that the amendments passed in November were lawful and the APT rules comply with all competition law requirements.
“We consider that the new arbitration must be resolved as soon as possible and, to that end, have agreed that the same tribunal should be appointed to hear the new case. The parties are currently corresponding in relation to further directions.
“The APT rules remain in full force and effect and clubs remain required to comply with all aspects of the system.”
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Despite the fresh legal challenge, the existing APT rules will remain in place and deemed lawful.
City’s view is that the new rules are discriminatory and face the same legal issues as the previous iteration because, the club believe, the existing shareholder loans are still not scrutinised in the same way as other commercial deals.
They feel those loans should have been subjected to fair market value tests at the time and should now be subject to them retrospectively as commercial agreements from 2021 to 2024 are scrutinised. City’s belief is that the new rules allow teams to keep that advantage which is, in their view, unlawful and in line with what the independent panel ruled in November.
City also believe that they are still supported in their stance by the teams that voted with them in October — Newcastle United, Nottingham Forest and Aston Villa.
(Oli Scarff/AFP via Getty Images)
In June last year, Manchester City’s arbitration with the Premier League regarding the APT rules led to an independent panel finding some aspects of the regulations to be unlawful.
This led to the Premier League consulting with its clubs for more than a month regarding making amendments to the APT rules. In November, 16 clubs voted through the changes, with only Manchester City, Newcastle, Forest and Villa voting against the proposed changes.
At the time, however, Manchester City argued that no vote should take place until the tribunal had provided its full guidance on the APT rules. And now the four-times-in-a-row Premier League winners are seeking another arbitration.
The amendments to the APT rules in November, the Premier League said at the time, were designed to ensure there is parity between the treatment of shareholder loans and other APTs in the future.
This means that shareholder loans are now required to be submitted as an APT and therefore subjected to the league’s fair market value assessment.
Should it be determined that the loan does not represent fair market value, then the club in question will have to terminate or alter the loan to reflect what the Premier League deems to be fair market value and also pay any shortfall in interest.
Another tweak made to the rules off the back of City’s initial legal challenge is that any shareholder loan which is replaced with other forms of payer — being converted into squirt or repayment, for example — within 50 days will not be required to be submitted as an APT or assessed for fair market value.
The Premier League outlined that if a shareholder loan was entered into the accounts after December 14, 2021, and remains in effect on January 11, 2025, then it must be submitted as an APT.
And if they, again, determine it is not at fair market value, then the club is allowed to retain the loan on its existing terms, although adjustments will need to be made to its accounts for 2024-25 as if it was at fair market value.
City’s challenge is likely to be discussed when clubs meet for their latest shareholder meeting on Thursday.
Additional reporting: Sam Lee
(Top photo: Carl Recine/Getty Images)
