ThewolfMan City and the Premier League both claimed victory after a legal case owner APT rules.
City and the governing body both claimed victories after the legal battle. The Etihad Stadium outfit had two sponsorship deals blocked through Associated Party Transaction (APT) rules. APT rules prevent clubs from earning inflated revenue through inflated commercial deals related to owners.
But City successfully argued that shareholder loans – often injected at zero or low-interest rates – should not be excluded from APT regulations and that they were ‘at odds with the whole rationale’ of the Premier League’s profit and sustainability rules (PSR).
Everton – who have £451 million in shareholder loans – were hit by an eight-point deduction last season for two separate breaches of PSR while Nottingham Forest had four points docked.
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APT rules were brought in to replace Related Party Transactions (RPT) in December 2021 against the backdrop of Saudi Arabia Public Investment Fund’s Newcastle United takeover. And if the Premier League were to revert to RPT then Stevie Loughrey, a partner at sports legal firm Onside Law, believes could see Everton look for compensation for being punished ‘under an unlawful regime’.
Speaking to The Athletic, Loughrey said: “The exemption of shareholder loans was Manchester City’s big win on competition law and the potential impact is very significant indeed. The Premier League will need to amend its rules to expressly include shareholder loans. It remains to be seen whether this is to be from December 2021 (when APT rules were introduced) or just going forward.
“If the APT rules are invalid and we revert to the RPT rules, then it would seem shareholder loans do need to be factored in from December 2021. All Premier League board decisions made since December 2021 on APTs may need to be revisited.
“Further, you can see that clubs such as Everton and Nottingham Forest may contend they have been subjected to punishments under an unlawful regime and seek compensation for that.”
Simon Leaf, a partner and sports law specialist at Mishcon de Reya, agreed. He said: “On the one hand, whilst the Premier League may try to carry on with the existing rules and rely on what is commonly known in the legal world as the ‘blue pencil test’, where essentially they would argue that the rules should be read so that they are automatically reinterpreted in a lawful way, it would appear that Manchester City would challenge this strongly,” says Leaf.
“City would, no doubt, try to argue that until formal changes to the rules are voted on and agreed by the other Premier League clubs, the APT rules are unlawful and therefore cannot be enforced. In my view, City may even try to suggest that the APT rules can only now work if the shareholder loan calculation applies retrospectively — which again, is likely to be problematic for the Premier League because several clubs are likely to oppose this, and may even try to challenge such a rule change themselves.”
Thewolf
