Mixed verdict delivered in Manchester City's APT case against the Premier League

The tribunal ruled that shareholder loans should not be excluded from the scope of APT rules and that some amendments made in February by the Premier League should not be retained.

Interestingly, Everton, Chelsea and Newcastle acted as witnesses for Manchester City, whilst witnesses for the Premier League included, Manchester City, Arsenal, Tottenham, Liverpool, Brighton and West Ham.

The Premier League says the tribunal rejected the majority of Manchester City's challenges and 'endorsed the overall, framework and decision-making of the APT system'.
Source: BBC

The APTs are commercial deals involving clubs doing deals with companies they have close ties to and it was introduced soon after the Saudi group took control of Newcastle Utd.

So this will now open the door for companies closely related to the Saudi group to now poor millions into Newcastle. But the strangest thing about this case is that Everton were one of the witnesses for Man City against the Premier League along with Newcastle and Chelsea, while Man Utd, Liverpool, Arsenal, Spurs, Brighton and West Ham were witnesses for the Premier League.

Also, part of City’s argument was, as I understand it, some clubs were allowed to take personal loans from directors which Everton are the highest of clubs who do this. So hopefully Friedkin gets control before the Premier League change the rules and directors loans become part of PSR.

There is a table relating to this in the link below.

Man City - Victory?

Matt Lawton, who broke the story for The Times on Monday later joined talkSPORT and admitted the is 'civil war' between the Premier League and its clubs, and between some of the clubs themselves.

“Right now the Premier League is in civil war," he told Hawksbee and Jacobs.

"It's very messy, this is not a good place.

“While we're enjoying watching the football on a Saturday and Sunday, there's a lot of friction here.

“Eight or nine clubs gave evidence in this particular case in support of the Premier League. The clubs are divided.

“It's a messy situation and the consequences of this are the shareholder loans - if you are Arsenal with over 200 million quid worth of shareholder loans this is a worrying development.”

“It's a messy situation and the consequences of this are the shareholder loans – if you are Arsenal with over £200 million worth of shareholder loans, this is a worrying development.”

Everton can double Arsenal's £200M, can't they?

I also struggle to see why interest should be included, when it's not been charged. This is a commercial decision not for the Premier League to find on.

Any club worth its salt will just recategorise as junior equity in any case.

The commercial point that Man City can add any commercial details that don't have a fair value, just means that football will become a state controlled game.

According to the table that was supplied to Talksport by Swiss Ramble, at the end of the 2022-23 season, Everton had £451M worth of shareholder loans. Things may have improved since or some loans may have been moved, but it is worrying.

I imagine Paul The Esk will have something to write about this in the coming days.

Several Premier League clubs disappointed by the ruling, including Arsenal, Bournemouth, Liverpool and West Ham.

The Premier League maintain rules won't dramatically change, but Shareholder loans will now be factored in, which could affect some of the heavier borrowers using this method.

This type of lending is interest-free but interest rates may now be applied for PSR purposes. — Ben Jacobs via 'X'

As with most of these type of things, we won't know how it will pan out, but I won't be happy until Friedkin are the new owners and none of this 'civil war' nonsense prevents that from happening.

I agree with Ian though, I don't see that this decision leads directly to our loan number being retrospectively added.

The Premier League's consistent failures regarding governance and clarity of rules is leading to mayhem.

The Premier League refused that… so, if the goalposts have been moved, doesn't that now need to go to VAR?

What I read is:

"What has changed on the loans is that clubs like Arsenal (£200M) and Liverpool (£70M) have loans from their owners for which they are not paying any interest. As this is included in PSR then they are not spending £42M and £15M over a 3-year period – which they would do if they paid say 7% interest, as all other clubs are paying.

Man City argued that that was unfair when other clubs were having to pay interest on their loans.

The Premier League have reportedly invited all 20 clubs to an emergency meeting to discuss needing to change its rules following the outcome of Manchester City's tribunal.

A number of City's complaints were upheld, most critically in relation to Associated Party Transaction (APT).

The club's lawyers successfully argued that interest-free loans from shareholders to clubs needed to be included in APT regulations, leaving a number of clubs now in danger of breaching Profit and Sustainability Rules.

Arsenal are one club now set to face ramifications. They are said to have taken about £200m in shareholder loans to boost transfer market spending, and now face the prospect of having to quickly balance their books.

Now, top-flight bosses are trying to urgently arrange a meeting with all 20 of its clubs present next week. They're expected to discuss the extent to which it will need to change rules and regulations as a consequence of the sponsorship judgment.

From what I have read today, 19 out of the 20 clubs, including Manchester City, voted in February 2024, to keep shareholders loans out of APT, but today's decision seems to have opened the door to at the very least include market value interest rates as part of the calculation for PSR, apparently a 5% rate on Everton's current loans would amount to circa £20M, if that was somehow backdated – which I don't think it would be – it would cause a great difficulty for the club.

Four-letter words used to upset lots of people but three-letter acronyms are the bane of all of our lives: PSR, VAR, APT, VAT, PFI the list goes on! Enjoyment of the sport RIP (LOL)!

Surely they would be against it?

In "civil war" or does it just need the dog to stop the tail wagging it?

So it was of no financial or other direct benefit to City, but indirectly provides perhaps some strength to their stance against the other main charges brought by the Premier League (ie, they're not managing their processes properly).

"The clearest victory for City came in the challenge to rules on loans made by shareholders to their clubs. Despite Uefa having regulations that require such loans to meet fair market value – ie, that the loans be made at or close to market [interest] rates – the Premier League exempted such deals when the rules were redrafted this year."

That would tie up the Premier League in a load of other cases they might not want to get involved in (time, money, distraction, etc) and might impact other clubs financially more than it would impact City.

I suppose Usmanov has that much money that common-sense didn't even come into it but nobody can predict the future and how we have suffered since.

Only Everton, Newcastle and Chelsea offered any support – why would they do that unless it somehow benefits them?

The ‘arm wrestle’ of power within the game looks set to continue, and in my eyes, the tribunals and legal arguments are bringing the whole of football into disrepute.

How can it be that the powerful and rich clubs can continually be allowed to prosper using loopholes? This cannot be a level playing field with regard to other ambitious clubs wanting to gain success purely by remaining in the parameters of the rule book.

"Only Everton, Newcastle and Chelsea offered any support – why would they do that unless it somehow benefits them?"

James, a pure guess – might it be that Newcastle and Chelsea wouldn't be impacted as much from a rule about shareholder loans being applied?

The demise of Man Utd saw Man City as the only bulwark against Liverpool domination under Klopp and thank the lord for that.

I know it doesn't mean anything to those not from this parish but I assure you growing up amidst the sneering weasels makes anything that puts their nose out of joint a joy. Decades of nothingness here makes disappointment across the park the only thing enjoyable in today's game.

"Bluuuee Moon you saw me standing alonnne" – not so; many of us are 4-square behind you!

Interest on commercial loans are already factored into PSR calculations.

City made the legal challenge against 25 of the regulations in the Premier League's rulebook regarding Associated Party Transactions (APTs), as well as its decision to reject the two sponsorship deals. — Sky Sports

I don't think it's a "mixed" verdict as this thread headline claims at all, as City's silk has said "all of the APT rules are void".

The Premier League are desperately trying to spin a better outcome, it's another humiliating defeat for them and it's only a matter of time before these clubs decide to take their billions to the European Super League

Man City challenged on 25 points; the panel gave them a win on just 2 of those points… yet City claim victory?

The Premier League claimed the panel had “endorsed the overall objectives, framework and decision-making of the APT system” while Man City also claimed they had “succeeded” in their case against the Premier League:

“The tribunal has declared the APT rules to be unlawful. MCFC's position is that this means all of the APT rules are void, and have been since 2021."

City's lawyer claims “It is enough that they are unlawful for one reason. In the event, the tribunal found the APT rules are unlawful for three different sets of reasons.”

The way City's legal team are progressing, I don't rule anything out.

So they've argued for something they are supposed to believe is immoral just to have some sort of precedent for the Premier League rules being potentially dodgy in their main fight against the 115 charges that are still to be dealt with.

Well, I hope there's nothing derived from this that will upset Friedkin's plans for balancing the books and investing in strengthening Everton FC.

I'm not sure how interest-free loans are worse financially for a club than any that need interest to be repaid as well and I thought the basis of PSR was to prevent rogue owners from impoverishing their clubs and walking away?

All Arsenal have done is essentially what Moshiri did. The problem is not spending the money on players, it is spending it on poor players so that the money is wasted rather than leading to success and better income.

Rory ‘Another-Talking-Head' on Radio 5 last night wondered that anyone would want to give their own club an interest-free loan. Obviously doesn't believe there are vanity projects in sport. I didn't realise all our Olympians have to pay back the funding they get at some point!

I'd rather the RS win it on merit with a genuine level-playing field competition than be stuck with the current closed-shop situation.

It may make the Kopites sad not to win things all the time but the reality is their club is part of an elite group that the rest of us can only envy from ‘afar' unless the financial shackles are somehow neutralised.

I'm with you, brother!

What the fuck?

Where do you live, Si?

In reality, the chances are 'only' the two rules require changing but the sweeping statement now needs clarifying and adds paperwork to be dealt with. It's a clever move and a delay tactic.

City can now say 'Which rules are we being judged by?' and 'Are you sure they are legal?'

I just think that the Premier League has to tackle any uncompetitive measures attempted by Clubs, because if they don-,t it falls into the realm of Government Competition laws.

I know that it can be the view that Clubs can spend what they like, even due to no interest loans, but being able to tap into endless finance can by uncompetitive and is not competitive football, even if the Club is being run properly.For the authorities there is the adfition problem that finance is available, when a Club is run badly, unfortunately like Everton.

The central problem is can a properly run Club with fiance's related to football operations be competitive in the Premier League?

The Telegraph claims that the Premier League has confirmed clubs will only be liable for paying interest on shareholder loans agreed after the new regulations have been established.

The apparent decision by the Premier League that it will not backdate interest charges on existing shareholder loans will offer more security for Premier League clubs and avoids a potential revolt by many of its clubs.

The Telegraph are reporting that Everton are paying interest on loans from Moshiri and that these – unless for infrastructure such as a new stadium – are the be included in PSR.

What will change is that those clubs whose shareholders have loaned them huge amounts of money interest-free (such as the £137m to build that carbuncle on our original stadium) will now have to include the expected interest that they would have paid in their PSR calculations.

Sadly for us, interest-free loans made before today will still have 0% interest of PSR and only new loans are affected and the interest on money for the carbuncle would also be excluded under the infrastructure rule.

It is now time to have a complete overhaul of the Premier League hierarchy.

We don't know the half of what's going on and it just seems that very little is being done to correct things.

The introduction of VAR has been a shambles and other tinkling with the rules leaves me dumfounded.

Let's get ready to rumble!

Barry wants to perpetuate a system where the gap between the haves and have-nots is maintained, I'd rather that be broken down and rebuilt as a true sporting competition.

I don't just measure Everton against them, I measure Everton against everyone and I want us to be winners.

You can keep your poxy proxy hollow victories.

I am also only bothered by the opinions of people I respect.

"I'd rather the RS win it on merit with a genuine level-playing field competition than be stuck with the current closed-shop situation".

He's not saying he wants the rs to win the league. He's saying he wants a level playing field, no closed shop, which would give us a chance of winning it on merit; that means logically that we have to accept that the rs would still have a chance of winning it on merit.

Do we want to win the league again?!

Clubs have been asked to supply information to the Premier League by the close of business on Thursday about the mix of shareholder loans and loans converted to equity they currently have, and have had in the last 3 years.

This information will help the Premier League draft recommendations that will be put before the league's Financial Controls Advisory Group (FCAG) and its Legal Advisory Group (LAG) on Tuesday before a wider discussion among all clubs next Thursday morning.

Clubs are not expected to vote on any rule changes at that meeting, however.

Richard Masters has written again to the Premier League clubs, with:

Clubs told no quick fix to rule changes after Man City verdict

Masters says the Premier League will take “the necessary time” to make APT amendments in a clear change of tone from his initial response, which implied that the APT rules could be easily redrafted and ready for the clubs to ratify at a meeting previously scheduled for Thursday of next week, but which may now be delayed.

“There have been many club conversations over recent days, with constructive and informative feedback provided.

“Also, thank you to those who provided information on shareholder loans. We now have a comprehensive set of information and data which is helping to inform our recommended approach and rule amendment drafting.

"We will circulate these to clubs when fully considered and ready, which may impact on the scheduling of our planned meetings with financial controls and legal advisory groups, and all clubs next week."

The link is to the original article in The Times, which is behind a paywall for me.

The PL is not fit for purpose and can you imagine one of the Sky 6 getting the huge fine that Forest just received foer the VAR comments about Atwell being biased, not a snowball's chance in hell.

Unfortunately Richard Masters gets auto-corrected to ‘slimy weasel' by my brain and I can't help thinking those conversations with the various clubs fall into 2 categories; those in which he thinks he is in charge, and those in which he hears ‘his masters' voices'.

"This is a league that is seen as one of the country's crown jewels. It is the envy of all the other leagues around the world.

"If the Premier League is seen fighting constant legal battles with its member clubs then that does serious damage to the brand.

"The damage might not happen overnight, but when the game is being played out in court rooms rather than on the pitch then it isn't the kind of thing that sponsors and broadcasters will want a piece of.

"There will be damage to the brand that you can't put a number on at the moment. It is often said that there is no such thing as bad news – but ultimately when it comes to external sponsors, especially from overseas, looking at who they want to partner with there maybe more of a temptation now to perhaps go with La Liga rather than the Premier League.

"A civil war like this really isn't good for business. It brings the Premier League into disrepute." — Simon Leaf of Mishcon de Reya.

Looking at their website, I reckon Simon Leaf is keen to benefit in a business sense from any friction between the League and its clubs where he can insert himself… so, er, vested interest, methinks.

Oh, and the broadcast contracts are huge and long-term. But maybe Thursday's meeting will see some fireworks being tossed into the ring…

Won't this question be immaterial if the Government puts their much vaunted body in place to regulate and run the affairs of the Premier League?

My short answer would be an emphatic No – there is absolutely no way that the regulator will be running the affairs of the Premier League.

Longer answer: 3 years minimum before the legislation on a football regulator becomes law. Then, and only then, will we know what the remit of the regulator is — but you can rest assured that their powers over the Premier League will be very limited.

Yes, I doubt I'm the only one who sees Man City, in the long run, not being seriously penalised when the result of their 115 charges are announced early next year.

There will be no comeback on the penalties we and Nottm Forest suffered last season with Everton being the club most affected by them.

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 this 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.”

The full article at The Athletic does a deep dive on the whole thing under the title: Everton, Brighton, Arsenal and the Premier League clubs with the largest shareholder loans – for those who can get through the paywall…

Uefa and the European Club Association [Dan Friedkin sits on the ECA executive committee through his ownership of Roma] have extended their memorandum of understanding until at least 2033 in a move which will indirectly safeguard the interests of both Everton and Man City.

As part of the new deal, Uefa has agreed to increase solidarity payments to teams not competing in its club competitions to £257M per year.

Oooo… that sounds good!

Until you do a fact check and find that a cap on the distribution of so-called solidarity payments [Hands up if you have any idea what these are!] to the top five European football federations was introduced, meaning England, Spain, Italy, Germany and France will receive €10M each. The resulting €258M left over will be a huge increase on the current €135M and will go towards the remaining 50 football associations in Europe.

I think the numbers are per year, not per club, and the money just goes to feed the football pyramid in each country. So, Everton and Man City set to benefit as £257M deal struck with UEFA until 2033?

Not exactly.

Another win for Man City in their battle with the Premier League…