What APT rule changes mean for Premier League clubs as Manchester City handed blow

At London’s swanky Nobu Hotel on Friday morning a vote was put to the 20 Premier League member clubs, its shareholders, over proposed changes to the rules governing commercial deals.

Associated Party Transaction (APT) rules were brought in to prohibit some clubs with certain ownership groups who had the ability to draw on other related assets being able to strike deals above fair market value. In the wake of Newcastle United’s takeover by the Saudi Arabian Public Investment Fund (PIF), regulations around ‘fair market value’ were brought in.

But earlier this year, reigning champions Manchester City launched legal action against the Premier League’s APT rules, claiming that they were unlawful.

While many of City’s arguments were rejected by the independent commission that heard the case, some aspects were agreed with, including the argument that interest-free shareholder loans from owners should be included in the calculations of the league when it came to profit and sustainability rules (PSR).

The Premier League made amendments to reflect this, and the changes were put to a vote for the 20 member clubs, with 14 needed for them to pass. They achieved 16, with Manchester City, Newcastle United, Nottingham Forest and Aston Villa all voting against the proposals, while representatives from Chelsea and Manchester United made the case to the members present that they should vote in favour of the changes.

Following the meeting, the Premier League said the APT rule changes relate to "integrating the assessment of shareholder loans" and "include the removal of some of the amendments made to APT rules earlier this year.”

A statement read: "The purpose of the APT rules is to ensure clubs are not able to benefit from commercial deals or reductions in costs that are not at fair market value by virtue of relationships with associated parties.”

The Premier League will see the vote as something of a victory, although the legal challenge that was brought by Manchester City has resulted in changes being enforced, with the introduction of shareholder loans for PSR assessment potentially being impactful for some clubs in the coming years, while some elements of the revised APT rules that occurred earlier in the year have been stripped out, essentially weakening the regulation from where it was.

However, the Premier League will have been relieved that City and those in agreement with their stance did not do enough to sway other shareholders, as that would have kicked open the door to potentially huge changes to the way that commercial deals could be struck while, at the same time, being another blow to the Premier League’s argument that it can govern itself effectively at a time when they are already facing down Manchester City in a legal sense through the ongoing commission hearing into the 115 charges over alleged breaches of financial controls over a decade-long period by the club.

It likely won’t be the end of the matter, and City have previously suggested that they would take the legal case further if the decision did not go their way. What that means for the Premier League is more legal fees that they could have to face, money which comes out of the central funding, which means it will be money that won’t be filtering its way to the member clubs through central payments.

But even with the inclusion of assessing shareholder loans for PSR purposes, 16 of the clubs felt that the rules as they stood were appropriate, likely pointing to concerns that they had that they could have been blown out of the water in terms of revenue generation had some team owners been able to lean on their related assets to a far greater extent.